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Market analysis and forecasting |
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Decision support systems • Market reports • Special project analyses |
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Investment and risk management |
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Credit evaluation • Investment evaluation • Risk management services |
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Finance |
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• Fund raising |
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A
shipowner's or shipper's goal in the bulk shipping industry is to
improve overall performance, that is to maximize profits (or minimize
costs) at an acceptable level of risk. This goal can be achieved by
developing and implementing effective investment and chartering strategies.
Successful strategies require selecting the right mix of assets A combination of owned tonnage, long term contracts (time chartered tonnage or contracts of affreightment), short term coverage (spot market, consecutive voyages), as well as positions in the paper markets (i.e. BIFFEX contracts) constitute the mix of assets the shipping executive has to decide upon in designing a successful strategy. Marsoft's Market Analysis and Risk management Services (MARS) help clients position themselves to take advantage of expected shipping market developments, and decide on the ownership and employment mix of their fleet, or coverage of their seaborne transportation requirements in a risk efficient way. Higher and more predictable profits The benefits to the client of undertaking this service and implementing its recommendation are twofold. First, significant profit increases or cost savings can be realized through better timing and mix of investment and employment strategies. This is based on fundamental market analysis and a continuous, systematic monitoring of key market indicators. Secondly, predictability of revenues or transportation costs and control of exposure to market developments can be achieved through the development of a robust strategy, flexible contract mix and hedging. As market volatility increases, flexibility to react becomes more important The volatility of the bulk markets has substantially increased over the last two years. This makes it more difficult to 'read' the market and renders it necessary to develop a certain degree of insurance (hedging) against undesired market developments. Both successful timing of the market turning points, and flexibility to react to market developments are crucial to achieve higher and more predictable profits. Strategy Components The design and implementation of a robust strategy for portfolio management and risk control is a highly complicated task in a cyclical and volatile market like bulk shipping. It requires detailed and continuous market and risk analysis to detect market trends early on, and to incorporate them in the appropriate strategy decisions. Right timing and asset mix key to successful strategies Marsoft's analysis has proven that the key factors of any strategy in the bulk shipping industry are: • Timing, particularly so of long term commitments and, • Asset mix, that is the split between short and long term contracts, as well as the distribution of assets across market segments.In addition, it is important for the shipping executive to be able to deal with the inherent volatility of bulk shipping markets, and the uncertainty around market forecasts. Marsoft Decision Support Approach To organize and make systematic the analysis of the fundamentals of the bulk shipping markets, Marsoft has developed the Bulk Decision Support System (BDSS). The BDSS has been successfully used by Marsoft and more than 100 shipping companies and banks for the last 8 years to analyze and forecast the tanker and dry bulk shipping markets. Marsoft's own forecasts have consistently provided superior timing advice for its clients. Alternative market scenarios: a way to manage market risk As no scenario or forecast can be 100% accurate, robust strategies need to account for a range of possible market developments and be flexible enough to react to them. The Marsoft approach uses alternative scenarios to develop an understanding of the various ways bulk shipping markets can move. Marsoft has developed the Risk Management System (RMS) to analyze the profitability and exposure to market developments of various investment, chartering and employment strategies. Strong analytical and decision analysis platform The combination of the BDSS and RMS gives us the ability to examine the performance of a strategy and contract mix under a broad range of market developments. We can evaluate not only the expected profit or cost, but also its range of fluctuation under probable market scenarios. The two systems also allow for the production of the required management reports to communicate the strategy, strengths, weaknesses, and consequences. Strategy development Strategy development needs to deal with categories of issues: industry or market segment wide, and company specific. The first category requires the analysis of major issues like the effect of upcoming stricter regulations for tankers on the pattern of trade, supply of vessels and rate developments. As part of this process, we assess how the client should be positioned to benefit from such developments. The second part involves the establishment of a clients own business goals and how he should synthesize the various positions relative to market developments and issues analyzed above in the various market segments, what opportunities to pursue, how connected the various market segments are, and how the client can hedge against adverse developments. Description of MARS Marsoft's Market Analysis and Risk Management Service (MARS) has two parts: • An initial review of the client's current procedures and development of a robust strategy that meets the client's business goals and, • An on-going retainer to continuously monitor, improve and adapt the strategy to the changing market and client needs. An initial strategy study... The initial strategy study provides the client with a recommendation on the most appropriate strategy given the client's own business philosophy. To reach the recommendation we develop a range of market scenarios, input and analyze the client's portfolio (assets, contracts and needs) in Marsoft's systems, and design the most effective strategy to meet the client's business goals. A number of alternative strategies will be simulated both historically and in the future. ...and on-going retainer The on-going retainer and strategy execution program is intended to keep the client's position and strategy up-to-date. We will provide continuous monitoring of the market and our client's position and suggest revision to the strategy and position as appropriate. Further customization of the on-going part of the service will be performed after the completion of the initial study jointly with the client. Marsoft and the client work together Marsoft's objective is to deliver to the client a strategy development and asset mix specification program that would result in a significant increase in profits and profit predictability, in accordance with a client's business philosophy and desired market position. The initial strategy study establishes the foundation for this process. It requires a great degree of participation from the client both in indicating its desired business direction, and in providing the necessary data for the strategy development exercise. The on-going part of the MARS is tailored to clients' needs The on-going retainer part of the service is meant to be tailored to the needs of the client, both in terms of frequency and magnitude of the effort. It does not include executing the recommended strategy (or variations of it as decided by the client), but can include specific deal evaluation and recommendation on specific strategic decisions. Marsoft can also maintain the client's portfolio and provide position and market monitoring reports at regular intervals. Deliverables At the end of the initial study the client receives a report summarizing the results and strategy recommendations of the study. Marsoft will work closely with the client to communicate the recommended strategy and the underlying analysis within the client's organization. Marsoft and the client define a program to monitor the progress of achieving the strategic goals. Deliverables from the on-going phase include reports and/or presentations as appropriate. Client control of process; access to Marsoft expertise MARS is designed to take into account a client's way of doing business. At the same time, MARS makes available to the client Marsoft's methods and systems for analyzing the bulk shipping market and its expertise in integrating the analysis into robust strategies.
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