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The Impact Of Container Slot Excess Capacity With Regard To Ocean Freights (Dissertation Sample)




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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

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.
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.
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
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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