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Shipping Market Structure - Assignment Example

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The main aim of this paper “Shipping Market Structure” is to compare container liner shipping with crude oil tanker shipping while including references that will support the arguments. The main subject of the comparison between these two forms of shipping is the form of market structure they exist in…
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Shipping Market Structure
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Download file to see previous pages Crude oil tanker shipping involves a critical flow of goods that has been broadly used in the day to day economic activities of various industries as well as energy resources and raw material that is used in different sectors (Hocking 2005, p. 584). When considered in the short term, the supply and demand in this industry have low elasticity which consequently has a worldwide economic impact in the significant fluctuations in price are this is mainly because it is not easy to track the changes in the supply and demand equilibrium regardless of the fact that it affects the fluctuations in prices (Wijnolst, Wergeland and Levander 2009, p. 127). The global markets associated with international crude oil tanker shipping is considered to have assumed a perfect structure that is comprised of a large number of producers who are in competition to satisfy huge demands, where the price of oil is determined in the global oil market and thus, if the operating costs are low, the profits that will be realized by the firm will increase as the prices associated with the crude oil are extremely important in this industry (Beenstock and Vergottis 1993, p. 101).

Alternatively, the container liner shipping industry has been facing tremendous repercussions since the Ocean Shipping Reform Act was implemented in 1998 allowing the operators of the liners to avail complete liner services without any involvement of liner conferences (Schaffer, Earle and Agusti 1999, p. 170). Consequently, the nature of the liner shipping is comprised of cartel powers that provide fixed scheduled, tariff as well as regular sailing forces to create trade groups that will certify the trade routes they are using making a switch from one trade route to another much simpler for the liner companies (Gwilliam and Molenaar 1993, p. 70). ...Download file to see next pagesRead More
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