The Time-Driven Activity-Based Costing In A Container Shipping Company

The global economy is fluctuated. The container shipping industry is also influenced by such fluctuation. In the complex and dynamic environment of today, It is very important for companies to know the exact product costs and profitability of products, services and strategies. Cost systems must be able to quickly adapt to changing circumstances. Ever increasing competition and globalization result in high risks when wrong decisions have been made based on wrong figures. Most of enterprises focus on the control of their cost. For the container shipping, with the advance of machinery automation, the proportion of direct cost has increasingly reduced, on the contrary, the vessel and container fixed cost has sharply increased. All the time the cost tracing and measurement is mainly in accordance with the method of cost and expense management of shipping enterprises. This method adopts the same criteria to allocate some related expenses, which affects the quality of cost information and has not been adaptable to meet the needs of decision-making any more. So it is necessary to re-think and re-engineer the process of cost management and the technique of costing. As a response to these factors, time-driven activity based costing ((hereafter referred to TDABC) was introduced. This costing system provides more accurate cost and profitability information at a lower cost manner.This paper focuses on the development and application of TDABC which is based on the process of container shipping in shipping business, and the methodology of implementation of TDABC. The roadmap is also depicted and discussed in the next several chapters.First of all, we point out the purpose of this paper, the significance, the framework and the research method adopted. Next we will show the problems existed in the traditional cost management of container shipping. Meanwhile, we will discuss the feasibility and adaptability of implementing the TDABC for a shipping company. Again, the methodology of TDABC and the time equation will be explained, and the researcher will set out a case study to manifest how to develop the TDABC model in the implementation of TDABC. Then the paper will provides a IT-supported solution across the process of the development of the TDABC model. Finally, we will analyze the problems we meet explain the limitations during the research and foresee issues for further research.