The Grey Box Concept


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The Grey Box Concept

  1. 1. The Grey Box Concept<br />
  2. 2. Background<br />Although the economic recession which has gripped the world is showing signs of easing, its disastrous financial impact on the global liner shipping industry will continue to be felt for years to come. Not all companies will survive and even those carriers which remain must still take drastic action to reduce their operating costs.<br />The ‘Grey Box’ concept has been developed towards achieving this cost saving objective.<br />
  3. 3. Concept<br />Multiple container carriers transfer equipment assets to a jointly owned off-shore holding corporation. The units are thereafter, managed by a separate ‘leasing’ subsidiary of the corporation for the mutual benefit of the shareholders.<br />The overall objective of the ‘Grey Box is to optimise equipment utilisation and to reduce shareholder expenses.<br />
  4. 4. Cost Savings<br />By maximising equipment optimisation through the use of shared pooled facilities, cost savings can be effected in:<br /> overall fleet levels<br /> reduced repositioning movements<br /> lower storage charges<br /> savings in M & R costs<br /> lower insurance premiums<br /> staffing levels<br />
  5. 5. Additional Advantages<br />Further indirect advantages of a ‘Grey Box’ pool include:<br /> potential for optimising ‘carrier haulage’ logistics<br /> improved input for pricing policies and revenue management systems<br /> healthier ‘balance sheet’ profiles<br />
  6. 6. Main Beneficiaries<br />The ‘Grey Box’ concept will be of most benefit to:<br /> Consortia and Alliance Groups<br /> Short and Near Sea Partnerships<br /> and for<br /> Large Independent Operators seeking to reorganise their Asset Management into ‘Profit Centres’<br />
  7. 7. Present Consortia Alliance Workings<br />Shared facilities<br /><ul><li> Schedules
  8. 8. Ships
  9. 9. Ports & Terminals</li></ul>Separate facilities<br /><ul><li> Equipment
  10. 10. CY & MR
  11. 11. Hinterland logistics
  12. 12. IT Systems</li></ul>Region X<br />Region Y<br />Region Z<br />Line A ---------Line B ---------Line C ---------<br />
  13. 13. Future Consortia/Alliance Workings<br />Separate facilities<br /><ul><li> Marketing
  14. 14. Sales
  15. 15. Commercial
  16. 16. Accounting</li></ul>Shared facilities<br /><ul><li> Schedules
  17. 17. Ships
  18. 18. Ports & Terminals
  19. 19. Equipment </li></ul>(via Grey Box Pool)<br />Region X<br />Region Y<br />Region Z<br />‘Grey Box’ facilities<br />Line A ---------Line B ---------Line C ---------<br />
  20. 20. ‘Grey Box’ Structure<br />Line<br />B<br />Line<br />C<br />Line <br />A<br />Asset Holding<br />Corporation<br />Grey Pool<br />Management<br />Region<br />Z<br />Region<br />Y<br />Region<br />X<br />
  21. 21. ‘Grey Box’ Methodology<br />Carriers assign owned/leased units to Asset Holding Corporation<br />Asset Holding Corporation designate equipment management to ‘Grey Box’ company<br />Pool Equipment operated as ‘in house’ leasing facility<br />Individual lines ‘pick up’ and ‘drop off’ equipment as required<br />Lines only charged for equipment used<br />Profits of ‘Grey Box’ pool, less management fee, returned to lines<br />
  22. 22. Calculation of Per Diem Charges<br />Per Diem consolidated container fees will be charged on the following basis:<br /> residual value (owned units)<br /> lease costs (rented units)<br /> M & R expenses (unrecoverables)<br /> insurance (TT Club)<br /> allocated system costs<br /> unit storage<br /> pool administration<br />Fees will be weighted for average utilisation and seasonality<br />
  23. 23. Additional Fees<br />Carriers will also be charged for:<br /> pick up/drop off charges<br /> depot handling costs<br /> IT transaction charges<br /> identifiable repair expenses<br /> and<br />‘carrier haulage’ if outsourced to management company<br />
  24. 24. Statistics<br />Tracking<br />and<br />Tracing<br />Accounting<br />-<br />Contracts<br />Grey Box - Database<br />Hosting<br />Facilities<br />Optimising<br />Engines<br />Schedules/<br />Vessel Allocations<br />Booking<br />Requirements<br />Line<br />A<br />Line<br />B<br />Line<br />C<br />IT System Interfaces<br />
  25. 25. Optimal Time Scales<br />1 – 6 months<br />Analysis of each carriers’ existing equipment management operations, data elements and costs<br />Evaluation of carriers’ systems and analysis of interface requirements<br />Preparation of predicted ‘Grey Box’ cost savings and presentation to carriers’ senior management<br />
  26. 26. Optimal Time Scales<br />7 – 12 months<br />Testing of IT interfaces and staff training for each carrier <br />Full audit of carriers’ equipment by type/location<br />Reappraisal of existing contractual arrangements <br />Provision of future trade flows<br />
  27. 27. Optimal Time Scales<br />13 – 18 months<br />Gradual implementation of ‘Grey Box’ application in each geographical region, leading to full operation by 18th month<br />Outsourcing of ‘carrier haulage’ functions to ‘Grey Box’ management<br />
  28. 28. Grey Box Management and Partners<br />The ‘Grey Box’ senior management team have all had considerable experience in successfully operating previous ‘neutral’ equipment pools, whilst the IT partners in the venture have developed and hosted many similar applications<br />
  29. 29. Attainable Cost Savings<br />Experience has shown that the operation of ‘Grey Box’ pools can save carriers at least 15% in asset management costs. These have included ‘one off’ savings as well as ‘on going’ operational expenses.<br />For further information contact:<br />Invicta Management Services Ltd<br />(email: <br />