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Erschienen in:
2023 | OriginalPaper | Buchkapitel
Risk Management in Shipping Industry
verfasst von : Xiaoxiao Dou
Erschienen in: Proceedings of the 6th International Conference on Economic Management and Green Development
Verlag: Springer Nature Singapore
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Abstract
The goal of risk management is to balance the level of risk and return to optimize shareholders’ value. One fundamental method of risk management is to utilize financial instruments, including derivatives. In this paper, specific risks and solutions of the shipping industry are studied, taking the Matson company as an example. Risks in the shipping industry are featured as such: fluctuation in fuel prices, which affects significantly the operating expenses; difficulty to obtain capital as well as changeable debt ratios; unstable freight rate, which influences income. Some applicable hedging methods are analyzed accordingly, including borrowing a mix of fixed rate debts and floating rate debts, longing crude oil futures, and entering Forward Freight Agreements. Some suggestions based on analysis are then given in response to new conditions in the year 2022, including entering into crude oil futures at different prices and different maturities and focusing more on domestic logistics.