The story of how an emerging shipping company rose and eventually became a major shipping company.

 

The emerging shipping company's business model involved sourcing ships through the short-term charter market and collecting cargo for transportation.

 

Generally, as the short-term charter market was linked to the freight market, this business model's profit margins were extremely low.

 

Therefore, they needed to develop a high-profit business model. Specifically, they had to source ships in a way that was not linked to the freight market, which meant owning the ships. Although owning ships involved risks, they understood that the benefits of ownership far exceeded the risks.

 

When they acquired their first ship, they had to maintain and manage it. If the number of their owned ships was small, the fixed costs for the department responsible for maintenance and management would become high. So, for the time being, they decided to engage an external management company. However, they knew well that external management was inferior to in-house management in terms of cost and performance, so they believed it was best to transition to in-house management as soon as possible.

 

The best aspect of in-house management is the ability to perform preventive maintenance. By constantly monitoring the condition of the vessel, issues could be addressed and repaired before they became severe, thereby minimizing costs.

 

As the number of their self-owned vessels increased, the management was transitioned to in-house. They found that the reduction in management costs was greater than they had ever imagined.

 

Before long, after their fleet had been formed by self-owned vessels, they established their own manning company to train and educate crew members internally. This ultimately ensured the retention of competent crew members.

 

Needless to say, the quality of the crew directly impacts the reliability and safety of operations. The synergy effect of integrating operation, ownership, maintenance, and crew members resulted in rapidly increased profits and reduced costs.

 

At this stage, they were capable enough to observe the shipbuilding and trading ship markets, while considering the condition of self-owned vessels. They advantageously sold their owned vessels and ordered new ships at the right timing.

 

The emerging shipping company, equipped with a constantly competitive fleet, joined the ranks of major shipping companies due to its solid business foundation.