Strategies in “Shipping Business Management”

Alexandros M Goulielmos

doi:10.4236/me.2017.810083

Abstract

The paper deals with the tactics and strategies applied by shipping companies. During current depression in the dry cargo sector, shipowners adopted two tactics: to ‘survive’ and ‘look after opportunities.’ Shipowners are mostly reactive-managers and apply Porter’s strategy of ‘cost leadership’ mainly through economies of scale, cutting-down fleet’s average age as well total costs. This has been applied in 1986 and in 2016. The poverty of research about shipping strategic issues, given also that nowadays all management functions became strategic, is worth noting. Lately (2013) maritime economists showed an interest in strategies. This we believe is due to the fact that many maritime companies are now listed and data are now available. The need of shipowners to find funds for the larger and more expensive ships, led them to ‘stock exchanges.’ This led into the creation of two separate classes of shipping companies: those that remain outside the stock exchanges, which we call them ‘traditional’ and the ‘modern’ ––those inside. Certain economists argued that there is an antagonism between the two classes and that the strategies of the second are unquestionably superior and more profitable than the first’s…Is this true? We do not blame shipowners for having a limited number of strategies, (excluding liners), as ‘Academia left them helpless’; despite GARCHian, neural networking and chaotic models, no forecasting at firm’s level is used or trusted so far. Shipowners feel that a shipping crisis is coming, but they do not know when and for how long it will last…

Highlights

The need of shipowners to find funds for the larger and more expensive ships mentioned above, led them to “stock exchanges”. This led into the creation of two separate classes of shipping companies: 1) those that remain outside stock exchanges, which we called them “traditional” and 2) the “modern”—those inside
Greek shipping managers acting in a traditional way—from father to son— they apply a standard strategy depression after depression ignoring cycles but exploiting them: they buy at rock bottom prices larger and bigger ships and sell thereafter smaller and older ones
This paper revealed that shipping companies used only tactics14

Summary

Introduction

Even in a very volatile industry like shipping, it appears more frequently, especially after 2004 (Niamie, 2014 [1])1 No doubt, it is prestigious for a shipping manager to design a strategy... Strategies based on managing prices are invalid in bulk shipping, as the freight rate is determined by demand, supply and time only, and is given for the individual shipping company (sign of pure competition). The CEO of “Overseas Shipholding Group” (in 2006) argued that in order for one to make money in shipping, he/she has to run: safe-secure-reliable shipsand invest every year so that to do things better: there is, out there, a race to quality He added that shipping, as time went-by, became more professional, and more demanding. We can say that hopeful signs, came from research published recently about “maritime logistics companies” (Cariou et al, 2015 [15])

Aim and Structure of Paper

A Short History of Strategic “Shipping Business Management”

Third-Party Ship Managers

Findings

Conclusions