Ocean Carriers Case Study
Ocean Carriers
Case Study
Submitted by
Fozia Abid
Maryam Noor
Nadia Farooq
Umar Farooq
Hamza Tariq
Muhammad Mohsin
Lahore School of Economics
Ocean Carriers Report
The fragmented shipping industry is one of the most essential industries for continuous globalization and growth; industry prospects are surprisingly stable in contrast to the normal logistics businesses that are highly cyclical. The factors that drive average daily hire rates are the age of vessels, market condition, the supply and demand and the size of the ships.
Daily hire rates are found by the interaction of the supply and demand of vessels. The supply is influence by market demand for shipping capacity, the efficiency and size of vessels and the rate of scrapping. The demand is influenced by the situation of the world economy, technological changes and trade patterns. There is a strong positive relationship between spot/time charter hire rates and demand for iron ore vessel shipments (exhibition 5). This is due to the fact that rates are set by current market conditions and expectations that also influences investment decisions in new vessels.
Spot hire rates are expected to decrease next year because there is a big number of vessels order for next year, according to exhibit 3. Compared to exhibit 2, it’s a big proportion. So the supply will be large, leading the rates to decrease. In the next few years, there will be a large supply of new capsize vessels. And also, there will be some vessels that are over 24 years and will be scrapped. But the old vessels just total a small portion. So the influence that brought by the old vessels’ scrap is minor. Another point is, if Australia and India ore export is going well in the next few years, it would be very good for this industry and make the hire rates decrease.
According to calculation, the 15 years’ plan will generate positive NPV as compared to NPV of 25 years plan.
The forecast is highly optimistic about the industry’s
Case Study
Submitted by
Fozia Abid
Maryam Noor
Nadia Farooq
Umar Farooq
Hamza Tariq
Muhammad Mohsin
Lahore School of Economics
Ocean Carriers Report
The fragmented shipping industry is one of the most essential industries for continuous globalization and growth; industry prospects are surprisingly stable in contrast to the normal logistics businesses that are highly cyclical. The factors that drive average daily hire rates are the age of vessels, market condition, the supply and demand and the size of the ships.
Daily hire rates are found by the interaction of the supply and demand of vessels. The supply is influence by market demand for shipping capacity, the efficiency and size of vessels and the rate of scrapping. The demand is influenced by the situation of the world economy, technological changes and trade patterns. There is a strong positive relationship between spot/time charter hire rates and demand for iron ore vessel shipments (exhibition 5). This is due to the fact that rates are set by current market conditions and expectations that also influences investment decisions in new vessels.
Spot hire rates are expected to decrease next year because there is a big number of vessels order for next year, according to exhibit 3. Compared to exhibit 2, it’s a big proportion. So the supply will be large, leading the rates to decrease. In the next few years, there will be a large supply of new capsize vessels. And also, there will be some vessels that are over 24 years and will be scrapped. But the old vessels just total a small portion. So the influence that brought by the old vessels’ scrap is minor. Another point is, if Australia and India ore export is going well in the next few years, it would be very good for this industry and make the hire rates decrease.
According to calculation, the 15 years’ plan will generate positive NPV as compared to NPV of 25 years plan.
The forecast is highly optimistic about the industry’s