A Strategic Analysis

Neptune Orient Lines

Ltd.
Strategic Management
Contents
Introductions:......................................................................................................... 4
Objective of report:.................................................................................................. 4
Present market environment:....................................................................................... 4
History:................................................................................................................. 4
Vision Statement:.................................................................................................... 4
Mission Statement:................................................................................................... 5
Environment Analysis:........................................................................................... 5
The External Environment Analysis: PEST Analysis:...........................................5
Political factors:.............................................................................................. 5
Economic factors:........................................................................................... 6
Environmental and Social factors:..................................................................7
Porters !ve forces:................................................................................................ 7
". Threats of #e$ entrants %lo$&:.......................................................................7
'. (ivalry amon) com*etitors %lo$&:..................................................................7
+. Su,stitute *roducts %-o$&:..............................................................................
+. /ar)ainin) *o$er of the su**liers %hi)h&:.......................................................
5. /ar)ainin) Po$er of ,uyers %0i)h&..................................................................
1om*etitive *ro!le matrix:.................................................................................... 2
S34T 5 T43S:.................................................................................................... "6
Stren)ths:......................................................................................................... ""
3ea7nesses:.................................................................................................... ""
4**ortunities:.................................................................................................. ""
Threats:............................................................................................................ "+
+.'.' 8inancial analysis:....................................................................................... "5
Pro!t 9ar)in Analysis:...................................................................................... "5
-i:uidity ratios:................................................................................................ "5
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Solvency (atios:............................................................................................... "6
;rand Strate)y :.................................................................................................. "7
1urrent Strate)y:.............................................................................................. ".
(ecommendations and 1onclusion:..................................................................".
References....................................................................................................... '6
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Introductions:
Objective of report:
The objective of this report is to research the Neptune Orient Lines strategy and efficacy
thereof. In this research we will analyze critically Neptune Orient Lines (hence forth referred
to as NOL
Present market environment:
The global shipping industry is still reeling fro! the shoc"s of the greatest global recession
since the great depression. #hile in recent ti!es$ we have witnessed sharp upsurge in the
trade volu!es theres no guarantee that trend can be sustained in the long%run with de!and
fro! the &!erica and 'urope on the decline. &lthough e(perts agree its unli"ely for the
volu!e to slip to )**+ levels there is a loo!ing threat of overcapacity that has long plagued
the shipping industry. ,any container co!panies had placed orders for new ships that had
been due for delivery but had been delayed in the wa"e of the financial crisis and when
these new ships are set afloat the overcapacity$ already hurting the shipping lines$ !ight
!itigate against the financial gains in the last one year. (bbc$ )**+
History:
-ro! its hu!ble beginnings in ./0+ today NOL is the 0
th
largest shipping co!pany in the
world in ter!s of !ar"et share. 1esides its container transportation unit it runs an
independent logistics unit which is spread throughout the world. &2L logistics ran"s a!ong
one of the biggest logistics provider co!panies. In this way NOL provides a !ore integrated
supply chain service to its custo!ers. The single biggest event in the NOLs history was its
!erger with &!erican 2resident Lines (&2L$ )*.*.
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The co!ing together of the two co!panies saw the for!ation of one of the biggest shipping
lines in the world.
Vision Statement:
The vision of the NOL group is stated as Our Vision is to be the best in the world at
moving and managing containerized trade, providing a lifeline for the global
economy.
The vision state!ent states in very une3uivocal ter!s that NOL strives to be the best in the
industry. This is good for the !otivation of the staff and in engendering investor and
shareholders confidence in the co!pany. The co!pany strives to be the best in the industry.
Mission Statement:
Our !ission is to enable trade and create long"term value by delivering# $trong
returns for our shareholders %ompetitive advantage for our customers Opportunities
for our employees and $upport for our communities
The !ission state!ent e(plicitly !entions co!panys shareholders$ custo!ers and
e!ployees. The three !ost i!portant co!ponents of the business are incorporated into it.
&nd it goes beyond that by including the sta"eholders as well$ which !eans that co!pany is
co!!itted to conducting its affairs in a way such that benefits the co!!unity at large.
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Environment Analysis:
!e E"ternal Environment Analysis: PES Analysis:
The process of analyzing e(ternal environ!ent is called 2'4T analysis according to ,orden
()**5. These are factors that a business cannot control for they e(ist in the e(ternal
environ!ent. It can$ however$ structure it policies such that it can better adapt to these
conditions. 2'4T is an acrony! for 2olitical$ 'cono!ic$ 4ocial and Technological factors.
Political factors:
The fallout fro! political !isadventures can have severe econo!ic repercussions in a world
where trade a!ong nations is of penulti!ate significance to the econo!ic and social
wellbeing of the trading nations. &lthough head%3uartered in 4ingapore$ NOLs pre!iere
brands$ &!erican 2residential lines (&2L and &2L logistics have a global reach and
therefore the health of global econo!y is entwined with the financial stability of these
co!panies. The upsurge in the total trade volu!e in the last century was a result of
countries lifting trade barriers$ such as tariffs$ 3uotas etc. 2olitics underpinned all these
decisions. These were so!e of the !easures$ besides technological advances$ that
facilitated the transition to globalization. In )**. 6hina for!ally entered #orld trade
organization. (116$ )*.* The i!pact of this arrange!ent beca!e instantly obvious. -or
e(a!ple$ in )**7$ the 6hinese 2ort of 4hanghai handled container cargo worth .7$005
T'8s. In )**/ it beca!e the second busiest port after 4ingapore handling )0$**) T'84 of
container cargo. (hafen%ha!burg. The i!plication for container shipping co!panies is
obvious here. #e "now how bilateral free trade agree!ents between nations have
significantly changed the world. -or e(a!ple$ tal"s have already begun on trans%pacific trade
agree!ent. The countries include &ustralia$ 1runei$ 6hile$ New 9ealand$ 2eru$ 4ingapore$
:ietna! and the 8nited 4tates. 4peculations are also rife that !ajor &sian econo!ies such
as ;apan$ 4outh <orea and 6hina !ight later join the pact. If and when this happens$ it will
be an event of !a!!oth proportions for the container shipping industry and we will see an
unprecedented surge in trade volu!e. Li"ewise$ lifting of trade barriers at such a large scale
level will invariably lead to !ore trade which will provide a further i!petus to the growth in
revenues for !ajor shipping lines (The ;a"arta =lobe$ )*.*
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Economic factors:
4ingapore is the busiest port in the world in ter!s of total cargo it handles. Its glea!ing s"y%
scrappers loo"ing down upon ceaseless loading and unloading of containers and$ within
close pro(i!ity of its port$ tens and hundreds of ships anchored$ waiting their turn to
discharge or load the cargo at the port > !a"es 4ingapore into a city that never sleeps. 1ut
its !id )**/$ and 4ingapore is the brightest single island in the world. Not that they
!anaged to put up !ore s"yscrapers but rather there are hundreds of ships laying idle at
4ingapore anchorage. 4ure a !es!erizing sight at night yet their presence in such large
nu!bers foretells an i!pending econo!ic crisis which has already wrea"ed havoc on the
shipping industry and NOLs pre!iere brand is in the eye of the stor!. ?eason being that the
econo!ic recession had just started to ta"e its toll on the shipping industry. That was )**/
and shipping industry is still reeling fro! the effects of an econo!ic tsuna!i of epic
proportions. (116$ )*.*
-irst half of )**/ saw de!and profoundly fall for &2L. This period of great recession was
described by NOL as the @worst !ar"et conditions since the advent of containerizationA.
Be!and contracted by C. percent. The losses sustained by one of the worlds !ajor
container carriers reflect the scale of the econo!ic crisis. In the year )**/ NOL registered
losses of 5C. !illion dollars co!pared to a profit of 5C !illion in )**+. (NOL &nnual report$
)**/
Dowever$ things started to loo" not so blea" for NOL by the first 3uarter of )*.*. 6ontainer
shipping volu!e had risen dra!atically by 7E F. ,any other !ajor shipping co!panies
recorded si!ilar results which led so!e to speculate that econo!ic recovery !ay be in the
offing. ?ecently #orld 1an" warned that while global econo!y !ay see! to have pic"ed up$
the de!and !ay slac"en in the short run. 1ut at the sa!e ti!e is hopeful that growth rates
for developing countries will continue to rise. This is where NOL needs to capitalize. #hile
!ost of its vessels are deployed on transatlantic and transpacific routes its operations do not
provide full%fledged coverage to sub%4aharan countries which are e(pected to see
staggering growth figures in the future. -urther!ore$ the sa!e #orld 1an" report cautions
that econo!ic situation in 'urope re!ains fragile. (#orld 1an"$ )*.*
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Environmental and Social factors:
It is esti!ated that ,ariti!e industry produces ).5 percent of the worlds total carbon
e!issions. This is significantly lower than one would e(pect. 6ontainer ships account for
!oving 0) percent of cargo transported via sea. & report by world shipping council clai!s
that !ariti!e shipping is by far the !ost carbon efficient !ode of transporting goods. In
showing environ!ental responsibility$ NOL has e(celled by adopting a broad%based strategy
that see"s to !itigate against the adverse affects of pollution created by its vessels. 1esides
confor!ing to international environ!ental rules and regulations$ NOL has ta"en initiatives to
spearhead the !ove!ent of @clean%ocean$ blue s"iesA. NOL is focused on reducing e(haust
pollutants to the e(tent possible. To this end$ it is partnering with #orld shipping council
which is also chaired by NOL group 6'O ?on #iddows. & detailed list of its environ!ental
friendly initiatives is available at the following websiteG
httpGHHwww.apl.co!Henviron!entHht!lHenviron!entIinitiatives.ht!l
In !any cases$ social trends underlie consu!ption patterns. 1ut what is the relevance of
these factors to transportation industry. It is of little i!port to ship owners what those
container bo(es contain. 2erhaps growing awareness a!ong consu!ers of ris"s and costs
that entails the transport of the goods they desire fro! overseas !ay be construed as an
e(a!ple of a social trend. #e see a trend a!ong developed nations where increasingly
custo!ers are wary of businesses that conduct their affairs in a way that is detri!ental to the
environ!ent. In !any ways$ so far as I a! concerned$ being environ!entally responsible
e3uates to being socially responsible. NOLs response to this has been already stated
above.
Porter#s five forces:
2orters five force is an analytical tool for analyzing co!petitive environ!ent of the industry
in which a business operates. ( Denr y$ )**+ . The !ai n obj ect i ve i n anal yzi ng
t hese f or ces i s t o gauge t he pr of i t pot ent i al i n any i ndust r y a busi ness
oper at es i n by st udyi ng t he i nt er act i on of t he co!pet i t i ve f or ces.
( Denr y$ )**+
$% !reats of &e' entrants (lo'):
4hipping industry is a!ong one of the !ost capital intensive industries and it will be very
difficult for new entrants to establish a foothold in such an industry. The trusted na!es in the
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industry have been around for decades. The scale of NOLs operations is so vast that it
faces no threat fro! new co!ers in the short to !ediu! run. Dowever$ further consolidation
of e(isting co!panies by !ergers and ac3uisitions can pose challenge to NOL. -urther!ore$
if pac"age delivery providers such as BDL want to provide !ore integrated supply chain
services then that could pose a substantial threat to NOL. These co!panies have sufficient
capital to not only enter the industry but also ac3uire so!e of the present container lines. 1ut
on the whole the threat fro! new%entrants re!ains e(tre!ely low at this point.
*% +ivalry amon, competitors (lo'):
#hile there are !ultiple big players involved in the industry$ its typically a buyers industry
where not one single shipping co!pany can control the price. In fact$ price wars are very
rate in this industry and this is reflected in the increasing cooperation we see a!ong !ajor
shipping lines in ter!s of how they e(change or offer their slots to other co!panies whereby
gaining fro! the core co!petencies of each other.

-% Substitute products (.o'):
There is no threat of substitutes in the global container shipping industry unless new
technology supersedes the present one$ such as when innovation in the shipping industry
gave birth to container shipping which snatched the !ar"et fro! bul" shipping.
.
-% /ar,ainin, po'er of t!e suppliers (!i,!):
The bargaining power of the suppliers fluctuates with the health of global econo!y. #hile
shipping co!panies !ay have !any suppliers$ including ship builders$ the single !ost
i!portant supply that has the !a(i!u! effect on the freight rates > which essentially
deter!ine whether co!pany registers a loss or a profit% is the fuel. #hen econo!y is
overheated$ as it was before the financial crisis erupted when oil was trading at all ti!e high
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the freight rates ju!ped significantly. Dowever$ at that ti!e co!panies were able to push
so!e of the costs to end custo!ers.
0% /ar,ainin, Po'er of buyers (Hi,!)

The bargaining power of the buyers is e(ceptionally high in this industry. &s we
observed above that when the global econo!y overheated just prior to the eruption of
financial crisis and fuel costs s"yroc"eted container co!panies were still able to push so!e
of the costs to the end custo!ers. Dowever$ when the econo!y started showing ends of
slowdown and global trade volu!e began to shrin" substantially !ost co!panies continued
providing their services offering very low freight rates to their custo!ers and while sustaining
heavy loss due to overcapacity and not being able to advantage fro! econo!ies of scale.
This was a ti!e when all big co!panies sustained e(ceptionally high costs and absorbed all
of the costs because they wanted to retain their custo!er bases when econo!y recovers.
#hen the econo!y finally recovered$ co!panies started increasing freight rates to recoup
so!e of their losses.
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1ompetitive profile matri":
62, is an essential strategic !anage!ent tool to co!pare the fir! with the !ajor players of
the industry. This analysis provides both an offensive and defensive strategic conte(t
through which to identify opportunities and threats.
6ritical 4uccess
-actors
#eight
NOL ,aers" lines ,46
?ating
#eighted
4core
?ating
#eighted
4core
?ating
#eighted
4core
. ,ar"et 4hare *.)* ) *.7* 7 *.+* C *.E*
) ?eputation in the industry *..0 C *.70 7 *.E* C *.70
C 4afety and security record *..* 7 *.7* ) *.)* C *.C*
7 ,anage!ent *..* 7 *.7* C *.C* C *.C*
0 -inancial 2osition *..0 ) *.C* . *..0 ) *.C*
E 1argaining power *..* ) *.)* 7 *.7* ) *.)*
5 =lobal '(pansion *..0 ) *.C* 7 *.E* C *.70
+ Innovation *.*0 7 *.)* C *..0 C *..0
Total ..** ).E0 C.) )./*
NoteG The rating values are as followsG .J !ajor wea"ness$ )J !inor wea"ness$ CJ !inor
strength$ 7J !ajor strength
#hile the figures are not arbitrarily assigned above$ 62, is not e(act science. Its based on
perception which is subject to error of judg!ent. In ter!s of !ar"et share NOL co!es
nowhere near ,aers" or ,46 lines yet it has a reputation of reliability in the industry and its
safety and security record is 3uite good too. There have been at least one hijac"ing case
involving ,aers" lines and on another instance its largest vessel was set on fire. Dowever$ it
is worth !entioning here that as the scale of your operations increase$ so does the
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probability of accidents. -inancial position of all co!panies evaluated is in a bad shape yet
&2L see!s on course to recoup so!e of its losses.
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S2O 3 O2S:
4wat anal ysi s hel ps t o su!!ar i ze st r at egi c i ssues f aci ng a busi ness
( =opi nat h$ K I . $ )**/ . 4t r engt hs and wea"nesses ar e aspect s of t he
i nt er nal envi r on!ent of an or gani zat i on wher eas t hr eat s and
wea"nesses e(i st i n t he e(t er nal envi r on!ent . #hen put i nt o a !at r i (
f or !at $ t hese 7 f act or s hel p t o gener at e al t er nat i ves i n a syst e!at i c
!anner and t hi s !at r i ( i s cal l ed TO#4 anal ysi s. -or e(a!pl e$ we can
!at ch t he el e!ent s of st r engt h and wea"nesses wi t h oppor t uni t i es and
t hr eat s t o cr eat e !or e f avor abl e out co!es.
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$trengths#
.. #orldwide reach.
). Logistic and ter!inal operations
co!pli!ent the core business.
C. great reputation in the industry
7. 'stablished foothold in North%&!ericas
!ost !ajor ports.
0. One of the largest shipping co!panies
with fairly large scale operations.
E. 1ac" by 4ingapore =overn!ent
&ea'nesses#
.. 6o!pared to co!petitors$ the scale of
operations is very s!all.
). declining revenues
C. Ter!inal and logistics businesses not
generating sufficient revenue.
7. Let to ta"e advantage of several "ey
shipping routes.
Opportunities#
.. ,ariti!e industry 2rojected to grow
steadily.
). Increased transpacific trade e(pected in
the future due to the potential !ultilateral
trade%agree!ents.
C. &bility to attract funds for e(pansion
7. Operating on new trade routes.
Threats#
.. =lobal econo!y just recovering fro!
recession
). Overcapacity challenges.
C. currency ris"s
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Stren,t!s:
NOLs pre!iere brand$ &2L$ is one of the biggest container shipping co!panies. 1y so!e
esti!ates the fifth biggest shipping co!pany. 1esides &2L$ NOLs other brands include &2L
logistics and &2L ter!inals. Neptune Orient lines strength is built upon its reputation. ;ust in
)*.* it was recipient of over a dozen awards.
& shipping co!pany lin"ed to ter!inal operating co!pany has !any co!petitive
advantages.. &2L itself is a !ajor contributor to ter!inals revenue. This gives NOL an edge
over its co!petitors in 8nited where it operates "ey ter!inal facilities. -or e(a!ple$ the ports
of Los &ngeles$ 4eattle and Oa"land. &2L logistics$ another NOL owned business$ has
established its presence across 0 continents. In the supply chain business$ &2L logistics has
!ade considerable headway and covers a vast array of supply chain services. (&2L
Logistics$ )*.*
.
2eaknesses:
&2L vessels operate with a total capacity of 07/$E7C T'8 with plans to increase capacity by
5 percent. httpGHHwww.joc.co!H!ariti!eHapl%e(pand%capacity%5%percent ( Leach$ )*.* .
This pales in co!parison to its !ost i!!ediate co!petitors such as &.2. ,oller%,aers" and
,editerranean shipping which have a capacity of )$*C+$/+C .$0*0$E7E T'8 respectively.
,oving on$ according to )**+ esti!ates$ &2L enjoyed a !ar"et share of just 7.. percent$
co!pared to ,aers" lines with a !ar"et share of staggering .0 perfect$ followed by
,editerranean shipping with a !ar"et share of .... percent. In view of the anticipation of
rise in global trade$ if &2L wants to continue to play a !ajor role in this industry$ it !ust
increase its capacity. -urther!ore$ increase in the scale will also allow NOL to benefit fro!
stronger bargaining power. (1usiness ,onitor Online$ )**/
1esides this$ while the co!pany !aintains a substantial presence along the !ajor trans%
pacific$ transatlantic routes$ it is yet to capitalize on other trading routes such as &frica and
,iddle%east.
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Opportunities:
1ecause of the co!panys strong brand i!age and reputation as a reliable enterprise it had
never had any proble!s financing it debts by !eans of issuing rights issues. #hen it did so
last year to pay off its debts$ it accu!ulated enough capital to not only shore up its financial
position but also be able to e(pand the scale of its operations by$ say$ ac3uisition of new
businessesM -urther!ore$ !ore opportunities lie ahead for NOL. &2L has opened new
service lines along different routes within &sia and across continents where it did not
previously have a !ajor presence. ( N &2L envi sages wor l d ,ar "et $ N )**+ The
greatest opportunity however lies in capitalizing onto the growing !ariti!e industry. 1y )*.C$
the industry is forecasted to increase by )C percent since )**+.
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!reats:
Transpacific growth is projected to re!ain wea" with !ajor developed countries econo!ies
still recovering fro! a !ajor financial crisis. &2L beca!e one of the first co!panies to
reactivate all of its laid up vessels yet this poses the threat that if global econo!y doesnt
fully recuperate then NOL !ight suffer substantial losses due to overcapacity. (Lloyds list$
)*.*
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TO#4 ,atri(
$"O $trategies#
.. =lobal scale of operations will allow the
business to reap !a(i!u! benefit fro! the
growth in the Industry (4.$*.
). =reat reputation in the industry will help the
co!pany enter new !ar"ets for supply chain
businesses.(4)$*)
&"O $trategies#
.. NOL can increase its !ar"et share by
entering new trade routes such as the
transpacific route. (#.$*)
). 6o!panys reputation will allow e3uity
capital to be raised. (#.$*C
$"T $trategies#
.. 'ventually$ when econo!y pulls out of
recession NOL will be well positioned to
benefit fro! the growth (4.$T..
&"T $trategies#
.. '(cess capacity can be e!ployed to
cater to trade routes in &sia. (#.$T)
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-%*%* 4inancial analysis:
Profit Mar,in Analysis:
Item *556 *557
8ross Mar,in % *.C.F .*.)/F
Profit Mar,in %...C7F *./0F
Operatin, Mar,in %.*.5.F ..75F
+OE %)E.CF C.0)F
+OA %.C.+CF 7.)0F
The results are not surprising. 8nprecedented slu!p in international trade ate into
co!panies profits. &ll big co!panies suffered ali"e$ including ,aers" > the biggest co!pany
by !ar"et share. -ro! the report above we can ascertain that its !ainly the operating costs
that increased tenfold ti!es on a year%to%year basis that beca!e a cause of real worry. The
sharp rise in operating costs is attributable to vessels being not operated at full%capacity.
Indeed$ &2L laid up !any of its vessels during the crisis yet laid up vessels incurs high costs
too$ including wages to sea%!en. If say a ships total capacity is 0*** T8's and its only . 0
th
loaded then it beco!es i!!ediately clear why operating costs can spiral out of control.
.i9uidity ratios:
Item *556 *557
1urrent +atio ..*.5F /0./7F
:uick +atio /EF ++.5*F
1as! +atio C*.+0F )+.C0F
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The li3uidity position of the co!pany has i!proved fro! )**+ as evidenced fro! the table
above. The co!pany is !uch better poised than )**+ to pay off its short ter!s debt.
Dowever$ 3uic" ratio reveals that it has substantial a!ount of !oney tied in inventories
which can be reduced to bring the 3uic" ratio within ..
Solvency +atios:
Item *556 *557
Bebt to '3uity ?atio ++.*CF ..5.C+F
Bebt ?atio 7E.+.F 0C.//F
4olvency ratios have also i!proved fro! )**+. 1ut they are still substantially high. 1ecause
the co!pany is owned by =O: of 4ingapore theres no ris"$ at present$ of the co!pany
defaulting on its debtO however$ it will have to reduce reliance on debt to e(pand its
operations.
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8rand Strate,y :
#ea"
6o!petitive
2osition
?apid ,ar"et =rowth
4trong
6o!petitive
2osition
:uadrant II
.. ,ar"et Bevelop!ent
). 2enetration
C. product develop!ent
7.Dorizontal integration
0. Li3uidation.
:uadrant I
,ar"et develop!ent
,ar"et penetration
2roduct develop!ent
1ac"ward and forward
integration
:uadrant
.. 6oncentric
diversification
). horizontal diversification
C. ;oint ventures
:uadrant
.. Turnaround or
retrench!ent
). 6oncentric
diversification
C. 6onglo!erate
diversification
0. Bivestiture
E. Li3uidation
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4ourceG adapted fro! ?oland 6hrisensen$ Nor!an 1erg$ and ,alcol! 4ulter$ policy
for!ulation and ad!inistration (Do!ewood$ IIIL ?ichard B. Irwin$ ./5E$ .E%.+.
&ccording to ?obert N. Lussier ()**+ =rand strategy is the overall corporate strategy and it
!ay entail growth$ retrench!ent$ and divest!entO or a co!bination of all of the above. #hile
initially NOL was pursuing a growth strategy$ by increasing capacity$ these efforts were
ha!pered by unforeseeable eventsG na!ely$ the )**/ recession. It now faces the dreadful
prospect of overcapacity when new vessels are set afloat. 8ntil now$ NOLs strategy was
focused on growth. ;ust in one year$ revenue dropped fro! around +.0 billion to E.0 billion
and net profit fro! .C5 !illion in )**+ to a loss of 5** !illion in )**/. -aced with such a
grave situation$ co!pany$ it is advised$ should adopt a turnaround strategy$ perhaps in
co!bination with retrench!ent strategy. Turnaround strategy involves resuscitating$ as it
were$ a business !a"ing substantial loses and retrench!ent involves li3uidation of so!e of
business assets ?obert N. Lussier ()**+. NOLs greatest assets$ of course$ are its ships.
The average age of its fleet is nine years. Dowever$ !any of its vessels that were purchased
in early or !id%nineties can be sold off to i!prove the li3uidity position of the co!pany. This
will help bring down ad!inistrative e(penses substantially$ especially those associated with
the proble! of overcapacity. 4econdly$ while cutting down capacity$ NOL can continue to
pursue growth strategy by e(panding operations along new trade routes in &sia and &frica$
for e(a!ple. To do so$ NOL can enter partnership agree!ents with container%liners operating
along those routes for the !ean%ti!e.
1urrent Strate,y:
NOL was one of the first co!panies to bring bac" into operation vessels that had been laid
up as a result of financial crisis. NOL is presently increasing capacity li"e other !ajor
container shipping co!panies. The co!pany is presently operating at a capacity of
5$E*/T'8s.which gives it a !ar"et share of 7 percent$ !a"ing it the fifth largest container
shipping co!pany. -urther!ore$ while the co!pany has increased the capacity and is
loo"ing forward to charter additional ten ships$ it is continuing a policy of slow%stea!ing
which cuts fuel consu!ption by up to C* percent. -urther!ore$ by )*.) another .C vessels
Strategic Management
will be added to the present fleet$ adding ..)$5CET'8s !ore to the present capacity.
(@1usiness Bata ,onitorA .%E
+ecommendations and 1onclusion:
#hile in ter!s of totally capacity &2L is the 0th or by so!e esti!ates the E
th
largest
co!pany it faces !ounting challenges fro! its !ost i!!ediate co!petitors whose order
boo" see!s to indicate that by the ti!e new vessels are delivered they will ta"e away so!e
of &2Ls !ar"et share. (NOL$ )*.*. The !ar"et share of &2Ls !ost i!!ediate co!petitors
is al!ost the sa!e$ around four percent range. Dapa3 Llyod$ 'vergreen and &2L have
!ar"et shares of 7..$ 7 and 7 percent$ ran"ed 7
th
$ 0
th
and E
th
respectively. ( <onr ad$
)**/ 6o!panies ran"ed 5
th
$ +
th
and /
th
boast a !ar"et share of C./$ C.+ and C.5 percent
respectively. ( 1onney$ )*.* These s!all percentage differential points pose a
substantial challenge to &2L to retain its current position in the !ar"et. 'ven though$
financially$ so!e of these co!panies are deeply under debt when econo!y fully rebounds
they will be better placed to ride the growth and if all goes well$ will$ in longer to !iddle run$
recoup their losses and !a"e substantial profits because while no one can predict with
precision at what rate the trade volu!es will grow$ we "now for certain that with !ore -T&s
being signed$ and Intra%&sia trade offering pro!ise$ we will see substantial increase in trade
volu!e. &2L$ I reco!!end$ should pursue a growth strategy and add larger vessels to its
fleet. Its !ore econo!ical to operate larger vessels > those in e(cess of 0*** T8's. This is
because$ if fully loaded$ they gain fro! the econo!ies of scale. #hile bearing so!e ris"s >
as with every business underta"ing > the rise in global trade will e(pand$ not shrin"$ and in
the longer to !ediu! ter! the capacity now being ac3uired will offer dividends in future.
Strategic Management
+eferences:
&!erican 2resident Lines PonlineQ. ()*.* P&ccessed /th oct )*.*Q. &vailable fro!G
RhttpGHHwww.apl.co!Henviron!entHht!lHenviron!entIinitiatives.ht!lS.
&2L envi sages wor l d !ar "et l eader shi p. ( )**+ . Del i ver ( The Gl obal
Logi st i cs Net wor ki ng) $ ?et r i eved f r o!
ht t pG H H www. del i ver j our nal . co!H enH j our nal H newH sect i on. phpM
'L','NTII BJ.**0
Nept une or i ent l i nes ( nol K apl . ( )**/ . Busi ness Moni t or Onl i ne$
?et r i eved f r o! ht t pG H H www. al l busi ness. co!H co!pany% act i vi t i es%
!anage!ent H co!pany% st r uct ur es% owner shi pH .7+*C07C% .. ht !l
Apl l ogi st i cs .
( n. d. . ?et r i evedf r o!ht t pG H H www. apl l ogi st i cs. co!H wpsH por t al H apl l H "c(!l H *
7I4j /42y"ssy*(2L,n,z*v,*LITj z<LN7"CNB&'49n-O+LD=Ol Dogs9o
g"0(Cu9TI ?+j 4&i ;v-ho?i <B'*/o<o,/U*/+nNT/L2*vf 8B/&t yT7'got z
?8:'?&NLi c&gV H del t aH baseE7(!l H LCd;dy'vd*9NT8-zT8,vN'l :?4+)
Uz?f :"7
N 6o!pany 2r of i l e % Nept une Or i ent Li nes ( K &2L . N Busi ness Dat a
Moni t or ( )*.* G .% E. #eb. )* !ay )*...
Rht t pG H H www. al l busi ness. co!H co!pany% act i vi t i es% !anage!ent H co!pany%
st r uct ur es% owner shi pH .7+CEE))% .. ht !l S.
N 6ont ai ner por t t hr oughput i n a gl obal co!par i son. N haf en ha!bur g.
haf en% ha!bur g$ .* ;ul y )**/. #eb. )* !ay )*... Rht t pG H H www. haf en%
ha!bur g. deH enH cont ent H cont ai ner % por t % t hr oughput % gl obal % co!par i sonS.
Denr y$ &. ( )**+ . "n#er st an#i ng st r at egi c !anage!ent . O(f or d
8ni ver si t y 2r ess$ 84&.
;onathan =ordon$ The 1o( arrives in 4ingapore. ()**+. bbc$ .5 October
;a"arta =lobe PonlineQ. ()*.* P&ccessed /th oct )*.*Q. &vailable fro!G
RhttpGHHwww.theja"artaglobe.co!HbusinessHtal"s%begin%on%trans%pacific%trade%
agree!entHCEC+./S.
Strategic Management
Leach$ 2et er . ( )*.* . &pl t o e(pand capaci t y by 5 per cent . The $our nal
of %o!!er ce $ ?et r i eved f r o! ht t pG H H www. j oc. co!H !ar i t i !eH apl % e(pand%
capaci t y% 5% per cent
<onr ad$ ;ohn. ( )**/$ !ar ch 5 . %ont ai ner shi ppi ng co!pani es & t he
t en l ar gest vi sual i 'e# . ?et r i eved f r o! ht t pG H H gcapt ai n. co!H t he% t en%
l ar gest % cont ai ner % shi ppi ng% co!pani es% vi sual i zedME5+
,or den$ T. ( )**5 . (r i nci pl es of st r at egi c !anage!ent . &shgat e 2ub
6o.
,ason$ 2aul i ne. N I dl i ng shi ps cl og up 4i ngapor e shor es. N BB% .* ;ul y
)**/G .. #eb. )* oct )*.*.
ht t pG H H news. bbc. co. u"H )H hi H busi nessH +.7)+C+. st !
2or t er $ ;anet . N NOL t o r eact i vat e al l i t s i dl e shi ps. N Ll o)#* s Li st . Ll oydW s
Li st $ )7 ,ay )*.*. #eb. )* oct )*.*. R
ht t pG H H www. l l oydsl i st . co!H l l H sect or H cont ai ner sH ar t i cl e.E/C7). ece S.
Nept une or i ent l i nes ( nol K apl . ( )**/ . Busi ness Moni t or Onl i ne$
?et r i eved f r o! ht t pG H H www. al l busi ness. co!H co!pany% act i vi t i es%
!anage!ent H co!pany% st r uct ur es% owner shi pH .7+*C07C% .. ht !l
N =l obal 'cono!i c 2r ospect s )*... N +or l # Bank. #or l d 1an"$ )*.*.
#eb. )* !ay )*.*.
Rht t pG H H web. wor l dban". or gH #14I T'H 'UT'?N&LH 'UTB'6H 'UTB'62?O4
2'6T4H 'UT=1L2?O42'6T4H *$ $ !enu2<G E.075*Xpage2<G E7).+/)EXpi
2<G E7).+/0CXt he4i t e2<G E.)0*.$ **. ht !l S.
=opi nat h$ 6$ K I . $ ;. ( )**/ . ,t r at egi 'e -e. 6engage Lear ni ng.