Investigation into the optimal acquisition and employment strategies with concentration on the VLCC East Suez market

Abstract

The aim of this research project is to ascertain the optimal employment and acquisition portfolio of 10 different Very Large Crude Carrier (VLCC) from the period 2000 to 2011. This experiment will be done on the assumption of perfect hindsight over the last 12 years.

The paper commences with a preliminary discussion on the costs of acquiring the vessel, revenue generation of the different employment structure and the risks associated with owning and operating the VLCCs.

Subsequently, the aforementioned elements will be incorporated into Markowitz Optimisation portfolio where quantitative analysis is used in determining the optimal acquisition – employment mixture in getting the highest returns possible. The experiment results will vary according to the capital costs ranging from 1% to 20%.

The findings and implications are summarized in this report, which may provide as a stepping stone to further in-depth analysis on the commercial operations of the shipping industry.