Tanker Shipping Market Outlook Case Study Example | Topics and Well Written Essays - 500 words

Tanker Shipping Market Outlook - Case Study Example Finally, there would be capacity issues imposed by seaway regulations associated with allowable freight sizes that could further limit profitability and competitive advantage. The business recognizes cost issues in proposing new strategies, evident in recognition of RFID investment and concerns over the pricing model after investing in RFID. Is diversification the most effective strategy to improve the competitive position and profitability of Great Lakes Carriers or should the business continue with its current operational model for iron ore freight? D. Conduct a research study on safety risks associated with railroad transport versus lake shipment to present to customers currently using railroad for grain deliveries and enhancing railroad market share in the process. Solution A would be the most viable to GLC. Purchasing the new fleet would not only serve new markets and improve profitability, but it would also give the business more assets. Leszczynski (2009) identifies that new ships maintain almost the same depreciated value after five years as at the time of purchase. Thus, the life cycle of these ships gives more asset protection and would also improve the capacity of Great Lakes Carriers to gain more market share. The low capacity ships required due to size restrictions by regulatory forces on the lakes cost approximately 43 million USD (UNCTAD, 2006). It is also common practice in the maritime shipping industry to hedge against potential risks, such as demand decreases, through Freight Forward Agreements (Kavussanos, 2003). This could help offset the one-time high investment as well as new market share improvements. GLC should consult with new and used ship sellers to identify the most practical solutions for procurement.