OSG at the terminal of last fiscal twelvemonth, the Company owned or operated a modern fleet of 111 vass ( aggregating 11.3 million deadweight dozenss and 864,800 three-dimensional metres ) of which 88 vass operated in the international market and 23 operated in the U.S. Flag market. OSG ‘s new-building plan of owned and chartered-in vass totaled 11 International and U.S. Flag vass, conveying the Company ‘s entire owned, operated and new physique fleet to 122 vass.
OSG is regarded as merely major company with a important international flag & A ; US flag fleet. OSG has a concern scheme which enables it to keep a balance portfolio of vas types & A ; charter mix options i.e. long term clip charter employment every bit good as topographic point ocean trip committednesss.
OSG has 3500 employees worldwide out of which 3050 are mariners, who are regarded as contractual employees or undertaking based employees. OSG operates office at Athens, Houston, London, Manila, Montreal, Newark, Newcastle, Singapore & A ; Tampa, therefore giving the organisation a worldwide shore presence. The corporate central office of the company is located in New York, the fiscal capital of United States of America.
OSG is committed to supplying safe, dependable transit services to its clients while guaranting the safety of its crews, vass and the environment. The Company is besides committed to making long-run stockholder value by put to deathing on a growing scheme designed to diversify its gross beginnings across its chosen sectors and thereby maximise returns and cut down hazard over transportation rhythms.
OSG ‘s growing scheme is focused on four elements:
aˆ? Sector Leadership – OSG seeks to keep or accomplish market taking places in each of the primary markets it operates: petroleum oil, merchandises and U.S. Flag. The Company has expanded its fleet through organic growing and acquisitions of companies that have expanded its market presence, the graduated table of its fleet and service offerings.
aˆ? Fleet Optimization – The Company believes that it can better returns in any transportation rhythm by taking a portfolio attack to pull offing its concern. This attack includes runing a diverse set of vass that trade in different markets ; take parting in commercial pools that maximize vessel use ; pull offing a fleet of owned and chartered-in tunnage that provides for flexibleness and optionality ; and merchandising its fleet in both the topographic point and clip charter markets to heighten returns.
aˆ? Superior Technical Ship Management – OSG is committed to operational excellence across its fleet. The Company ‘s high-quality, modern fleet is operated by experient crews supported by skilled shore side forces. OSG ‘s Safety Management System ( ”SMS ” ) is designed to guarantee that operational patterns and processs are standardized swift broad and those mariners and
vessel operations meet or exceed all applicable safety, regulative and environmental criterions established by International and U.S. maritime Torahs.
aˆ? Financial Flexibility – The Company believes its strong balance sheet, ample liquidness, proven entree to the capital markets and a important unencumbered plus base provide important fiscal flexibleness. OSG has entree to significant sums of debt capital on an unbarred footing in both the bank and public debt markets, thereby cut downing its issue of secured debt, which typically has collateral care demands. This fiscal flexibleness permits the Company to prosecute attractive concern chances.
Strategic Organization Arrangement
The Company ‘s vas operations are organized into strategic concern units and focused on wide market sections: petroleum oil, refined crude oil merchandises, and U.S. Flag. The International Flag Crude Tanker unit manages International Flag ULCC, VLCC, Suezmax, Aframax, Panamax and Lightering oilers ; the International Flag Product Carrier unit chiefly manages LR1 and MR merchandise bearers and the U.S. unit manages most of the Company ‘s U.S. Flag vass. Through joint venture partnerships, the Company operates four LNG bearers and two Floating Storage and Offloading ( ”FSO ” ) service vass.
Dedicated chartering and commercial forces manage specific fleets while the Company ‘s proficient ship direction operations and corporate sections back up the Company ‘s planetary operations.
Multi-business organisations use a assortment of constructions ; multidivisional strategic concern unit, or a signifier of matrix construction frequently described as transitional. With the multidivisional construction, single exists as independent units, with each unit director describing to corporate caput quarters. When an organisation is loosely diversified with several concerns in its portfolio, direction may take to organize strategic concern units, with each unit integrating a few concerns holding something in common or commonalty.
Business Strategy for Trading Ships
OSG by and large charters its vass to clients either for specific ocean trips at topographic point rates or for specific periods of clip at fixed day-to-day sums. Topographic point market rates are extremely volatile, while clip and bareboat charter rates, because they are fixed for specific periods of clip, supply a more predictable watercourse of Time Charter Equivalent grosss ( ”TCE ” grosss ) .
Charters in the oiler market are chiefly oil big leagues which charter in portion of their transit demands on a long term footing, and enter into the topographic point market hire vass for the their short-run demands merely, largely during the peak oil trading season. This type of renting scheme, when followed by group of charters such as oil big leagues, can escalate the topographic point rates.
Strategic Key Financial Facts
KD – demand this in tabular word format – hypertext transfer protocol: //sg.finance.yahoo.com/q/ks? s=OSG
The transportation industry is extremely competitory and fragmented with OSG viing with other proprietors of U.S. and International Flag oilers. Rivals include other independent shipowners and incorporate oil companies and province owned entities with their ain fleets, oil bargainers with logistical operations, and grapevines.
OSG ‘s vass compete with all other vass of a size and type required by the client that can be available at the day of the month specified. In the topographic point market, competition is based chiefly on monetary value, although charterers are going more selective with regard to the quality of the vass they hire sing other cardinal factors such as the dependability and quality of operations and a penchant for modern dual hull vass based on concerns about environmental hazards associated with older vass. In the clip charter market, factors such as the age and quality of the vas and repute of its proprietor and operator tend to be even more important when viing for concern.
OSG ‘s fleet of VLCCs and ULCCs is commercially managed through Tankers International. Tankers International, with a sum of 43 VLCCs and 2 ULCCs as of December 31, 2010, is a taking participant in this extremely competitory and disconnected market. Its chief rivals include Frontline Ltd. , BW Shipping Managers, Mitsui OSK Lines, Ltd. , Nippon Yusen Kabushiki Kaisha, Malaysian International Shipping Corporation Berhad and Maran Tankers Management.
OSG formed the Suezmax International pool in 2008. There were four oilers in the pool as of December 31, 2010 that trade chiefly in the Atlantic Basin. The chief rivals of the Suezmax International pool include the Gemini Tankers, Stena Sonagol and Blue Fin Tankers pools. Other rivals include non-pool proprietors such as Dynacom Tankers Management, Ltd. , Thenamaris Ships Management, Inc. and OAO Sovcomflot.
OSG is a founding member of Aframax International, which consists of 46 Aframaxes trading chiefly in the Atlantic Basin, North Sea, Baltic and the Mediterranean countries. Aframax International is one of the largest operators in this market sector. Aframax International ‘s chief rivals include Teekay Corporation, General Maritime Corporation and Sigma Tankers Inc.
OSG ‘s chief rivals in the extremely disconnected Panamax trade include proprietors, bargainers relets and pool operators. Well all of OSG ‘s fleet of Panamax oilers is commercial managed by Panamax International, which commercially manages 24 dual hull vass. Main rivals include Star Tankers Heidmar Inc. , A/S Dampskibsselskabet Torm and Jacob-Scorpio Pool Management S.A.M.
In the MR Product Carrier section, OSG owns or charters-in a fleet of 32 vass that competes in a extremely disconnected market. Eight of the OSG vass are operated in the Clean Products International Pool. Main rivals include Glencore International AG, Handytankers K/S, Vitol Group, Trafigura, A/S Dampskibsselskabet Torm, Navig8, Dorado Tankers Pool Inc. and OAO Sovcomflot.
Reference OSG.com /
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Detailed Analysis of OSG ‘s Strategic Management
In this subdivision we will closely reexamine the schemes of OSG. Besides in this portion, we will measure on internal & A ; external analysis of strategic direction of OSG.
Optimize net incomes by runing assets in pools & A ; coactions. Supply attractive returns to portion holders
Decrease in administrative costs & A ; operating expenses. Leverage over clients & A ; impact value due to big scale operation.
Deliver safe, efficient and dependable transit.
Image sweetening & A ; higher premiums paid by Oil big leagues, for vass.
Set the gold direction for proficient direction
Image sweetening & A ; higher premiums paid by Oil big leagues, for vass
Strong balance sheet & A ; entree to capital.
Unencumbered assets allow unbarred adoption. High degree of liquidness, permits better hard currency flow.
Strategic Business Unit of measurements
ACHIEVING COMPETITIVE ADVANTAGE
SPECIALISED CUSTOMER FOCUS BASIS BRAND EG DISTILLATES
POOL PARTNERSHIPS EASIER TO FORM, SIMILAR TYPE OF SHIPS
BRAND IMAGE CAN BE MICRO MANAGED, AS DICATED BY THE MARKET REQUIRMENTS
BASES OF COMPETITIVE STRATEGY
CLEAR BENCHMARK INDICATION, IN THE RESPECTIVE MARKET SEGMENTS EG. SUEZMAX ATLANTIC BASIN TD5
EASIER TO DECIPHER SHIP QUALITY VS COMPETITOR BASIS AGE, OIL MAJOR APPROVALS, STRUCTURE, ETC
The get downing point in explicating a scheme is normally SWOT analysis. SWOT is an acronym that stands for strength, failing, chances and menaces. SWOT analysis is a careful rating of an organisations internal strengths & A ; failing every bit good its environmental chances & A ; menaces.
The technique is credited to Albert Humphrey who led a research undertaking at Stanford University in the sixtiess and 1970s utilizing informations from taking companies involved in long scope planning processes.A
-Largest US flag fleet operator, therefore giving it prolonging competitory advantage in the domestic US market, in conformity of Jones Act.
-Very High criterions of proficient direction, hence enhance plus value in the SNP market for OSG drifting assets
– 6 decennaries of oiler operation experience, which attracts safety witting oil big leagues such as ExxonMobil, shell, stripe, Conoco, etc to prefer OSG tunnage, comparative to smaller ship operators.
-Strong public image as OSG is the 2nd largest publically traded oil oiler company in the universe, measured by figure of vass
– Number 1 market place in really big petroleum oil bearer sector
– Number 2 market place in the Aframax Sector
-Primary concern transportation, which has thin rhythms for long stretches due to subdued demand & A ; sensitive to universe trade. Eg Due to go on failing in the fiscal & A ; recognition markets since 2008, the cargo topographic point market has non been still able to accomplish same cargo degrees, as witnessed in pre-financial epoch of 2007 & A ; prior to that
-Trades chiefly in topographic point market which mean vass chartered footing ocean trip, hence this encourages unpredictable net incomes & A ; skewed fiscal projections
-Shipping is a concern with built-in hazard, hence higher insurance premiums & A ; more unpredictable operating expenses eg BP Oil Spill in US Gulf
-Open minded to engagement in commercial pools enhances OSG ‘s fleet use & A ; TCE grosss
-Long term contracts with south American oil exporting states footing strategic confederation, which provides higher & A ; consistent net incomes
-Enter the fastest turning planetary transportation section i.e. LNG & A ; countering hazard of market entryway, thru 25 old ages term contracts for several assets
-Market value of transporting assets has been of late fluctuating significantly, due to sudden rise & A ; autumn in trade good monetary values including base metals.
-Terrorists onslaughts on oil oilers, particularly for a company which is incorporated in united provinces of United States
-Hijacking & A ; plagiarist onslaughts in buccaneering prone countries, Gulf of Aden & A ; Indian ocean parts on the rise, particularly for Very big petroleum bearers for which the biggest burden country is in-between E
A good established type of analysis to place important factors in the distant concern environment is PEST analysis. PEST itself is an acronym for political, economic, societal & amp ; technological factors. PEST is a good know model frequently used when carry oning a market analysis to back up concern planning & A ; scheme development.
-Company ‘s concern would be adversely affected if failed to follow with Jones act commissariats on United coastwise trade
-OSG ‘s runing market might considerately shrivel due to UN countenances spearheaded by United provinces of America. Such UN countenances have been imposed on large oil exporting states such as Iran, Libya.
– OSG ‘s operating cost could increase drastically, in aftermath of rigorous US authorities Torahs by US authorities such as OPA 90, particular fuel emanation countries, environmental policies in aftermath of BP oil spill, etc.
-OSG ‘s fiscal status would be materially adversely f affected if the shipping income OSG ‘s foreign subordinates subject to current revenue enhancement in the United states
-OSG ‘s liquidness & A ; hard currency flow place may acquire affected due to fluctuating cost of trade goods such as base metals.
-Fuel costs spiking due to crude oil volatility
-Termination of strategic confederations with south American concern spouses due to alter in economic policies
-Inherent trading hazard germinating from frontward cargo understandings
-Rise in rising prices in Asiatic states, from where preponderantly the mariners are coming to run OSG fleet
-Culture span when commercial trading in far east
-HR policies may non be additive, due to utmost cultural diverseness in the organisation
-Shortage of competent & A ; adept mariners, due to lesser aspirers for sea traveling calling
– Piracy, security & A ; highjacking of vass is going a major concern, in the Indian ocean part due to hapless economic conditions in east African states
-Shifting to alternate beginnings of energy & A ; turning economic systems cut downing dependableness on oil energy
– Development of strategic long distance computerised belowground grapevines
-E Governance & A ; E Trading doing little operators compete with larger good established operators, easy
-Better polishing techniques being invariably developed hence cut downing dependableness on rough oil bearers
Critical Evaluation & A ; Strategic Management Assessment
The bosom of an organisation is its cognition, its experience, and its engineering. These are the cardinal strategic foundations.
Please refer Appendix 1 + 2 & A ; we compare OSG fiscal strength with rivals such as “ Frontline, Teekay, Torm.
Market Cap OSG – 903.62 Million
Market Cap Frontline – 1.61 Billion
Market Cap Teekay – 2.37 Billion
Qtrly Revenue Growth OSG – -2.30 %
Qtrly Revenue Growth Frontline – -13.70 %
Qtrly Revenue Growth Teekay – -13.60 %
EBITDA OSG – 56.40 Million
EBITDA Frontline – 490.01 Million
EBITDA Teekay – 583.89 Million
EPS OSG – -5.30
EPS Frontline – 2.07
EPS Teekay – -3.90
Strategic and Tactical Competitive Actions
OSG uses both strategic and tactical actions when organizing their competitory actions and competitory responses in the class of prosecuting in competitory competition. A competitory action is a strategical or tactical action the house takes to construct or support its competitory advantages or better market place.
STRATEGIC AND TACTICAL COMPETITIVE ACTIONS
ENTERING New MARKETS
South American MARKETS SUCH AS VENENZULA, BRAZIL, ETC. MORE Focus ON US DOMESTIC TRADE, WHICH IS CONSIDERED TO Be A NICHE MARKET, DUE TO JONES ACT
New MARKET SEGMENTS
LNG SEGMENT, EXPANDING IN THE UNITED STATES GULF AREA LIGHTERING OPERATIONS
Average FLEET AGE
ACTIVELY INVOLVED IN NEW BUILDING PROGRAM
Amalgamations / Alliances
ACTIVELY INVOLVED IN CREATING NEW POOL PARTNERSHIPS
ACTIVELY PUSHING FOR FUEL HEDGHING OPPURTUNTIES, TO CAP OPX COSTS
WITH INCREASE IN REFINING MARGINS, INTRODUCING MORE DISTILLATE CARRIERS
FAR EAST MARKETS
Look AT ACQUISITIONS & A ; COLLABRATIONS ACTIVELY, IN THIS PART OF THE GLOBE
Strategic impetus is the inclination for schemes to develop incrementally on the footing of historical and cultural influences but fail to maintain gait with a altering environment. OSG needs to diversify quickly into LNG section instead than concentrating merely bulk oil liquds. What if emerging markets shift to LNG for their turning demands?
Market incursion refers to a scheme by which an administration takes increased portion of its bing markets with its bing services scope. It seems OSG has been really consistently been focussed on US domestic market. Harmonizing to BMI theoretical account, united provinces energy demands will remains about consistent, so is it right to merely perforate this market?
Degeneration concerns the extent to which the Centre of an administration delegates determination doing to units and directors lower down in the hierarchy. Is OSG corporate back uping its BSU ‘s or still the determination devising is based out of New York?
Exploiting the net income pool construct for competitory advantage. Explore pool partnerships with planetary participants.
Information engineering tools should be deployed to increase the coherency & A ; smoother work flow with strategic concern units
In times of geo political uncertainnesss, hazard extenuation should be good regulated through fuel hedge & A ; frontward cargo understandings. Bing exposed to large cost spikes can impact bottom line.
Target market section of BRIC economic systems, more sharply
Minimize exposure to put on the line sections such as lightering concern in United provinces gulf country
Critical Success Factors
Leveraging from Strength in US Oil markets soon
Strategic partnerships with turning economic systems such as Brazil, veneunzala.
Less systematic & amp ; political barriers
Successful pool partnerships on really big petroleum bearers