cambridge university press - ubs blue sea index - freight derivatives - ffa - ilija murisic

Index

acquisitions, approach by Georgiopoulos,Peter 250

Aegean Marine Petroleum Network 188agents see using, shipbrokersarchetypes 251critical success factors 86, 111four specialized 187, 215–32

asset bubble 42asset class, derivatives as 152asset ownership, split from operation 84asset play strategy 52, 194selection defined 193timing 100

Awilco 97

Baltic Exchange 148Basel I 225Basel II Accord 56, 222, 225–6unintended outcome 226

benchmarking, and specialization 87bias, hindsight 60biases, in data 59branding 104coherent strategy 105cruise lines 27customer focus 105shipbuilding segments 27

brokerage, in-house 258brokers, cost-benefits 257bulk carriers, safety 19bureaucracy, increased 252business order, and political forces 8business views, juxtaposing varied 108BW group, conversion program 19

Capesize, winning strategic choice 195capital, abundance of 11–12and competitive advantage 12scarcity 11

capitalization, significance of distribution 72Carnival 27

cartels 45change, response to 14China 22, 124container shipping 4demand growth 6, 47, 48, 259energy efficiency 22environmental issues 22iron ore 33shipbuilding growth 54, 124

Clarkson Shipping Hedge Fund 155,198–9, 231

Clipper, diversification 92clusters 62and human talent 67and national state entities 65–9, 84–5and specialization 84composition 69–70concept as paramount 63Danish 73Dutch 65, 68focus in 64global vs. national 65–9, 73–4logistical/port 62, 74maritime, financially oriented 62network, importance of 63, 70Norwegian 69policy 62, 73prime global shipping 62–3prominent companies not in 63shipping 62–75secondary 64success factors 64–5, 66, 139

CO2 emissions, environmental challenge10, 180

commoditiesdemand growth 4–5freight rates 36supply shortages 4

commodity business, shipping as 36, 44–50competition, in shipping industry 79competitiveness 10, 138

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competitors, differentiation from 258complexity 256consolidation 80horizontal 83

container-based shipping, demandgrowth 4

containerization, impact on industry 21Contracts of Affreightment

(CoA) 95corporate culture 79cost, capital, success factor 102costs, need for control 256credit crisis 7, 11, 80tighter financing due to 116

cultureglobal vs. national 94headquarters 94risk-averse 252trading activities 94

cultures, five, in shipping firm 254currency, speculative, risk 58customer insight, key 109customer relations firms 88strategies for 105–10trading as focus 142, 248

customer satisfaction, 104customer value, critical success

factors 245customer view, importance of 245customer-based network, importance of 91customers, inspiring solutions

108, 109customs barriers 72cycles, shipping, 118long-term view 118surviving 118

Damen shipyard 126Danaos 13and IT services business 92

debt, higher prices for 116decision making, speed 244shipowning built around 248

decomposition 82–5derivatives market 99, 142, 152, 156

and container-based 154and dry bulk 142, 153, 248key requirements for 157trading instruments, developing 158see also FFAs

DFA (Demolition Forward Agreements) 157differentiation, positive 258Diogenes Fund 100double hull tankers 102double hulls, requirement 18Dynamic Trimming Assistant 181

economic performance 253–4economic stability 6–8employee development 108entrepreneurs, internal 246

Wang, Gerry 246environmental concerns 9–10equity, ability to raise 246equity, need for sufficient 112EUKOR 25, 29exit strategies, options 42, 51experimentation, need for 107Exxon Valdez 9, 216

family business dimension 99, 235–41archetype 235–47congruence between ownership and

management 235decline 238fragmentation 239Klaveness 239Leif Höegh & Co 239longer term view 236management competence 238orientation 237publicly traded firms 235shareholder perception 238sibling rivalry 238stagnation 238success factors 236succession 240, 241Tschudi & Eitzen 239

FFAs 99, 147–58, 167and new liquidity 152clearing platforms 149–50derivatives 147–58market, number of players in 148tradable investment index 155

finance, as key 255financial crisis 12, 98financial engineering, importance 35, 58, 255financing, function, importance 92–3firms, specialized, dominance 248fiscal policy, as essential for shipowning 84

index 267






flag of convenience 62, 139flexibility, importance of strategy for 42forecasting consulting firms 101

see also freight rates, forecasting; marketforecasting; Marsoft

forward trading instruments see FFAsFredriksen, use of ship operating companies

100freight rates 31–61and commodities 36, 45and currency fluctuations 58and demand 33–5and financial markets 46and financially oriented entrants 57–8and finished goods, availability 36–7and new capacity 47, 48and newbuilding and scrapping 38–44and port congestion 37–8and ship type 55and timing 55and trade developments 35, 36, 45container, falling 37drivers for 31, 35–6, 44, 61forecasting 31, 51–7and shipbrokers 55changes in 47customers for 54cycles paradigm 43, 51, 52difficulties of 43

freight markets 31–2locking in 57model for future VLCC spot rates 42ship utilization key to 34

Frontline 94, 102fuel consumption, and trim 181

Gearbulk, closeness to customers key 106,107, 108, 109–10

Genco Shipping 188General Maritime Corporation 88, 188geopolitics 8governance 235–47action orientation 244and dictatorship 243and simplicity 247balance between top team 243CEO 242chair and board, role of 242challenges 243healthy culture, issues 244

IGLOO concept 242open attitude 244risks, guidelines for 242speed and focus 243truisms 244

growth platforms, key to success 256growth, and political stability 8growth, and Western Europe 7

hedging 38, 149, 150, 154Höegh Autoliners 25, 29hull design 10, 18, 19, 129, 179hull shape, aqua-dynamic 178human resource policies, and global

competence 251human resources see governance

IMAREX 99, 149disadvantages 149, 150

industry conditions, taxation influence on 71industry, shipping 3–14capital-intensive nature 11demographic shifts, impact on 5–6dispersed manufacturing 4economic growth, uneven 6–8globalization 3–4new entrants 12speed of change 3trading blocs 4value chain 3

information sharing, customer service 109innovating, focus on speed and talent 249innovation 101, 181–2and ship design 178–81clusters, importance for encouraging 74environmental 183focus on scope 103forecasting capabilities 183fuel-saving, charterers valuing 182in US economy 7J. Lauritzen 250research leading to 74Skipsteknisk 249see also steel, innovating

innovativeness, as cluster success factor 66integrated company, revision 89integrated shipping company, decline 82investing in shipping 97–100investmentcosts, increasing 10, 11

268 index






mode of 97turnaround time 35

iron ore, demand for 19irrational exuberance 42, 118, 136

J. Lauritzen 96, 202–3, 250John Frederiksen 63, 96–7Jotun 73

K Line 29Kommanditgesellschaft investment funds

(KGs) 101Kyoto protocol 10

leadership 246, 252–3style, clarity in 253

learning, systematic, need for 107–8Leif Höegh 83liquidity availability 246logistics, critical competence 13luck, key to success 60

Maersk Line 132–5difficulty with integrating IT 26

management capabilities 248–59management focus, driver for specialization

93–4maritime network, Dutch 65market capitalization 72–3market forces, microeconomic 7market forecasting 51–61biases and uncertainty in data 59importance of accurate assumptions 56need for shipowners to supplement data 57

market, freight derivatives 95markets, shipping 15–30bulk carrier 19–21bulk, utilization rates 20Capesize 19Handysize 19Panamax 19potential for growth 20

car carriers 24–6chemical tankers 28–9commodity strategy 15container 21–4trend to larger ships 24worst case scenario 21

cruise ships 26–7LNG/LPG carriers 28

niche markets 15offshore ships 27–8passenger ships 26–7reefers 27ro-ro 24–6, 29Norwegian focus on 24

strategic advantage from IT 26tanker 16–19Aframax 18conversion to bulk 19Handysize 18Panamax 18product tankers 18rates, and oil prices 17Suezmax 18VLCC 18

Marsoft 53, 56and independence 92and risk management 53Decision Support System 221dry bulk case 54factors taken in to account 56limitations 57, 60, 61Shipping Risk Management 221tanker freight model 43Timing and Risk Management System 221

middleman function 257, 258trend away from 257see also using steel, shipbrokers

Mitsui-O.S.K. Line 29Moller-Maersk 83, 91, 101, 205–11

container market, share 24see also Maersk Line

Moore Stephens 171MTM, conversion program 19

New York, as powerful cluster 64newbuilding and scrapping 38–44

capacity 20, 35managing programs 136tankers, double hull requirement 18trading orders 144see also shipbuilding

not invented here syndrome 108, 109–10NOX emissions, reducing 180NYK 29

OBO see ore-bulk-oilmultiple markets, ability to serve 20

OOCL, effective approach to IT 26

index 269






operating steel,100, 170–4annual benchmarking study 171competitive focus 173cost-efficiency 171, 249crew costs 173critical success factors 170, 172, 173customers 173key dilemmas 91outsourcing 171shorter term focus 89

options vs swaps 159ore-bulk-oil 19organizational change, constant 255organizations, networked 255OSM 172–3outsourcing 83Frontline 256

owners, relationship with users 94–5owning steel see shipowningand operating 95and trading 101–3economies of scale 248pull systems 88push systems 88

paper trading, evolution towards 99perfect competition 30, 55, 258planning and control process see governance,

management processespolicies, fiscal 71pools 102–3port congestionand container industry 37Australian 37capacity 37effect on freight rates 37–8

port delays see port congestionport delays, and dry bulk markets 52portfolio management 187–214and diversity 190, 214and risk management 187, 189, 193, 212asset selection 193car carriers 209performance criteria for 194

commodity sector, success factors 211container terminals 209–11complexity 210

exit strategy 189gas carriers 208–9chartering policies 189

IT as change driver 187learning curve effect 213liner and terminal business related 210logistics business 207–8niche sector, Gearbulk 212niche shipping, success factor 212offshore supply ships 208strategic process design 213cost discipline 212

tramp ship business 207–8Morgan Stanley active in 204

portfolio planning 191need for liquidity 58–9selection problem 191

portfolio strategy 190–2, 194,196–204, 232, 249

A.P. Moller-Maersk 205–11and cash flow 191and focus on costs 206asset choice 192–6board, determined by 242container liner business 206–7CSAV and specialization 206diversification 190, 191, 195, 202–3time-correlated 195

exiting 194growth patterns, changing 49indices for stock market sectors 193passive investing 193pick the winner 195regular revision of 191risk, challenge of understanding 200profile 250, 254

Seaspan as long-term model 197specialization 207stop-loss criteria 194success factors for acquisitions 204timing and 194yield or stock based 199, 200

ports, productivity in US, limited 138professionalism 13, 252project initiatives, new firm structure

along 252protectionism 71puts vs. calls 159–60

rates of return, factors dictating 16rechartering risk 16research and development, impact for

shipping 9

270 index






risk and revenue management 187, 215–32Aker Kvaerner 230archetypes, risk different for each 217bankruptcy, critical to avoid 218benefits 218–22capacity and future demand, identifying

219capital, competition for 217, 226commoditization 224currency and interest rates 223decision making, key parameters 220exposure management key 215forecasting scenariosand decision maker 220and timing purchases 219–22Marsoft’s approach 220need for stress-testing 220setting risk levels 221

forward prices, importance of 231stakeholder influences 216

hedging 218innovations 231key message 215lending, portfolio approach to 225new capital 216–17Norden, and VaR approach 222credit worthiness, perception 224

performance, dictated by investors 216probability estimation 219residual values, risk around 228–9influencing factors 229risk for Seaspan 231volatility 228rising importance of 80

risk 217, 218, 219, 226–7attitudes to 217credit 224exposure, income and 224, 227–8lower market exposure 223management and 223–5, 229–30market 224minimization, securitization as 229profile, and liquidity 89requirements for 226unintended, elimination 218

stop-loss management 230strategies 217trading results, VaR as predictor 222Value at Risk (VaR) 222–3VaR, limitations 223

risk exposure, understanding 201Scandinavian firms 187

risk, diversification 99risks, trading-related, need to manage

149, 150Royal Caribbean International 27

safety concerns 9–10scale benefits 88scrapping 44Seaspan Corporation 11, 79, 198

container shipping lines 113containerization 15innovation through standardization 181lease-inspired niche 13long-term charter strategy 93newbuilding programme 131portfolio model 196–204standardization policy 88transnational structure 85

Seatrade 27sector asset management 97–9Sector Maritime 204services, top class, near clusters 63Ship Finance International 102ship operating companies, largest 100ship owning, by public companies 102ship types, segmentation 120shipbuilders, three biggest 119shipbuilding 124, 129

capacity growth 33capacity, availability a factor of 118financial support for 71–2growth, banks drivers of 34new prices 124productivity 126subsidies 71see also newbuilding

shipowning 139–40adding tonnage 137–8and operating, different time horizons

89–91business cycles 136charter-vessel owners 129competitive focus 112–13container line, complexity 134container ships market 127container ships, newbuilding 129–35customers 113–14customers as infrastructure contractors 114

index 271






shipowning (cont.)cycles, timing in 135–7emotional elements 89financial management 141critical success factor 112strategies 116understanding, role of 115

innovation in practice 140investment behavior, principles 135large companies, advantageous financial

terms 115long-term focus 89orderbook to fleet ratio 131scale, equivalence to scope 134scale economies 114–15scrapping, market in 138second-hand prices 128segmentation of ships on order 119–24sentimentality in 89ship acquisition, timing in 137specialization 112supply and demand 127–9and financial markets 117

shippingarchetypes 77, 85–111companies 3global approach 251need for analysis 98

crisis, overcapacity as 50funds, investment in 100industry, success factors 255markets, atomistic nature of 55ocean, stability and growth 8types of, differing success factors 139world 1, 75, 79–111

ships, categories 120ships, demand, macro factors 138–9ships, new, demand and supply for 118–120shipyards, growth 124, 127silo thinking 108, 109, 251Singapore, growth in maritime

industry 70single-hull tankers 10, 19, 129Skaugen I.M. 81Skipsteknisk 176, 177specialist firm, types 85–7specialization 80–4, 86, 91–2A.P. Moller-Maersk 83benchmarking as contributor to 87core activities, aid to defining 83

critical success factors 85speed reduction 179SPFAs (Sell Purchase Forward Agreements

for ships) 157spot market 95steady steaming 179steel, innovating 101, 175–83commercial 175competitive focus 175–6customers 176, 177–8environmental 178–81Marsoft 177niches 176–7online 177success factors 175technical 175, 178see also innovation

steel, operating 100, 170–4see also operating steel

steel, owning 112–41see also shipowning and owning steel

steel, using see using steelstocks and shares 160–1Stolt-Nielsen 110–11strategic issues, need for open

discussion 245strategies, niche 1, 75, 79–111clear, developing 103

subsidies 71success, new innovations for 80succession planning 240

see also family business dimension,succession

sulfur fuels, low 180

T. Klaveness 151–2technology, changing 9Teekay 81terrorism 9TEU 11strategies 113

TK Gas Partners 102TMT Corporation 150–1TPM 152trade, free, barriers to 36trading instruments, new 157trading terms 159–63tramp shipping, Norwegian owners,

focus on 24transaction costs, and specialization 91–2

272 index






Tufton Oceanic 204turbulence, regional instability reason

for 8

UBS Blue Sea Index 155–6uncertainty, need to prepare

for 59using steel 142bargaining power, shift 146branding 146–7capital markets, access 142customers 144–6, 249customer, final 145

demand-side factors 143derivatives 147–8, 168DFDS 166–7financial capabilities,

key 142Frontline 161Golden Ocean 162purchase options 163routes dictated by

customers 145

shipbrokers 163–4, 168Cargill 165transaction oriented 164

success factors 142, 143, 195time charters 161–3Western Bulk 162–3see also operating

value chain, integrated 82, 104decomposition of 82economic, stability needed for 8enablers 84trend to dispersal 84

value creation, volatility in 253–4van Oord 81Vietnam, low-cost manufacturing 4

Wallenius Wilhelmsen Logistics 25, 29World Trade Organization 36world trade 5

and world shipping 8

yourship.com 177

index 273






cambridge university press - ubs blue sea index - freight derivatives - ffa - ilija murisic

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