Cambridge University Press
978-0-521-76149-9 - Shipping Strategy: Innovating for Success
H. C. Mult and Peter Lorange
Inde...
Cambridge University Press
978-0-521-76149-9 - Shipping Strategy: Innovating for Success
H. C. Mult and Peter Lorange
Inde...
Cambridge University Press
978-0-521-76149-9 - Shipping Strategy: Innovating for Success
H. C. Mult and Peter Lorange
Inde...
Cambridge University Press
978-0-521-76149-9 - Shipping Strategy: Innovating for Success
H. C. Mult and Peter Lorange
Inde...
Cambridge University Press
978-0-521-76149-9 - Shipping Strategy: Innovating for Success
H. C. Mult and Peter Lorange
Inde...
Cambridge University Press
978-0-521-76149-9 - Shipping Strategy: Innovating for Success
H. C. Mult and Peter Lorange
Inde...
Cambridge University Press
978-0-521-76149-9 - Shipping Strategy: Innovating for Success
H. C. Mult and Peter Lorange
Inde...
Cambridge University Press
978-0-521-76149-9 - Shipping Strategy: Innovating for Success
H. C. Mult and Peter Lorange
Inde...
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Cambridge University Press - UBS Blue Sea Index - Freight Derivatives - FFA - ilija Murisic

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Cambridge University Press - UBS Blue Sea Index - Freight Derivatives - FFA - ilija Murisic

Keywords: Freight, Shipping, FFA, China, Port Congestion Factor, Commodities, Trading, Derivatives, Structured Products, Hybrids, UBS, Baltic Exchange

Published in: Economy & Finance
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Cambridge University Press - UBS Blue Sea Index - Freight Derivatives - FFA - ilija Murisic

  1. 1. Cambridge University Press 978-0-521-76149-9 - Shipping Strategy: Innovating for Success H. C. Mult and Peter Lorange Index More information Index acquisitions, approach by Georgiopoulos, cartels 45 Peter 250 change, response to 14 Aegean Marine Petroleum Network 188 China 22, 124 agents see using, shipbrokers container shipping 4 archetypes 251 demand growth 6, 47, 48, 259 critical success factors 86, 111 energy efficiency 22 four specialized 187, 215–32 environmental issues 22 asset bubble 42 iron ore 33 asset class, derivatives as 152 shipbuilding growth 54, 124 asset ownership, split from operation 84 Clarkson Shipping Hedge Fund 155, asset play strategy 52, 194 198–9, 231 selection defined 193 Clipper, diversification 92 timing 100 clusters 62 Awilco 97 and human talent 67 and national state entities 65–9, 84–5 Baltic Exchange 148 and specialization 84 Basel I 225 composition 69–70 Basel II Accord 56, 222, 225–6 concept as paramount 63 unintended outcome 226 Danish 73 benchmarking, and specialization 87 Dutch 65, 68 bias, hindsight 60 focus in 64 biases, in data 59 global vs. national 65–9, 73–4 branding 104 logistical/port 62, 74 coherent strategy 105 maritime, financially oriented 62 cruise lines 27 network, importance of 63, 70 customer focus 105 Norwegian 69 shipbuilding segments 27 policy 62, 73 brokerage, in-house 258 prime global shipping 62–3 brokers, cost-benefits 257 prominent companies not in 63 bulk carriers, safety 19 shipping 62–75 bureaucracy, increased 252 secondary 64 business order, and political forces 8 success factors 64–5, 66, 139 business views, juxtaposing varied 108 CO2 emissions, environmental challenge BW group, conversion program 19 10, 180 commodities Capesize, winning strategic choice 195 demand growth 4–5 capital, abundance of 11–12 freight rates 36 and competitive advantage 12 supply shortages 4 scarcity 11 commodity business, shipping as 36, 44–50 capitalization, significance of distribution 72 competition, in shipping industry 79 Carnival 27 competitiveness 10, 138 © Cambridge University Press www.cambridge.org
  2. 2. Cambridge University Press 978-0-521-76149-9 - Shipping Strategy: Innovating for Success H. C. Mult and Peter Lorange Index More information i n d e x 267 competitors, differentiation from 258 DFA (Demolition Forward Agreements) 157 complexity 256 differentiation, positive 258 consolidation 80 Diogenes Fund 100 horizontal 83 double hull tankers 102 container-based shipping, demand double hulls, requirement 18 growth 4 Dynamic Trimming Assistant 181 containerization, impact on industry 21 Contracts of Affreightment economic performance 253–4 (CoA) 95 economic stability 6–8 corporate culture 79 employee development 108 cost, capital, success factor 102 entrepreneurs, internal 246 costs, need for control 256 Wang, Gerry 246 credit crisis 7, 11, 80 environmental concerns 9–10 tighter financing due to 116 equity, ability to raise 246 culture equity, need for sufficient 112 global vs. national 94 EUKOR 25, 29 headquarters 94 exit strategies, options 42, 51 risk-averse 252 experimentation, need for 107 trading activities 94 Exxon Valdez 9, 216 cultures, five, in shipping firm 254 currency, speculative, risk 58 family business dimension 99, 235–41 customer insight, key 109 archetype 235–47 customer relations firms 88 congruence between ownership and strategies for 105–10 management 235 trading as focus 142, 248 decline 238 customer satisfaction, 104 fragmentation 239 customer value, critical success Klaveness 239 factors 245 Leif Höegh & Co 239 customer view, importance of 245 longer term view 236 customer-based network, importance of 91 management competence 238 customers, inspiring solutions orientation 237 108, 109 publicly traded firms 235 customs barriers 72 shareholder perception 238 cycles, shipping, 118 sibling rivalry 238 long-term view 118 stagnation 238 surviving 118 success factors 236 succession 240, 241 Damen shipyard 126 Tschudi & Eitzen 239 Danaos 13 FFAs 99, 147–58, 167 and IT services business 92 and new liquidity 152 debt, higher prices for 116 clearing platforms 149–50 decision making, speed 244 derivatives 147–58 shipowning built around 248 market, number of players in 148 decomposition 82–5 tradable investment index 155 derivatives market 99, 142, 152, 156 finance, as key 255 and container-based 154 financial crisis 12, 98 and dry bulk 142, 153, 248 financial engineering, importance 35, 58, 255 key requirements for 157 financing, function, importance 92–3 trading instruments, developing 158 firms, specialized, dominance 248 see also FFAs fiscal policy, as essential for shipowning 84 © Cambridge University Press www.cambridge.org
  3. 3. Cambridge University Press 978-0-521-76149-9 - Shipping Strategy: Innovating for Success H. C. Mult and Peter Lorange Index More information 268 i n d e x flag of convenience 62, 139 IGLOO concept 242 flexibility, importance of strategy for 42 open attitude 244 forecasting consulting firms 101 risks, guidelines for 242 see also freight rates, forecasting; market speed and focus 243 forecasting; Marsoft truisms 244 forward trading instruments see FFAs growth platforms, key to success 256 Fredriksen, use of ship operating companies growth, and political stability 8 100 growth, and Western Europe 7 freight rates 31–61 and commodities 36, 45 hedging 38, 149, 150, 154 and currency fluctuations 58 Höegh Autoliners 25, 29 and demand 33–5 hull design 10, 18, 19, 129, 179 and financial markets 46 hull shape, aqua-dynamic 178 and financially oriented entrants 57–8 human resource policies, and global and finished goods, availability 36–7 competence 251 and new capacity 47, 48 human resources see governance and newbuilding and scrapping 38–44 and port congestion 37–8 IMAREX 99, 149 and ship type 55 disadvantages 149, 150 and timing 55 industry conditions, taxation influence on 71 and trade developments 35, 36, 45 industry, shipping 3–14 container, falling 37 capital-intensive nature 11 drivers for 31, 35–6, 44, 61 demographic shifts, impact on 5–6 forecasting 31, 51–7 dispersed manufacturing 4 and shipbrokers 55 economic growth, uneven 6–8 changes in 47 globalization 3–4 customers for 54 new entrants 12 cycles paradigm 43, 51, 52 speed of change 3 difficulties of 43 trading blocs 4 freight markets 31–2 value chain 3 locking in 57 information sharing, customer service 109 model for future VLCC spot rates 42 innovating, focus on speed and talent 249 ship utilization key to 34 innovation 101, 181–2 Frontline 94, 102 and ship design 178–81 fuel consumption, and trim 181 clusters, importance for encouraging 74 environmental 183 Gearbulk, closeness to customers key 106, focus on scope 103 107, 108, 109–10 forecasting capabilities 183 Genco Shipping 188 fuel-saving, charterers valuing 182 General Maritime Corporation 88, 188 in US economy 7 geopolitics 8 J. Lauritzen 250 governance 235–47 research leading to 74 action orientation 244 Skipsteknisk 249 and dictatorship 243 see also steel, innovating and simplicity 247 innovativeness, as cluster success factor 66 balance between top team 243 integrated company, revision 89 CEO 242 integrated shipping company, decline 82 chair and board, role of 242 investing in shipping 97–100 challenges 243 investment healthy culture, issues 244 costs, increasing 10, 11 © Cambridge University Press www.cambridge.org
  4. 4. Cambridge University Press 978-0-521-76149-9 - Shipping Strategy: Innovating for Success H. C. Mult and Peter Lorange Index More information i n d e x 269 mode of 97 niche markets 15 turnaround time 35 offshore ships 27–8 iron ore, demand for 19 passenger ships 26–7 irrational exuberance 42, 118, 136 reefers 27 ro-ro 24–6, 29 J. Lauritzen 96, 202–3, 250 Norwegian focus on 24 John Frederiksen 63, 96–7 strategic advantage from IT 26 Jotun 73 tanker 16–19 Aframax 18 K Line 29 conversion to bulk 19 Kommanditgesellschaft investment funds Handysize 18 (KGs) 101 Panamax 18 Kyoto protocol 10 product tankers 18 rates, and oil prices 17 leadership 246, 252–3 Suezmax 18 style, clarity in 253 VLCC 18 learning, systematic, need for 107–8 Marsoft 53, 56 Leif Höegh 83 and independence 92 liquidity availability 246 and risk management 53 logistics, critical competence 13 Decision Support System 221 luck, key to success 60 dry bulk case 54 factors taken in to account 56 Maersk Line 132–5 limitations 57, 60, 61 difficulty with integrating IT 26 Shipping Risk Management 221 management capabilities 248–59 tanker freight model 43 management focus, driver for specialization Timing and Risk Management System 221 93–4 middleman function 257, 258 maritime network, Dutch 65 trend away from 257 market capitalization 72–3 see also using steel, shipbrokers market forces, microeconomic 7 Mitsui-O.S.K. Line 29 market forecasting 51–61 Moller-Maersk 83, 91, 101, 205–11 biases and uncertainty in data 59 container market, share 24 importance of accurate assumptions 56 see also Maersk Line need for shipowners to supplement data 57 Moore Stephens 171 market, freight derivatives 95 MTM, conversion program 19 markets, shipping 15–30 bulk carrier 19–21 New York, as powerful cluster 64 bulk, utilization rates 20 newbuilding and scrapping 38–44 Capesize 19 capacity 20, 35 Handysize 19 managing programs 136 Panamax 19 tankers, double hull requirement 18 potential for growth 20 trading orders 144 car carriers 24–6 see also shipbuilding chemical tankers 28–9 not invented here syndrome 108, 109–10 commodity strategy 15 NOX emissions, reducing 180 container 21–4 NYK 29 trend to larger ships 24 worst case scenario 21 OBO see ore-bulk-oil cruise ships 26–7 multiple markets, ability to serve 20 LNG/LPG carriers 28 OOCL, effective approach to IT 26 © Cambridge University Press www.cambridge.org
  5. 5. Cambridge University Press 978-0-521-76149-9 - Shipping Strategy: Innovating for Success H. C. Mult and Peter Lorange Index More information 270 i n d e x operating steel,100, 170–4 IT as change driver 187 annual benchmarking study 171 learning curve effect 213 competitive focus 173 liner and terminal business related 210 cost-efficiency 171, 249 logistics business 207–8 crew costs 173 niche sector, Gearbulk 212 critical success factors 170, 172, 173 niche shipping, success factor 212 customers 173 offshore supply ships 208 key dilemmas 91 strategic process design 213 outsourcing 171 cost discipline 212 shorter term focus 89 tramp ship business 207–8 options vs swaps 159 Morgan Stanley active in 204 ore-bulk-oil 19 portfolio planning 191 organizational change, constant 255 need for liquidity 58–9 organizations, networked 255 selection problem 191 OSM 172–3 portfolio strategy 190–2, 194, outsourcing 83 196–204, 232, 249 Frontline 256 A.P. Moller-Maersk 205–11 owners, relationship with users 94–5 and cash flow 191 owning steel see shipowning and focus on costs 206 and operating 95 asset choice 192–6 and trading 101–3 board, determined by 242 economies of scale 248 container liner business 206–7 pull systems 88 CSAV and specialization 206 push systems 88 diversification 190, 191, 195, 202–3 time-correlated 195 paper trading, evolution towards 99 exiting 194 perfect competition 30, 55, 258 growth patterns, changing 49 planning and control process see governance, indices for stock market sectors 193 management processes passive investing 193 policies, fiscal 71 pick the winner 195 pools 102–3 regular revision of 191 port congestion risk, challenge of understanding 200 and container industry 37 profile 250, 254 Australian 37 Seaspan as long-term model 197 capacity 37 specialization 207 effect on freight rates 37–8 stop-loss criteria 194 port delays see port congestion success factors for acquisitions 204 port delays, and dry bulk markets 52 timing and 194 portfolio management 187–214 yield or stock based 199, 200 and diversity 190, 214 ports, productivity in US, limited 138 and risk management 187, 189, 193, 212 professionalism 13, 252 asset selection 193 project initiatives, new firm structure car carriers 209 along 252 performance criteria for 194 protectionism 71 commodity sector, success factors 211 puts vs. calls 159–60 container terminals 209–11 complexity 210 rates of return, factors dictating 16 exit strategy 189 rechartering risk 16 gas carriers 208–9 research and development, impact for chartering policies 189 shipping 9 © Cambridge University Press www.cambridge.org
  6. 6. Cambridge University Press 978-0-521-76149-9 - Shipping Strategy: Innovating for Success H. C. Mult and Peter Lorange Index More information i n d e x 271 risk and revenue management 187, 215–32 risk exposure, understanding 201 Aker Kvaerner 230 Scandinavian firms 187 archetypes, risk different for each 217 risk, diversification 99 bankruptcy, critical to avoid 218 risks, trading-related, need to manage benefits 218–22 149, 150 capacity and future demand, identifying Royal Caribbean International 27 219 capital, competition for 217, 226 safety concerns 9–10 commoditization 224 scale benefits 88 currency and interest rates 223 scrapping 44 decision making, key parameters 220 Seaspan Corporation 11, 79, 198 exposure management key 215 container shipping lines 113 forecasting scenarios containerization 15 and decision maker 220 innovation through standardization 181 and timing purchases 219–22 lease-inspired niche 13 Marsoft’s approach 220 long-term charter strategy 93 need for stress-testing 220 newbuilding programme 131 setting risk levels 221 portfolio model 196–204 forward prices, importance of 231 standardization policy 88 stakeholder influences 216 transnational structure 85 hedging 218 Seatrade 27 innovations 231 sector asset management 97–9 key message 215 Sector Maritime 204 lending, portfolio approach to 225 services, top class, near clusters 63 new capital 216–17 Ship Finance International 102 Norden, and VaR approach 222 ship operating companies, largest 100 credit worthiness, perception 224 ship owning, by public companies 102 performance, dictated by investors 216 ship types, segmentation 120 probability estimation 219 shipbuilders, three biggest 119 residual values, risk around 228–9 shipbuilding 124, 129 influencing factors 229 capacity growth 33 risk for Seaspan 231 capacity, availability a factor of 118 volatility 228 financial support for 71–2 rising importance of 80 growth, banks drivers of 34 risk 217, 218, 219, 226–7 new prices 124 attitudes to 217 productivity 126 credit 224 subsidies 71 exposure, income and 224, 227–8 see also newbuilding lower market exposure 223 shipowning 139–40 management and 223–5, 229–30 adding tonnage 137–8 market 224 and operating, different time horizons minimization, securitization as 229 89–91 profile, and liquidity 89 business cycles 136 requirements for 226 charter-vessel owners 129 unintended, elimination 218 competitive focus 112–13 stop-loss management 230 container line, complexity 134 strategies 217 container ships market 127 trading results, VaR as predictor 222 container ships, newbuilding 129–35 Value at Risk (VaR) 222–3 customers 113–14 VaR, limitations 223 customers as infrastructure contractors 114 © Cambridge University Press www.cambridge.org
  7. 7. Cambridge University Press 978-0-521-76149-9 - Shipping Strategy: Innovating for Success H. C. Mult and Peter Lorange Index More information 272 i n d e x shipowning (cont.) critical success factors 85 cycles, timing in 135–7 speed reduction 179 emotional elements 89 SPFAs (Sell Purchase Forward Agreements financial management 141 for ships) 157 critical success factor 112 spot market 95 strategies 116 steady steaming 179 understanding, role of 115 steel, innovating 101, 175–83 innovation in practice 140 commercial 175 investment behavior, principles 135 competitive focus 175–6 large companies, advantageous financial customers 176, 177–8 terms 115 environmental 178–81 long-term focus 89 Marsoft 177 orderbook to fleet ratio 131 niches 176–7 scale, equivalence to scope 134 online 177 scale economies 114–15 success factors 175 scrapping, market in 138 technical 175, 178 second-hand prices 128 see also innovation segmentation of ships on order 119–24 steel, operating 100, 170–4 sentimentality in 89 see also operating steel ship acquisition, timing in 137 steel, owning 112–41 specialization 112 see also shipowning and owning steel supply and demand 127–9 steel, using see using steel and financial markets 117 stocks and shares 160–1 shipping Stolt-Nielsen 110–11 archetypes 77, 85–111 strategic issues, need for open companies 3 discussion 245 global approach 251 strategies, niche 1, 75, 79–111 need for analysis 98 clear, developing 103 crisis, overcapacity as 50 subsidies 71 funds, investment in 100 success, new innovations for 80 industry, success factors 255 succession planning 240 markets, atomistic nature of 55 see also family business dimension, ocean, stability and growth 8 succession types of, differing success factors 139 sulfur fuels, low 180 world 1, 75, 79–111 ships, categories 120 T. Klaveness 151–2 ships, demand, macro factors 138–9 technology, changing 9 ships, new, demand and supply for 118–120 Teekay 81 shipyards, growth 124, 127 terrorism 9 silo thinking 108, 109, 251 TEU 11 Singapore, growth in maritime strategies 113 industry 70 TK Gas Partners 102 single-hull tankers 10, 19, 129 TMT Corporation 150–1 Skaugen I.M. 81 TPM 152 Skipsteknisk 176, 177 trade, free, barriers to 36 specialist firm, types 85–7 trading instruments, new 157 specialization 80–4, 86, 91–2 trading terms 159–63 A.P. Moller-Maersk 83 tramp shipping, Norwegian owners, benchmarking as contributor to 87 focus on 24 core activities, aid to defining 83 transaction costs, and specialization 91–2 © Cambridge University Press www.cambridge.org
  8. 8. Cambridge University Press 978-0-521-76149-9 - Shipping Strategy: Innovating for Success H. C. Mult and Peter Lorange Index More information i n d e x 273 Tufton Oceanic 204 shipbrokers 163–4, 168 turbulence, regional instability reason Cargill 165 for 8 transaction oriented 164 success factors 142, 143, 195 UBS Blue Sea Index 155–6 time charters 161–3 uncertainty, need to prepare Western Bulk 162–3 for 59 see also operating using steel 142 bargaining power, shift 146 value chain, integrated 82, 104 branding 146–7 decomposition of 82 capital markets, access 142 economic, stability needed for 8 customers 144–6, 249 enablers 84 customer, final 145 trend to dispersal 84 demand-side factors 143 value creation, volatility in 253–4 derivatives 147–8, 168 van Oord 81 DFDS 166–7 Vietnam, low-cost manufacturing 4 financial capabilities, key 142 Wallenius Wilhelmsen Logistics 25, 29 Frontline 161 World Trade Organization 36 Golden Ocean 162 world trade 5 purchase options 163 and world shipping 8 routes dictated by customers 145 yourship.com 177 © Cambridge University Press www.cambridge.org

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