Investigation into the optimum fleet employment strategy with concentration on the capesize bulk carrier East of Suez market

Abstract

The objective of this paper is to determine the best employment strategy for a fleet of 10 Capesize bulkers of varying ages, which can maximise returns whilst minimising risks. As risks are present in every aspects of business, it is especially evident in the Capesize bulkers trade due to its lower operational flexibility. Using quantitative analysis of the historical figures from 2006 to 2012, the risk level and returns can be computed for different strategies to find the best strategy with the lowest risk-return ratio. In the experiment, 12 acquisition-deployment strategies were created and evaluated. There are altogether 352,719 possible combinations of strategies for the 10 Capesize vessels, out of which 4 have been chosen as the best strategies with the lowest risk per unit of return at 4.9448. The similarity between them seems to be that they all indicate a greater proportion of ships acquired by Newbuilding and Sale & Purchase and deployed on either the spot market or on 3 years time charter party. This may suggest that these acquisition-deployment strategies are more optimum for the period of 2006-2012. This research has high commercial significance in that the findings indicate how diversification can effectively help to contain risks, and can provide a useful guide for all shipping companies.