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There are five general modes of transportation: pipeline, ocean (vessel and barge), air,
rail, and truck. Since pipeline is appropriate only for a limited number of goods, most
companies have to balance their transportation requirements across the other four
modes. The right mix depends on a number of factors, including service level require-
ments, the value of the products being transported, and the implementation of certain
manufacturing and distribution strategies (e.g. just-in-time and pooling).
However, there are cases where the existing options are either too expensive,
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unreliable, or inefficient. This was the situation 30 years ago, when Frederick
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effective means of delivering overnight packages within a certain time win-
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dow. A few years ago, a group of entrepreneurs came to a similar realization.
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They formed FastShip to provide shippers of high-volume, high-value goods
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with an alternative to standard air and ocean services. Their vision is to en-
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able “time determinate” ocean shipments from the Eastern US to Western
Europe in seven days or less and at half the cost of airfreight. The challenge is large, but
the company’s holistic approach is worth examining.
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It’s no secret that US ocean ports lag behind foreign ports in terms of productivity,
automation, and sophistication. A recent article in the Wall Street Journal highlighted
some of the key issues affecting the industry, including:
• Virtually zero investment in state-of-the-art automated equipment, which results in
significant dockside delays.
• Most ports are too shallow to accommodate large container ships.
• Union rules that create barriers to innovation in order to preserve jobs.
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For example, Asian ports can unload and reload a large container ship in about half the
time it takes in southern California. The economic impact of such inefficiency is meas-
ured in billions of dollars per year, and it will only worsen as trade volumes increase
over the next decade. Therefore, the US must take action to not only reduce the produc-
tivity gap, but also to become a leader in ocean shipping innovation.
In addition, business trends such as globalization, outsourcing, and make-to-order
manufacturing create new challenges for companies. In order to respond effectively,
companies are adopting new business
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processes and technologies. Unfortu-
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nately, some of these initiatives are
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companies with lean manufacturing proc-
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time-sensitive shipments were essentially
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Therefore, the time has come for enabling a transportation service that combines the best
attributes of both air and ocean shipments. This means a service that is significantly
faster and more reliable than traditional ocean service, but also significantly less expen-
sive than airfreight. This is the underlying goal of FastShip.
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FastShip envisions so-called Semi-planing Mono Hull (SPMH) cargo ships that can carry
10,000 tons of high-volume, high-value cargo across the Atlantic in seven days or less
through virtually all weather conditions. The success of this system depends on a num-
ber of critical factors, including the unproven capabilities of the SPMH cargo ship, new
terminal facilities and cargo-loading systems built specifically for this service, and a net-
work of strategic partners such as freight forwarders and logistics technology providers.
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The largest ship built to date using SPMH technology is 185 feet long, while the FastShip
design is 830 feet long. The propulsion system is also unique. It will propel and steer
the ship with water jets powered by Rolls-Royce Trent aeroderivative engines. The pat-
ented FastShip design has undergone extensive tank testing, and the results correlate
well with other models and full-scale ships. Also, the design has been approved by Det
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Norske Veritas, a Norwegian firm that establishes rules and guidelines for the classifica-
tion of ships.
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New terminals and loading systems have been proposed for Philadelphia, PA and Cher-
bourg, France that take advantage of the ship’s hull and propulsion design, which
creates a wide stern with two unobstructed decks above the water line. Trains stacked
two high with containers drive into the ship. When it docks, a highly automated system
replaces incoming trains with outgoing trains. FastShip expects the ship to turn around
in 6 hours (versus 24 to 40 hours) and the cargo to clear the
terminal in 12 to 16 hours.
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Because time-determinant deliveries require that inland
transportation networks be synchronized with the ocean
schedules, FastShip has partnered with Schneider Logistics
in North America and CP Ships in Europe. Also, an inte-
grated IT infrastructure will enable a dock-to-dock service
and provide shippers with complete in-transit visibility of
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The infrastructure required by this vision will cost $1.8 billion, a risky investment con-
sidering that most of it is based on tested but unproven technologies. Commercial
service will not begin until the spring of 2005, with full service available about a year
later.
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According to the US Department of Transportation, ocean shipments accounted for al-
most 44 percent of imports in 1999 (based on value), and about 39 percent for
international shipments overall. Air shipments, in contrast, accounted for about 25 per-
cent for imports and 29 percent overall. In other words, ocean transportation is the
dominant mode for international trade and plays a critical role in the world economy.
In this so-called “new economy,” speed and flexibility define success. Over the past few
years, companies have invested millions of dollars in transforming their business process
and implementing sophisticated technologies. These investments have undoubtedly
created significant benefits, but more can be achieved. What’s the limiting factor? The
physical infrastructure of logistics.
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FastShip may be a “pie in the sky” dream that may never be realized. However, the
problems the company is trying to address are very real and will not disappear over-
night. During economic downturns, companies tend to adopt a short-term perspective
in order to minimize costs. While this policy makes sense, it shouldn’t come at the ex-
pense of recognizing and addressing long-term issues.
There are a number of projects underway aimed at improving the state of the ocean in-
dustry in the US. For example, in July 2001, the Port Authority of New York New
Jersey approved a $2.3 billion, 8-year project to dredge the region’s harbor channels to 50
feet in order to accommodate next-generation cargo ships. No doubt, these types of pro-
jects are critical and necessary. But they only get us back to zero. In other words,
nothing truly changes except the size of the ships and the depth of the channels. Unfor-
tunately, bigger and deeper does not imply smarter.
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• When it comes to ocean shipping, the US lags other countries in terms of productiv-
ity and infrastructure. Manufacturers that rely on ocean shipments need to consider
the long-term implications of this problem, which is expected to worsen unless ac-
tion is taken.
• As companies continue to outsource non-core business processes and adopt make-to-
order manufacturing strategies, time determinant shipping will play an important
role in managing costs and maximizing customer satisfaction.
• Shippers need to keep abreast of innovations in transportation and logistics-related
technology. FastShip is a futures play, but there are incremental improvements that
could be implemented today.
• Manufacturers need to consider how innovations such as FastShip’s will impact their
virtual factories and corporate goals.
For further information, contact your account manager or the authors at wbm@arcweb.com or
agonzalez@arcweb.com . Recommended circulation: All EAS clients.
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