Undoubtedly, shipping is one of the major basic components in trade process. To understand the importance of shipping in our lives, we only need to look at the diverse types of goods we use often from the mouse to the computer screen to the fuel that powers our vehicles and factories around the world every day. What we now call basic necessities of modern life is brought to us by world trade which the majority of them are transported by sea.
Therefore, there is more need to have shipping companies in order to handle transportation system both domestically and internationally. Since there are too many shipping agencies, they should have some benefits for customers to choose them which means high competition for shipping companies.
Although the comparative advantage is more common to use for products rather than services, paying attention to it cause better result in every industry. For instance, this concept can be applied in shipping industry as different aspects such as:
Ø Geographical considerations: some companies can provide the really great price of shipping due to their accessibilities to the ports particularly Free Trade Zones. As it known, these areas are tax free so the companies could offer lower prices.
Ø ISO: International Organization for Standardization which is responsible for quality control on management systems for different companies and industries. Obviously, customers would rely on companies which is graded based on ISO rather than entities that do not have any standards.
Ø Strategic connection and marketing strategy: have effective partnerships would result in strong unity and it also could synergize companies in order to be more efficient.
As it can be understood, opportunity cost which is based on comparative advantage also exists for service provider by overlooking these components.
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