Investigation into the optimal fleet employment strategy with concentration on the supramax bulk carrier east of Suez market

• Main Author: Long, Matthew Jiwei
• Other Authors: Soh Woei Liang
• Format: Final Year Project
• Language: English
• Published: 2014
• Subjects: DRNTU::Engineering::Maritime studies::Maritime management and business
• Online Access: http://hdl.handle.net/10356/61200
• Institution: Nanyang Technological University

In this research we investigate the optimal fleet acquisition strategy for a shipowner who is operating a fleet of 10 Supramax vessels for the period 2006 to 2012. Part 1 of the research focuses on cost minimization, which is largely dependent on how a shipowner decides to acquire his vessels. The main focus is on the three main acquisition methods – Newbuild, Sale and Purchase and Time-Charters. The aim of this paper is to identify which combination of acquisition methods would be the least costly to a shipowner during the period of 2006 to 2012. We started off by first looking at individual vessel acquisition costs and its related costs (Interest Expense, Operating & Dry-docking Expenses and Depreciation Expense) and deriving the lowest costs of acquisition for each acquisition method category (Newbuild, Sale & Purchase, consecutive 1-Year Time-Charter, and different permutations of utilizing 3-Year Time-Charters and 1-Year Time Charters.) We then further proceeded on to determine the possible acquisition portfolio combinations by taking into consideration the possible employment strategies based on logical elimination of acquisition-employment strategies that would never be profitable and arriving at the 13 different combinations of acquisition-employment strategy. The results show that Newbuilds which were ordered in 2003 and delivered in 2006 are the cheapest form of vessel acquisition strategy for the period of 2006 to 2012. And thus a vessel owner, who aims to only minimize costs would utilize an asset class which is mainly formed out of Newbuilds.