Investigation into the optimal fleet employment strategy with concentration on the supramax bulk carrier east of Suez market

In this research we investigate the optimal fleet employment strategy by looking at the 646,646 permutations derived from 13 different combinations of acquisition-employment strategy for a portfolio of 10 Supramax vessels for the period 2006 to 2012. Part 2 of the research focuses on revenue maximization, which is largely dependent on how a ship owner decides to employ his ships and focuses on 2 main employment methods – Time-charter and Voyage-charter. The aim of this paper is to identify which employment method would be able to generate the most earnings, specifically to prove 1) whether employing the ships on Voyage-charters is more volatile than on Time-charter by comparing the changes in yearly revenue and 2) whether returns on a portfolio can be maximized with long-term Time-charter in and short-term Time-charter out. The results show that Voyage-charters have relatively moderate volatility in terms of changes in yearly revenue with long-term and short-term Time-charters’ volatility lying in the two extreme ends. A ship owner who prefers to avoid uncertainty and wishes to earn a stable flow of income should opt for T/C (1, 3, 3) as his main employment strategy, however this option has the lowest revenue. It is also found that portfolios with combinations of long-term Time-charter in and short-term Time-charter out fare badly, lying in the 10th percentile of overall portfolio performance. The best combination comprises of acquiring Newbuild vessels and employing them on T/C (1, 1, 3, 1, 1) to maximize ship owner’s revenue.Bachelor of Science (Maritime Studies