Shipping strategies before, during and after 2008 financial crisis : a critical analysis
Wong, Ray Claire
Date of Issue2016-05-24
School of Civil and Environmental Engineering
The 2008 global financial crisis that had its origin in America swept over the entire world. The crisis was essentially caused by unreliable credit borrowers who were incapable of fulfilling their subprime mortgage payments. Container shipping companies, which depended largely on international trade flow, were impacted by the crisis. This paper seeks to investigate how container shipping companies utilized shipping strategy to influence their performance levels in the context of a changing environment, represented by the pre, during and after financial crisis periods in the years 2005 to 2015. Strategy related factors were also raised in this discussion to study the extent to which they influence performance. The causal link between shipping strategy and resulting performance was also analyzed in the presence of different environmental conditions. Data from literature reviews, annual reports and in depth interviews was consolidated and analyzed to aid the research. A mixture of two long haul and two feeder container shipping companies constituted the total interview candidature of four, to give a more well represented insight. The research findings from the container shipping sector were then contrasted with the dry bulk and tanker sector to acquire a more holistic view on shipping strategy and performance before, during and after the 2008 financial crisis. It was discovered that feeder and long haul sectors employed different corporate, business and functional strategies and had different performance levels before, during and after the 2008 financial crisis. While the strategies used had similar objectives before, during and after the crisis, the feeder sector was impacted to a lesser extent than the long haul sector. It was gathered from interviewees that there are many strategy related factors that can undermine a strategy’s fullest potential if they were mismatched with the strategy, such as company culture, technology capabilities, communication with involved players as well as the timing for strategy execution. Lastly, this paper identified that the causal link between shipping strategy and performance is dynamic and can be affected by various environmental factors, such as market volatility, bunker price and exchange rate fluctuations. The years 2005 to 2015 present many specific events to the container shipping companies that served as either an opportunity or a threat that influenced their performance.
Final Year Project (FYP)
Nanyang Technological University