Drybulk Shipping - Strategic Analysis
Drybulk Shipping – Strategic Analysis
By Hilmi Armoush HA519
Table of Contents
Executive Summary 2
Macroeconomic Drivers 3
PESTEL Analysis 3
Key Drivers 4
Critical Uncertainties 4
Future Scenarios 6
Sailing in the Dark 6
Imbalance Seas 6
The Greener Wins 7
Sea Marathon 8
Competitive Analyses – Drybulk Shipping 8
Market Outlook 8
Porter Five Forces Model 9 Entry Barriers 9 Threat of Substitutes 10 Bargaining Power of Buyers 10 Bargaining Power of Suppliers 10 Rivalry between Established Competitions 10
Strategic Views 11
Key Success Factors 11
Strategic Management 11
Conclusion 12
References 13
Executive Summary
In 2008, the global economic crises had a strong impact on the maritime market. A drastic decline of freight rates were immediately visible to below operating cost and many shipping companies found themselves in a very unviable position, struggling to cover costs and sustain existence.
Trade slowed down with a 4.7% growth compared to 5.7% in 2007, total volume of drybulk cargoes loaded in 2008 stood at 5.4 billion tons out of which major bulk trade estimated at 2.1 billion tons. On the other hand, drybulk fleet increased from 368 in 2007 to 391 million-deadweight in 2008 while order book was estimated at 289 million-deadweight. (UNCTAD 2009)
As a result, in 2008 fleet productivity was decreased to 5.36 tons/dwt and to 28.66 tons-miles, while Baltic Dry Index slumped from its peak 11,793 in the middle of 2008 to 1,100 points in November. In 2008, drybulk carriers reported for demolition reached 3.1 million-deadweight – the highest since 2003 and is expected to have grown in 2009.
Due to some positive signals in 2009-2010 in the freight market, and comparative lower vessel prices, many owners are now considering to enter the market, or increase their fleet through mergers and acquisitions.
Until 2008, it seemed that many players forgot about the cyclical nature of the industry, regardless, what’s important is: Did
By Hilmi Armoush HA519
Table of Contents
Executive Summary 2
Macroeconomic Drivers 3
PESTEL Analysis 3
Key Drivers 4
Critical Uncertainties 4
Future Scenarios 6
Sailing in the Dark 6
Imbalance Seas 6
The Greener Wins 7
Sea Marathon 8
Competitive Analyses – Drybulk Shipping 8
Market Outlook 8
Porter Five Forces Model 9 Entry Barriers 9 Threat of Substitutes 10 Bargaining Power of Buyers 10 Bargaining Power of Suppliers 10 Rivalry between Established Competitions 10
Strategic Views 11
Key Success Factors 11
Strategic Management 11
Conclusion 12
References 13
Executive Summary
In 2008, the global economic crises had a strong impact on the maritime market. A drastic decline of freight rates were immediately visible to below operating cost and many shipping companies found themselves in a very unviable position, struggling to cover costs and sustain existence.
Trade slowed down with a 4.7% growth compared to 5.7% in 2007, total volume of drybulk cargoes loaded in 2008 stood at 5.4 billion tons out of which major bulk trade estimated at 2.1 billion tons. On the other hand, drybulk fleet increased from 368 in 2007 to 391 million-deadweight in 2008 while order book was estimated at 289 million-deadweight. (UNCTAD 2009)
As a result, in 2008 fleet productivity was decreased to 5.36 tons/dwt and to 28.66 tons-miles, while Baltic Dry Index slumped from its peak 11,793 in the middle of 2008 to 1,100 points in November. In 2008, drybulk carriers reported for demolition reached 3.1 million-deadweight – the highest since 2003 and is expected to have grown in 2009.
Due to some positive signals in 2009-2010 in the freight market, and comparative lower vessel prices, many owners are now considering to enter the market, or increase their fleet through mergers and acquisitions.
Until 2008, it seemed that many players forgot about the cyclical nature of the industry, regardless, what’s important is: Did
References: * World Trade Organization, (2010). (online) Available from http://www.wto.org (accessed on 14.03.2010) * United Nations Conference on Trade and Development UNCTAD, (2010). Review of maritime studies 2009 (online) available from http://r0.unctad.org/ttl (accessed on 12.03.2010) * Martin Stopford (2008), Maritime Economics (3rd edition), Routledge. * Robert M. Grant (2008), Contemporary Strategy Analysis (6th edition), Wiley * United Nation Framework for Climate Change Convention UNFCCC, (2010). (Online) Available from http://unfccc.int/2860.php (accessed on 14.03.10). * International Maritime Organization IMO, (2010). (Online) available from http://www.imo.org (accessed on 12.03.2010).