Higher Nitec Maritime Business: Shipping Agency Operations Report

This report examines the Singapore shipping industry, focusing on the challenges and opportunities presented by the IMO 2020 sulphur regulations. The introduction highlights the importance of operational management in achieving optimal resource utilization, using the Singapore shipping industry as a case study. The background section details the implementation of new sulphur regulations and their impact on the industry. The report identifies key issues, including increased fuel prices, disruptions in the oil industry, the use of scrubbers, and the potential rise in diesel usage. It then provides recommendations for companies and the Maritime and Port Authority of Singapore, such as using very low sulphur fuel, implementing scrubbers, and investing in research and development. The report concludes by emphasizing the importance of compliance with regulations and the long-term benefits of continuous improvement in the shipping industry. References to books, journals, and online sources are provided.

SHIPPING AGENCY AND OPERATIONS

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................3
BACKGROUND.............................................................................................................................3
IDENTIFICATION AND ANALYSIS OF ISSUE.........................................................................3
RECOMMENDATIONS.................................................................................................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Operation management refers to a process of handling and monitoring whole production unit of a
by implementing continues improvement in it so that optimum utilisation of resources would be
achieved by them (Visvikis & Panayides, 2017). For this report, Singapore Shipping industry
case study is taken for consideration which aims to achieve clean fuel energy in their business
operations before 2020 as per the orders by United Nation Agency (Andrikopoulos & et al.,
2019). Various issues which would be faced by the industry members will be identified and how
companies could cope up with it is explained. Different recommendations which companies and
Maritime and Port Authority of Singapore must inculcate in to their working are scrutinised.
BACKGROUND
It was already announced in 2016 by International Maritime Organisations that they will
implement new sulphur regulations rule by January 2020 which every shipping company have to
comply with. IMO02020 regulations states that oil which has 0.5% sulphur will only be used by
company around the world (Singapore's shipping industry aims, 2019).
IDENTIFICATION AND ANALYSIS OF ISSUE
Singapore is a hub of shipping industry due to large oil refiners but melting Artic ice is
forcing them to change their route which will create negative environment for them as fuel price
is likely to get increase due to new regulations (Lam & et al., 2015). For instance, Gasoil average
rate in the market is 280 dollars per ton which will increase up to 380 dollars per ton resulting in
less trade or orders as customers then prefers to opt other way which is cheap as compare to this.
So in this case, company like VLCC which is one of the largest shipping company is bound to
pay approximately 25% of overall amount they used to pay while buying Gasoil (Okada,
Namatame & Sato, 2016).
Other issue is disruptions of oil industry which will overall impact business in a negative
way. For instance, 4 million barrels is produced on a daily basis of Gasoil but as if companies
stops using it then thousands of people will become unemployed as they does not have proper
expertise in making sulphur free or less sulphur oil (Perera & Mo, 2016). So to avoid this,
company will start using scrubber which will give short term profit and long term losses. For
instance, each scrubber used in the ship cost minimum one million to install, so company needs
to invest in the starting and waits for it to get positive or favourable result for it. Scrubber will

also have a negative impact on Engine due to which life expectancy of any ship will be lower
thus more issues for Marine company and industry (Zhang & et al., 2019).
Increase in usage of diesel will become one of the issue in this industry as scrubbers as
well as 0.5 Sulphur oil will increase shipment cost up to 20%-40%. For instance, companies will
now shifted towards usage of Diesel in their ships as it is cheap and easily available in the market
(Pristrom & et al., 2016). So increase in usage of diesel will increase overall diesel price in the
world thus affecting other environment and transportation in a negative way (Poulsen & Sornn-
Friese, 2015).
RECOMMENDATIONS
As it is not possible for any company and authority of Singapore to avoid complying with the
cap of 0.5% sulphur as then it will affect their global trade and relationship with other countries.
So various recommendations which they must implement in their working operations is given
below,
 Very low sulphur fuel, Marine gas oil and ultra-low sulphur fuel can be used by shipping
companies in Singapore so that they can maintain their relationship and image in the
market as they are bound to comply with the rules and regulations.
 If any company is not planning to implement this new rule then they could also use
scrubbers in their ships so that it will help them to keep 0.5% sulphur by processing the
normal fuel used by companies before January 2020. Though it requires 1 million dollars
to 5 million dollars to implement Scrubbers which is not possible for every company.
 Usage of Diesel could be other way of complying with the new rules but still it will only
work for shorter time and companies needs to start investing in their R&D department to
find the permanent solution of it.

CONCLUSION
From the above information, it can be summarised that companies working in any
industry must compliance with rules and regulations formed by the governing authority as it will
assist them to maintain their goodwill in the market. Continuous improvement requires high
amount of capital but on the other hand, company gets the fruitful result in the long term instead
of shorter one. It also contributes their part in saving environment and society by reducing their
carbon footprint and pollution so that stakeholder’s expectations would be fulfilled.

REFERENCES
Books and Journals
Andrikopoulos, A., Georgakopoulos, A., Merika, A., & Merikas, A. (2019). Corporate
governance in the shipping industry: board interlocks and agency conflicts. Corporate
Governance: The International Journal of Business in Society.
Lam, D. K., Tan, A. B., Cheah, L. R., Su, J. E., & Lee, K. H. (2015). Transferring 100,000
Samples of Risk Group 3 Biological Agents in Singapore—Lessons Learned. Applied
Biosafety, 20(4), 201-204.
Okada, T., Namatame, A., & Sato, H. (2016). An agent-based model of smart supply chain
networks. In Intelligent and Evolutionary Systems (pp. 373-384). Springer, Cham.
Perera, L. P., & Mo, B. (2016). Emission control based energy efficiency measures in ship
operations. Applied Ocean Research, 60, 29-46.
Poulsen, R. T., & Sornn-Friese, H. (2015). Achieving energy efficient ship operations under third
party management: How do ship management models influence energy efficiency?.
Research in transportation business & management, 17, 41-52.
Pristrom, S., Yang, Z., Wang, J., & Yan, X. (2016). A novel flexible model for piracy and
robbery assessment of merchant ship operations. Reliability Engineering & System
Safety, 155, 196-211.
Visvikis, I. D., & Panayides, P. M. (Eds.). (2017). Shipping Operations Management (Vol. 4).
Springer.
Zhang, W., Zou, Z., Goerlandt, F., Qi, Y., & Kujala, P. (2019). A multi-ship following model for
icebreaker convoy operations in ice-covered waters. Ocean Engineering, 180, 238-253.
Online
Singapore's shipping industry aims. 2019. [Online]. Available Through:
<https://www.straitstimes.com/business/economy/singapores-shipping-industry-aims-to-
achieve-cleaner-fuel-target-ahead-of-2020>