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33 pages/≈9075 words
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Harvard
Subject:
Management
Type:
Dissertation
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English (U.S.)
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Topic:
The Impact Of Container Slot Excess Capacity With Regard To Ocean Freights (Dissertation Sample)
Instructions:
THE IMPACT OF CONTAINER SLOT EXCESS CAPACITY WITH REGARD TO OCEAN FREIGHTS
source..Content:
THE IMPACT OF CONTAINER SLOT EXCESS CAPACITY WITH REGARD TO OCEAN FREIGHTS
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Table of Contents
TOC \o "1-3" \h \z \u HYPERLINK \l "_Toc482138813" Abstract PAGEREF _Toc482138813 \h 5
HYPERLINK \l "_Toc482138814" 1. Introduction PAGEREF _Toc482138814 \h 7
HYPERLINK \l "_Toc482138815" 1.1. Background Review PAGEREF _Toc482138815 \h 7
HYPERLINK \l "_Toc482138816" 1.2. Problem Statement PAGEREF _Toc482138816 \h 8
HYPERLINK \l "_Toc482138817" 1.3. Research Aim PAGEREF _Toc482138817 \h 8
HYPERLINK \l "_Toc482138818" 1.4. Research Objectives PAGEREF _Toc482138818 \h 9
HYPERLINK \l "_Toc482138819" 1. 5. Purpose of the Study PAGEREF _Toc482138819 \h 9
HYPERLINK \l "_Toc482138820" 1.6. Research Questions PAGEREF _Toc482138820 \h 9
HYPERLINK \l "_Toc482138821" 1.7. Thesis Structure PAGEREF _Toc482138821 \h 10
HYPERLINK \l "_Toc482138822" 2. Literature Review PAGEREF _Toc482138822 \h 11
HYPERLINK \l "_Toc482138823" 2.1. Brief History of Liner Shipping PAGEREF _Toc482138823 \h 11
HYPERLINK \l "_Toc482138824" 2.2. Excess Capacity in Liner Shipping PAGEREF _Toc482138824 \h 12
HYPERLINK \l "_Toc482138825" 2.2.1. Spare Capacity Statistics PAGEREF _Toc482138825 \h 13
HYPERLINK \l "_Toc482138826" 2.3. Causes of Excess Capacity in Liner Shipping PAGEREF _Toc482138826 \h 14
HYPERLINK \l "_Toc482138827" 2.3.1. Natural Monopoly PAGEREF _Toc482138827 \h 14
HYPERLINK \l "_Toc482138828" 2.3.2. Theory of the Core PAGEREF _Toc482138828 \h 16
HYPERLINK \l "_Toc482138829" 2.3.3. Government Policies PAGEREF _Toc482138829 \h 16
HYPERLINK \l "_Toc482138830" 2.3.4. Economic Recession PAGEREF _Toc482138830 \h 17
HYPERLINK \l "_Toc482138831" 2.3.5. Non-capacity Issues Facing the Liner Shipping Industry PAGEREF _Toc482138831 \h 18
HYPERLINK \l "_Toc482138832" 2.3.6. Volatile Freight Rates PAGEREF _Toc482138832 \h 18
HYPERLINK \l "_Toc482138833" 2.3.7. Piracy PAGEREF _Toc482138833 \h 18
HYPERLINK \l "_Toc482138834" 2.3.8. Labor Shortages PAGEREF _Toc482138834 \h 19
HYPERLINK \l "_Toc482138835" 2.4. Effects of Overcapacity in in the Industry PAGEREF _Toc482138835 \h 20
HYPERLINK \l "_Toc482138836" 2.4.1. Domino Effect PAGEREF _Toc482138836 \h 20
HYPERLINK \l "_Toc482138837" 2.4.2. Ceasing Leasing of Contracts PAGEREF _Toc482138837 \h 21
HYPERLINK \l "_Toc482138838" 2.4.3. Price Competition PAGEREF _Toc482138838 \h 21
HYPERLINK \l "_Toc482138839" 2.3.4. Job Losses PAGEREF _Toc482138839 \h 22
HYPERLINK \l "_Toc482138840" 2.3.5. Financial Losses and Bankruptcy PAGEREF _Toc482138840 \h 23
HYPERLINK \l "_Toc482138841" 2.4. Cost Cutting Strategies Pursued by container Shipping Firms Arising from Overcapacity PAGEREF _Toc482138841 \h 23
HYPERLINK \l "_Toc482138842" 2.4.1. Regulate New Orders to keep Capacity Growth in Check PAGEREF _Toc482138842 \h 24
HYPERLINK \l "_Toc482138843" 2.4.2. Terminate or Postpone Orders PAGEREF _Toc482138843 \h 24
HYPERLINK \l "_Toc482138844" 2.4.3. Pursue Slow Steaming to Save on Bunker Costs PAGEREF _Toc482138844 \h 24
HYPERLINK \l "_Toc482138845" 2.4.4. Withdrawing Existing Tonnage PAGEREF _Toc482138845 \h 25
HYPERLINK \l "_Toc482138846" 2.4.5. Demolishing Older Vessels PAGEREF _Toc482138846 \h 25
HYPERLINK \l "_Toc482138847" 2.5. Conclusion PAGEREF _Toc482138847 \h 26
HYPERLINK \l "_Toc482138848" 3. Methodology PAGEREF _Toc482138848 \h 27
HYPERLINK \l "_Toc482138849" 3.1. Research Philosophy PAGEREF _Toc482138849 \h 27
HYPERLINK \l "_Toc482138850" 3.2. Research Approach PAGEREF _Toc482138850 \h 27
HYPERLINK \l "_Toc482138851" 3.3. Research Design PAGEREF _Toc482138851 \h 27
HYPERLINK \l "_Toc482138852" 3.4. Research Strategy PAGEREF _Toc482138852 \h 28
HYPERLINK \l "_Toc482138853" 3.5. Research Methods PAGEREF _Toc482138853 \h 28
HYPERLINK \l "_Toc482138854" 3.5.1. Sample Size and Techniques PAGEREF _Toc482138854 \h 28
HYPERLINK \l "_Toc482138855" 3.5.6. Secondary and Primary Data Sources PAGEREF _Toc482138855 \h 29
HYPERLINK \l "_Toc482138856" 3.6. Data Analysis Approach PAGEREF _Toc482138856 \h 29
HYPERLINK \l "_Toc482138857" 3.7. Conclusion PAGEREF _Toc482138857 \h 30
HYPERLINK \l "_Toc482138858" 4. Results PAGEREF _Toc482138858 \h 31
HYPERLINK \l "_Toc482138859" 4.1. Descriptive Statistics for General Questions PAGEREF _Toc482138859 \h 31
HYPERLINK \l "_Toc482138860" 4.2: Type of Marine Organization PAGEREF _Toc482138860 \h 32
HYPERLINK \l "_Toc482138861" 4.3. Effects of Overcapacity on the Industry PAGEREF _Toc482138861 \h 41
HYPERLINK \l "_Toc482138862" 4.5. Strategies for addressing Overcapacity PAGEREF _Toc482138862 \h 48
HYPERLINK \l "_Toc482138863" 5. Discussions PAGEREF _Toc482138863 \h 53
HYPERLINK \l "_Toc482138864" 5.1. Causes of excess capacity in marine line shipping PAGEREF _Toc482138864 \h 53
HYPERLINK \l "_Toc482138865" 5.2. Effects of excess capacity in ocean freights PAGEREF _Toc482138865 \h 53
HYPERLINK \l "_Toc482138866" 5.3. Efforts being pursued to address the excess capacity PAGEREF _Toc482138866 \h 54
HYPERLINK \l "_Toc482138867" 6. Conclusion PAGEREF _Toc482138867 \h 55
Abstract
Introduction
Marine freight industry has been struggling with excess capacity since the onset of great recession. As global economy recovers to match the demand before the crisis, the growth has been sluggish almost a decade later. To this end, the reduction in global consumption have persisted since the crisis leading to declining demand for ocean freights. However, shipping capacity remains where it was before the crisis while more capacity continue being introduced into the industry leading to more supply than demand. The current paper sough to investigate the impact of the excess slots on the industry
Literature Review
The paper conducted a literature review with the key goal of evaluating literature on the topic. The analysis that literature into marine shipping is expansive but little research existed in the areas of excess capacity in container shipping. The review of literature investigated the causal factors and effects of the excess capacity as well strategies best suited to address the problem.
Methodology
The research has made use of descriptive research design to undertake the investigation. Further, the study was descriptive in nature while survey research strategy was used to collect data from primary sources and case studies strategy use to analyses the phenomenon in its real-life context.
Results
The paper established that natural monopolistic nature of the industry as well investment in large ships were the key drivers of overcapacity in the industry. Secondly, both the existing and current research are unanimous that job losses, bankruptcy and financial losses, price competition, and domino effects were key negative effects of the problem in the industry. Further, the paper suggest the use of slow steaming, mergers and acquisitions, and withdrawal of existing tonnage as the best approaches to solve the problem
Introduction
Background Review
Oceans freights are one of the oldest modes of transport helping to deliver a large volume of goods into different parts of the world. Since medieval times, people have used ships space to transport goods to overseas land over prolonged periods. Traditionally, ships were transporting loads placed strategically to occupy spaces on the ship to maximize the returns. However, the introduction of containers was a key revolution in the industry that largely depends on space utilization to reduce transportation costs and increase returns. Since the introduction of containers, shipping lines have been largely profitable with companies seeking to build bigger and faster cargo ships with the ability to carry thousands of containers. As Sjostrom (2004) observes, shipping lines were achieving vessel optimization through deploying the biggest ship possible and at the highest speed prior to the financial crisis of 2007. The speed of the vessel was essential in delivering the cargo to its destination using the least minimum time possible.
However, the financial bubble in the U.S that resulted in the economic recession of 2007-2009 has had massive negative ramification in the shipping industry. Such have been the case as most of the sectors that rely on shipping liners to transport their cargo are witnessing sluggish growth with consumption remaining low in most parts of the world. Since the financial crisis, sectors such as motor vehicles, heavy machinery, and oil industries that rely heavily on shipping line have seen slumped growth due to reduced (Rodrigues and Vitale 2015). Further, the global economy has been growing slowly reeling from the 2007-2009 recession whose ramifications were being felt greatly with the credit crisis in European countries. The struggling economy implies that people have less disposable income resulting in less demand for products translating into reduced business for shipping liners. At the backdrop of reduced demand for shipping, liners are excess capacity created prior to the great recession as the industry enjoyed rapid growth. However, shipping lines are beginning to feel the excess burden of running huge ships with little demand leading to high maritime cost whereas the competition in...
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