Podcast
Questions and Answers
What is the key to survival in the shipping market?
What is the key to survival in the shipping market?
- Investment strategy
- Financial performance (correct)
- Ship productivity
- Capital costs
What is the primary goal of shipowners in terms of revenue?
What is the primary goal of shipowners in terms of revenue?
- Maximizing cargo-handling time
- Reducing operating costs
- Minimizing vessel time off hire (correct)
- Increasing capital costs
What type of costs include fuel, port charges, and canal dues?
What type of costs include fuel, port charges, and canal dues?
- Capital costs
- Voyage costs (correct)
- Periodic maintenance costs
- Operating costs
What determines the revenue a ship earns?
What determines the revenue a ship earns?
What is one way shipowners can reduce operating costs?
What is one way shipowners can reduce operating costs?
What is one component of cargo-handling costs?
What is one component of cargo-handling costs?
What factors affect the number of loaded days?
What factors affect the number of loaded days?
What is the main purpose of shipping accounts?
What is the main purpose of shipping accounts?
What does the income statement show?
What does the income statement show?
What is the primary use of the voyage cash-flow (VCF) analysis?
What is the primary use of the voyage cash-flow (VCF) analysis?
What is the main difference between the annual cash-flow (ACF) analysis and the required freight rate analysis?
What is the main difference between the annual cash-flow (ACF) analysis and the required freight rate analysis?
What is the primary consideration of the discounted cash-flow (DCF) analysis?
What is the primary consideration of the discounted cash-flow (DCF) analysis?
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Study Notes
Financial Performance and Investment Strategy
Financial performance is crucial for survival in the shipping market
Three key variables to achieve financial performance:
Maximizing revenue through minimizing vessel time off hire and cutting cargo-handling time
Minimizing costs by using modern ships with few crew
Financing the business by making capital repayments regardless of market conditions
Classification of Costs
Operating costs: expenses involved in day-to-day running of the ship (M + ST + MN + I + AD)
Periodic maintenance costs: incurred during dry-docking and special surveys
Voyage costs: variable costs associated with a specific voyage (FC + PD + TP + CD)
Capital costs: depend on ship financing
Cargo-handling costs: expenses of loading, discharging cargo, and cargo claims (L + DIS + CL)
Revenue and Ship Productivity
Revenue is determined by ship productivity
Ship productivity is a function of distance traveled, average operating speed, loaded days at sea per annum, and deadweight utilization
Loaded days depend on days off hire, days in port, and days in ballast/loaded in full per annum
Shipping Accounts
Compiled to show financial standing of the company
Include: income statement, balance sheet, and cash-flow statement
Provide information on profit, company wealth, and cash inflows/outflows
Methods of Computing Cash Flow
Voyage cash-flow (VCF) analysis: used for day-to-day chartering/operating decisions
Annual cash-flow (ACF) analysis: calculates cash-flow of a ship or fleet on a year-by-year basis
Required freight rate analysis: variant of annual cash-flow analysis
Discounted cash-flow (DCF) analysis: concerned with time value of money, used for comparing investment options
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