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

• Main Author: Rusli, Adelina Astra
• Other Authors: Soh, Woei Liang
• Format: Final Year Project
• Language: English
• Published: 2014
• Subjects: DRNTU::Engineering::Maritime studies
• Online Access: http://hdl.handle.net/10356/61211
• Institution: Nanyang Technological University

In this research we investigate the optimal fleet employment strategy by looking at the 646,646 permutations derived from 13 different combinations of acquisition-employment strategy for a portfolio of 10 Supramax vessels for the period 2006 to 2012. Part 2 of the research focuses on revenue maximization, which is largely dependent on how a ship owner decides to employ his ships and focuses on 2 main employment methods – Time-charter and Voyage-charter. The aim of this paper is to identify which employment method would be able to generate the most earnings, specifically to prove 1) whether employing the ships on Voyage-charters is more volatile than on Time-charter by comparing the changes in yearly revenue and 2) whether returns on a portfolio can be maximized with long-term Time-charter in and short-term Time-charter out. The results show that Voyage-charters have relatively moderate volatility in terms of changes in yearly revenue with long-term and short-term Time-charters’ volatility lying in the two extreme ends. A ship owner who prefers to avoid uncertainty and wishes to earn a stable flow of income should opt for T/C (1, 3, 3) as his main employment strategy, however this option has the lowest revenue. It is also found that portfolios with combinations of long-term Time-charter in and short-term Time-charter out fare badly, lying in the 10th percentile of overall portfolio performance. The best combination comprises of acquiring Newbuild vessels and employing them on T/C (1, 1, 3, 1, 1) to maximize ship owner’s revenue.