Impact Of Economic Recession on Wet Bulk Shipping

Impact Of Economic Recession on Wet Bulk Shipping Abstract Global economic integration and the world economy is closely linked with the world shipping market, 2009 world economic recession caused a negative impact on the economy of each countries, the shipping industry has been seriously affected. This article assesses the economic recession affecting the wet bulk shipping sector from four parts. Key words: economic recession; freight rates; wet bulk shipping; excess capacity. The Impact of the Economic Recession on Wet Bulk Shipping Introduction Shipping is a global industry, which is the lifeline of the world economy. The global bulk shipping markets consist of two main sectors dry bulk and wet bulk (Stopford, 2003). The carrier of wet bulk is tanker. It can transport oil or oil-based products liquid petroleum gas (LPG), vegetable oil etc., liquid chemicals or liquid natural gas (LNG) (House, 2007). However, crude oil carried in Very Large Crude Carriers (VLCCs) is the biggest wet bulk shipping market. The world financial crisis has brought a great impact to the international economy, which created the economic recession deeply and widely in 2009, especially in transport sector (European Commission, 2009). The crisis has triggered a slowdown in global economic growth that is manifesting itself in a demand-driven fall in international trade exacerbated by the deficit of credit and trade finance; falling commodity prices; declining remittances; contracting foreign direct investment (FDI); and the potential of declining offi cial development assistance (ODA) (UNCTAD secretariat, 2009a). This has given rise to the most significant challenges for wet bulk shipping (tanker) that involved volume, freight rates, operational productivity and job cuts. Effects on Tanker Freight Rates Transport market usually makes a direct reflection to a downturn in demand. The price of chartering tanker ships indicates the demand-supply balance for different wet bulk. The demand of tanker can be measured in tonne-miles. Table 1 describes the tonne-mile demand of most tanker sectors. There is a downward trend which dropped nearly 1.6% in 1H09 comparing with 1H08 (TANKEROperator, 2009a). The reason was that the demand of crude oil declined since last year. Different indices can present different market, i.e. The Baltic Exchange Dirty Tanker Index (BDTI) represents the crude oil market, which in major trading routes includes VLCC, Suezmax, Aframax and Panamaxes. Moreover, the Baltic Exchange Clean Tanker Index (BCTI) makes up of clean Panamax, Handymax and Handysize tankers (TANKEROperator, 2009b). Table 2 illustrates that comparing with the same period of 2008, freight rates of tanker vessels in the middle of 2009 were down. The deppening ecomomic crisis cause oil demand decline. BDTI shows an upward trend, which fell from 849 points in January 2009 to 482 in June 2009. It nearly fell half. BCTI also showed an downward trend, from highs of 623 in January 2009 to lows of 479 in June 2009 (UNCTAD secretariat, 2009a). Table 3 shows average freight rates, which is a unified measure for establishing spot rates. The areas of the table indicated including Persian Gulf, West Africa, the Mediterranean, the Caribbean, Singapore, East Asia, South Africa, North-West Europe and the East Coast of Norh America. Comparing feight indices of tanker market between the first half of 2008 and 2009, it can be seen that the freight rates on all routes declined. Though the feight rates in some routes in June of 2009 had a little increased than previous months, but overall trend was downward. Among them, there was a dramatic declines in freight rates for VLCC and ultra-large crude carrir (ULCC). The routes which they serviced were the Persian Gulf to Easern Asiam Europe, the Americas and South Africa. Table 3 clearly shows that the freight rates for VLCCs in April and May of 2009 on the Persian Gulf to Japan and the Persian Gulf to Republic of Korea routes decreased by nearly 50 percentage, from WS51 to WS27 and WS53 t o WS27 separately. The reason can be attributed to the Organisation of the Petroleum Exporting Countries (OPEC) members cutting the oil production thus, the volume of cargo which transport from Persian Gulf to other areas was reduced (UNCTAD secretariat, 2009a). In addition, LNG shipping reached in record-low freight rates in the spot and short-term LNG trades in spring 2009. The LNG industry has been closely tied to gas demand in Japan and Korea, because the two Asian nations account for nearly one-half of the global trade in LNG (Corkhill, 2009a). The Arab countries exports to Japan and Korea went down in July 2009 by 4.7% or 88 thousand tons to 1.801 million tons a share of 27.5% of total Japanese and Korean LNG imports (OAPEC, 2009). Effects on Voulme OPEC which provides about 40% of the worlds oil supply try to stabilise oil prices therefore, it decided to recuce daily production from 4.2m barrels per day to 24.9m bpd (Calderas-Mendez, 2010). Tanker shipping has been dealt with the delayed impact of declining demand. This cutting supply decision caused decline in the amount of oil carried by VLCCs (Calderas-Mendez, 2010). From the international oil market situation in recent years, the oil supply disruption is not happened, the oil market focus mainly on oil prices. In the downturn, table 4 shows that there was a large demand declines from the fourth quarter of 2008 to the second quarter of 2009, whcih attributs to the developed countries economics, particularly the United State (economic crisis). The demand of oil decline, the freight rates decline. Therefore, OPEC carried out a series of production cuts to support prices in order to faced with the demand weakness (International Monetary Fund, 2009). Effects on Operational Productivity Decline in demand for shipping, plus the financial crisis led to banks tightening credit on shipping finance, many shipping companies have been cancelled shipbuilding orders and have a wave of defaults began to appear. According to UNCTAD secretariat (2009) analysis, the share of liquefied gas carriers (of LNG and LPG) has stood at 10.8 per cent on 1st April 2009. As the volume of cargo per carrying capacity and freight rates decreased, the productivity in terms of tons carried per deadweight ton (dwt) of oil tankers were seriously surplus. There was 4.0 per cent of the world tanker fleet overcapacity in April 2009 (UNCTAD secretariat, 2009b). The market always showing that when cargoes fall away and the demand for ships drops. The fundamental reason for the decline in average productivity in recent years is the oversupply of tonnage available, which contrasts with the reduced growth in world seaborne trade (UNCTAD secretariat, 2009a). Although taking longer time, some of the shippin g companies chose routes that cost less. Some ships are being laid off to reduce the tons carried per dwt because of the reduced seaborne trade. Figure 1 shows the productivity of the world fleet has a significantly decline in 2009 and the values between 27,000 and 28,000 ton-miles (UNCTAD secretariat, 2009a). In addition, after some shipping companies and shipping agencies re-scheduled cargo routes, due to the pressure of freight rate, which is not enough to make up the cost, lay off ships was thought more cost-effective way. Effects on Job Cuts Affected by the depressed market, the ship owner started a large number of labour layoffs. Inevitably, some shipping companies wanted to cut additional cost; therefore, they closed overseas offices in the rescue plans in the current depressed market. During this hard time, shipping industry faced up to the challenges of over-tonnage, ship owner try to streamline their fleets in order to ease the increasing cost and manpower burdens. In addition, another reason for job cuts was the rising price of crude oil, other raw materials which had driven up the costs of ship maintenance, repairs and bunkers (Corkhill, 2009b). Conclusion With the process of global economic integration, international trade becomes a chain of countries in the world market, while the shipping industry as the main carrier of world trade that has become an important part of the economy. Every time of the fluctuations in the global economy will obviously reflect in the shipping market. In the global context of economic slowdown, both of the volume of trade and demand has a decline in different degrees, and at the same time it leads to the consumer and investor lack of confidence, which has brought great impact on the shipping industry. There hasnt been a major bankruptcy in the shipping market, which is an economic miracle in 2009 economic recession (BIMCO, 2009). The growth of the total carrying capacity greatly exceeded the growth of the economy and shipments, thus capacity has become surplus. When supply exceeds demand, the freight rates under the pressure or even have declined, the profit of shipping company dealt a heavy blow in the hard time. Since the outbreak of the financial crisis, the credit system has been practiced in a crisis, some banks refused to provide credit guarantees, which leads traders to pay shipping difficulties. Additionally, the operation of the shipping industry to make matters worse.

Cigarette Oligopoly

Cigarette Oligopoly Market Chayleen Marquis Benedictine University Author Note This research is being submitted on May 2, 2010, for Professor Raymond Bell’s MBA 611 course at Benedictine University by Chayleen Marquis. The cigarette market is one that is known to everyone. From magazine advertisements to constructive commercials people have been exposed to this market starting at a young age. The constant visuals of the advertisements as well as the free advertising that occurs daily with people smoking outside their office, in their car, and outside the night life scene the cigarette market has a benefit of using the free advertising as a benefit to their company at no cost. The cigarette market is a clear example of an oligopoly market because it is mostly run by a few large firms such as Philip Morris USA, Commonwealth Inc, Lorillard Inc and Reynolds American Inc. Due to the fact that an oligopoly market is hard to not only come into but also basically controlled by these large firms any new competitor is going to have a difficult time entering this market, being profitable in comparison to these firms and really having any type of say in the price or the output. A benefit of being an oligopoly is the fact that the prices are not determined for them but the larger firms more or less make the prices in reflection of the coordination amongst each other. Essentially the large firms come together and decide what price they would like to see and then all of the cigarettes cost the same amount across the board. Of course one concern that oligopoly’s must make sure that they are not be involved with is price fixing. Price fixing is when the competitors of a market fix the product price to avoid competition within their market, while at the same time not being fair to the consumers of the product in regards to the price. The price fixing does not always happen between the competitors but it also can be a factor between manufacturers and distributors. So as an oligopoly the firms must ensure that the price fixing is not occurring at any levels of their production. Most people look at an oligopoly market and think that they act as a monopoly because the main firms completely control the market. However in an oligopoly the main firms each have a distinguished product brand that sets them apart from their competitor even f it is in the smallest difference. These brands allow each firm to stake claim on consumers in a memorable way to keep consumers coming back for more. In reference to the cigarette oligopoly most consumers have smoke Marlboro’s from the beginning of their smoking career and have never strayed from the product that they know. In an oligopoly market if one firm drops their prices another firm is more likely to drop their prices as well to not only stay competitive but to also retai n their market share. However if a firm were to increase their prices the other competing firm will not like raise their prices obviously to try and maintain as well as try to increase their market share. Price increasing is not something that occurs often in an oligopoly market which in turn makes the market inelastic in regards to price change. The use of the game theory is commonly used in oligopoly markets such as the cigarette industry. Making moves in the market without fully knowing how your competitors are going to respond and knowing that if one move that is made can definitely benefit all firms is a tough task to attempt. Making a decision that could help out the companies is not always going to be perceived by the other companies and can back fire on the company who makes the initial decision which in turn would leave them more than likely with a net loss. In the cigarette oligopoly market I see promotion as a game theory used between the competing firms. Many different events are held and it seems that the cigarette firms are there to give away free samples of their new products, free t-shirts and of course creating a bond with the consumer which makes them stay a loyal customer and even gets some consumers to switch products. An example would be from Camel cigarettes to Marlboro cigarettes. As mentioned before advertisement is something that drives the cigarette oligopoly. With the promotions being such a market to get more and more people daily to advertise freely for the company cigarette firms use every opportunity to do so. Primarily during these promotion periods the cigarette companies will use the foot traffic to do the free advertising for them. This is an extremely smart move because in reality who does not want a free t-shirt. The competing firms do not know when competition is always having a promotion such as the ones mentioned above and could see a decrease in sales during a competitor’s promotion or even right after one. Another example of the game theory used in the cigarette oligopoly market is when purchasing a regular firm product giving out a free ull size sample of a new product to get consumers to try it, which then leads to the consumer not having to purchase their product for a longer period of time. In the cigarette industry I believe that profit has been maximized. There are not a lot of changes that can keep occurring in this industry that can great greater profits than the ones occurring right now. There is only so much change that the cigarette market can endure and change that I believe the market has no new product line to go to. The cigarette market is such an intricate market with a product that has been sold the same way for years and year’s people don’t want it to change. The only profit the cigarette industry is going to see is when prices rise slowly due to inflation. Other than taxes being enforced by states and the federal government the price for a pack of cigarettes is not going to change drastically by any firm in caution of losing its market share. The competition in the cigarette market is beneficial to the consumers because of the promotions they provide with all of the free merchandise. Unlike other oligopolies the cigarette market is not elastic so price changes that would occur in other oligopoly markets that affect the consumer don’t not occur in the cigarette market. Competition in other oligopoly markets can directly negatively affect the consumer but because the cigarette market is a market that change rarely happens, prices are the same regardless the brand the competition is a benefit. In conclusion the cigarette market oligopoly market is a pretty stable very profitable market that has proven to stand the test of time, anti-smokers protests and even recessions. This market has a proven track record and has no intent to go anywhere. With the ability to use consumers for free advertising this market has saved money in the marketing department which usually helps fight law suits but still keeps its consumers coming back for more each week. The amount for a pack of cigarettes today is between four and five dollars and for the amount of smokers that casually smoke to the addicted smokers who go through a pack a day the cigarette market is not going anywhere and profits they are seeing are simply astounding. References Thomas, C. R. , & Maurice, S. C. (2008). Managerial Economics (9th ed. ). New York, NY : McGraw-Hill Irwin. Market Information-Philip Morris USA. (n. d. ). Retrieved April 26, 2010, from http://www. pmusa. com/ed/ cms/Company/Market_Information/default. aspx

The Main Difference Between Manager and Entrepreneur

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Whereas in another one he says that subjects with a parent who is an entrepreneur will have higher entrepreneurial intentions than those whose parents are not entrepreneurs. Again these hypothesises have an implication that an assumption - ‘‘entrepreneurs are born, not made’’ - is misleading. Bandura (1975) in his book ‘‘Social Theory’’ states that personal and environmental influences are interdependent. For example, professors do not influence students unless they attend their classes or books do not affect people unless they read them, and punishing effects remain inactive unless activated by conditional perform ances. In the same manner, personal determinants are only potentialities that do not act as influences until they are activated. Individuals who can communicate knowledgeably about particular issues can have an impact on others if they speak but not remain silent, regardless of whether they possess the means to do so. 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Does Social Networking Effect Our Society Negatively

Caitlin Larson Dr. Roloff Welch ENG-103- 24 July 2014 Research Paper- Draft #1 Does Social Networking Effect Our Society Negatively? How many of you use some kind of social networking sites, such as Facebook, Twitter, Instagram, and Pinterest? According to Pew Research Centers Internet American Life Project states that â€Å"95% of all teens ages 12-17 are now online† and â€Å"81% of online teens use some kind of social media.† Social networking sites have grown tremendously since the past. Social networking sites allow individuals to create a private, semi-private, or public profile where they are able to connect with people. Social networking sites allow many people of different groups, such as age, race, religions, and locations to†¦show more content†¦With the amount of usage of social networking sites among our teenagers, this has raised a flag with academic procrastination. According to the Merriam-Webster Dictionary, procrastination is â€Å" to be slow or late about doing something that should be done: to delay doing somethi ng until later time because you do not want to do it, because you are lazy, etc.† Therefore, most of us can see it as a dedicated non-academic activity that results in the delay of completing an academic task. This shows that students are spending more of their time on nonacademic related activities instead of meeting the requirements for their academics. For instance, a problem of teenagers’ academic performance that is affected by social networking is the quality of their academic writing. Most teenagers may think that technology and the use of social networking sites does not negatively influence their writing, but little do they know it does. According to Writing, Technology, and Teens, Pew Internet American Life Project, â€Å"nearly two-thirds of teens (64%) say they incorporate some informal styles from their text-based communications into their writing at school.† For example, we may see phrases in papers such as LOL (which stands for laugh out loud), BT W (which stands for by the way), and even IDK ( which stands for I don t know). This could be a major reason why teenagers are being more reliant on the computer