| Guangdong Pearl River Tanker Transportation Co.,Ltd is a state-owned enterprise andwholly-owned by the Guangdong Province Navigation Holdings Co.,Ltd. In the early time,the Company specialized in transportation of refined oil within Guangdong province and waswell-known as ‘The South China’s Leader in liquid transportation market’. Until the end of1997, the executive team decided to open up new routes (chemicals transportation from SouthKorea to China) to face the downturn of refined oil business and intensive competition fromprivate enterprise.In2001, the Company tried to expand the palm oil transportation business andestablished a stable relationship with the chemicals and palm oil Suppliers through severalyears’ operation. During this time, the Company changed the deficit situation and becameprofitable, moreover it has entered a period of sound development. But there are still severalproblems, for example the weak transportation capacity and irrational fleet structure, whichlimits the profit of the company. The International Maritime Organization implemented theIBC code (International code for the construction and equipment of ships carrying dangerouschemicals in bulk) new provision, which requires the vegetable oil carrier must meet thespecification of double hull and double bottom. The Company’s owning ships used to carrythe palm oil will be eliminated or refitted, so the advanced preparations should be done, or itwill affect the future survival of the Guangdong Pearl River Tanker Transportation Co.,Ltd.From the marketing structure point of view, the Company specialized in chemicals andvegetable oil transportation operations, its position in the market has a certain degree ofparticularity. The competition is weak and the development of the market is huge because themarket threshold in chemicals transportation is high and the Company has the advantage, forexample qualifications and experience, in chemicals shipping.This paper aims to analyze the background of expansion plan of the fleet and itsmotivation, and the Company decides to take the chemicals and vegetable oil transportation asits main business because the famous shipping companies don’t take it as core business andthe small-scale shipping companies don’t have the qualifications on such business.Considering the good market prospect, the company’s network of customers, reserve ofhuman resources and analyzing the present situation and need of the Company, the paperanalyze the feasibility of the project of purchasing two10,000ton class chemicals tanker, theconclusion is that the carrying out of this plan will enhance the developing of the Companyand improve its competitiveness in the market, with a good profitable prospect and rational financial indicators. The investment project shows its profitability in all indicators under theanalyzing, which means it’s economically feasible and should be carried out. Further more,the risk of carrying out this project is very low because of the conclusion of sensitivityanalysis, profit and loss analysis and risk analysis of factors influence.After the carrying out of this project, the additional transportation capacity will help thecompany to get a high income and make the company developed as one of the three corebusiness operators of the Guangdong Province Navigation Holdings Co.,Ltd. because of thehigh profit particularity of specializing in chemicals and vegetable oil shipping. The Companycould also hold its share in the shipping market after eliminating three old ships and theannual pump oil shipping tonnage will get a40%increasing during the early three years. Theimplementation of this plan makes the company to get a39%increase in transportationcapacity which matches the company’s business expanding capacity, and ensures thesustainable development of the fleet, especially the purchasing of38,000ton class vessel and76,000ton class vessel in2010.In short, the developing model of the fleet of Guangdong Pearl River TankerTransportation Co.,Ltd is successful. |
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