Freight Rate Management And Shareholder Value

2292 words - 9 pages

The shipping markets have been among the most active among markets over the last couple of years. This significant growth in shipping markets has been influenced by changes in import policies, globalization and changing freight rates. Globalization and changes in the import policies across states and continents have positively influenced the growth of the shipping markets, with marginalized and developing countries having an opportunity to venture into the global arena.
Freight rates are however proportionate to growth of shipping markets and their contribution to the development of shipping markets has been influenced by several factors, some of which lead to negative growth and increase the shipping risks that freight companies are exposed to (Kavussanos & Nomikos 2000). Some of the issues that affect freight rates are economic growth and demand for specific goods, which is derived from the shipping industry forces. The contribution of the economic growth is significantly associated with a reduction and stabilized freight rates and this leads to fewer risks as compared to harsh economic conditions.
Economic developments lead to a change in the status of the shipping industry. In most countries, change in economic growth leads to stabilization of all transport services, including those offered in the shipping industry (Kavussanos & Visvikis 2006). For this reason, most of the freight rates are favored by a stable economy, making it possible for freight owners to diversify their products and services for increased profits. In a stable economy, there is increased trade and investment in local and international goods.
This means that when the demand for commodities is high, there is an associated increase in demand for shipping services and hence a significant reduction in the freight rates imposed by the shipping industry. A stable economy is therefore a key influence in the stabilization of freight rates among the various shipping companies.
Taking the Hellenic Marine, LLC Company as an example, there have been significant changes in its profits, assets and market share. Over the last five years, the company has witnessed major changes, which are mostly influenced by fluctuating and unstable freight rates. The instability of the freight rates has been influenced by among other things, the changes in price of commodity prices, fuels and other import policies that affect transit of goods from one region to another (Schwartz & Smith 2000).
The longstanding fluctuations in oil prices have also affected the freight rates in Hellenic Company. The relationship between freight rates and oil prices is linked to the bunker prices that account for nearly thirty percent of the entire operating cost (Manoliu & Tompaidis 2002). The bunker prices directly influence the freight rates because the prices interfere with the operating costs, influence demand and supply and affect the goods and services in transit.
The freight rates are also affected by...

Find Another Essay On Freight Rate Management and Shareholder Value

International Financial Management: Collect foreign exchange spot and forward rate data and interest rate data for two currencies; examine whether CIRP holds

1645 words - 7 pages International Financial ManagementCollect foreign exchange spot and forward rate data and interest rate data for two currencies; examine whether CIRP holds; analyse and discuss resultContent:3Introduction 4Collected data 4Analysis 7Discussion 9Conclusion 10References IntroductionThe theory of Purchasing Power Parity (PPP) is not appropriate to foreign exchange rate determination. One of the problems of using PPP is that it is primarilly focuses

Drafting a Problem Statement Essay

651 words - 3 pages Financial management plays a pivotal role in increasing shareholder value and customer satisfaction. The qualitative study involves survey as the research design and financial managers as the participants. The research aims at collecting data to establish the effects of financial management on customer satisfaction and shareholder value. Customer satisfaction and shareholder value are some of the main indicators used to measure the prosperity of

Economic value added

1978 words - 8 pages " (Ehrbar 2). EVA is a measure of wealth creation or destruction after all costs are capitalized.Companies use EVA as a measure of corporate performance, as an incentive system and as a link between shareholder and management/employee goals. Stock price indicates investor's certainty concerning current and future earnings potential. EVA is a static measure of corporate performance; MVA is a dynamic, forward looking market performance measure. "MVA is

Company Shareholders: Profit Making and Market Share

1117 words - 4 pages sufficient long term funds to finance fixed assets and long term investments and to provide for the need of working capital. Third objective is investment decision. In projects using the various capitals budgeting, accounting rate of return, internal rate of return, net present value is the investment decision. Assets management policies are to be laid down regarding the various items of current assets like accounts receivable by coordinating

Microeconomics of Maritime Shipping

2269 words - 9 pages economic development and trade of countries. In essence, economic development, trade and transport are mutually supportive. Ocean liner shipping is a regularly scheduled service on established ocean routes between countries or areas. Liners carry primarily manufactured goods that are relatively high in value. Although liners account for less than 53% of all freight, they amount for more than 93% of U.S. freight. (http://www.wto.org) A striking

Finance

1317 words - 5 pages transaction cost risk management is irrelevant to firms. On the other hand, we have a number of studies that support that the currency hedging is positively related to the increase of shareholder value. Allayannis and Weston (2001) using U.S. data from 720 firms found that hedging boost firm value, while same results had the researches of Stulz (1984), Frood, Scharfstein and Stein (1993), Nance, Smith and Smithson (1993), Tufano (1996) and Geczy

Important for stakeholder

897 words - 4 pages SREC takes the shareholder into account when making decisions since SREC has recently privatized and needs shareholders' investment. This is also the way to keep SREC survive. Besides, as Rappaport A mentioned "European continent, there is increasing political tension between the shareholder value business practices required in a competitive global market and the long-standing tradition of social welfare." Therefore, shareholders are important to

Pursuit of shareholder value distorted company strategy

1796 words - 7 pages It has been strongly emphasized that the fundamental goal of all business is to maximize shareholder value, as the focus of business argument now changed from giant firm in product market to giant firm facing the capital market. Especially, since the 1990's, there was a significant increasing demand from top companies for shareholder value, and shareholder value was subsequently used in Britain and USA as a management justification for the

capacity management

557 words - 2 pages HoUand-Kaye, development di- rector and chief executive designate of Heathrow, said. The Freight Transport Association (FTA) said this was good news for freight. Heathrow's announcement echoed the recently published FTA- commissioned document "Sky High Value," which detailed the impor- tance of air cargo to the UK economy. London's Heathrow Airport hopes to move forward with a third runway. Airfreight ac- counts for nearly 40 percent of UK imports

Exploring ocean transportation focused on freight forwarder

3510 words - 14 pages are interested to use fewer service providers to extend cooperation and communication among modes and between carriers to them.The role of the freight forwarder is changing from an agent who arranges transportation and prepares shipping documentation to a provider of the whole range of additional value-added services to shippers. At the same time, many forwarders are merging with large logistics companies to become part of one-stop-shop

Transportation and How it Affects Logistics

1346 words - 5 pages -Feighan, air freight logistics is selected “when the value per unit weight of shipments is relatively high and the speed of delivery is an important factor” (Reynolds-Feighan, 2001). Every business depends on transportation because it is the necessary link between the separated units. These separated units include the connection between plants and warehouses and between suppliers and customers. These units sometimes are costly and time consuming

Similar Essays

Essay Topic: Shareholder Value Provides A Comprehensive Framework For Evaluating Strategic And Tactical Marketing Decisions

1741 words - 7 pages Essay topic: Shareholder value provides a comprehensive framework for evaluating strategic and tactical marketing decisionsModern enterprise is uninterrupted to ameliorate its own system and constitute accredited standard or criterion on institutional. Today's directorate and top management seem to be more concentrating on shareholder value. Obviously, aim to maximize shareholder value become most enterprises' crucial goal that may affect

Glomerular Filtration Rate And Chronic Kidney Disease Management

3008 words - 12 pages The strengths of the study were the educational topics of the importance of eGFR and CKD management. The fact that this study showed that there was indeed a continuation of late referrals to the nephrologists could help further problems. The staging principals and risks discussed were also important. Another strength was the fact that a pre and post survey was conducted; with the education in between the surveys. The weakness of the studies

The Coca Cola Company: Market Based Management And Value Driven Management Strategies

1568 words - 6 pages as well as Value Driven Management (VDM) techniques within the organization and in its market to help the firm sustain its stronghold of the market. Market Based Management is premised upon a free market system, as described by Jones and George (2014). The principle is based around pleasing the customer by meeting supply with demand. It is imperative to be able to understand the market, and then to react accordingly to the market. These

"Using Earned Value Management Indexes As Team Development Factor And A Compensation

774 words - 3 pages What are some ways to motivate project teams? Are the ideas presented in the article "Using Earned Value Management Indexes as Team Development Factor and a Compensation Tool" applicable to your organization? Why or why not?Every team is different, and every individual on a project team is motivated differently. There are many ways to motivate the team as a whole, but many revert back to motivating the individuals. Witzel (2005) recommends the