Creating value from uncertainty : a study of ocean transportation contracting

How can financial tools like real options and hedging mitigate and create value from uncertainty in transportation? This paper describes these concepts and identifies research on them that has relevance to transportation. It then gives historical background of the containerized ocean transportation industry, uses Porter's five forces to explain its dynamics, and explains how contracts are set up and managed. It identifies areas within containerized ocean transportation that could benefit from real options and hedging, claiming that recent deregulation is creating opportunities for innovative thought. It gives examples of how real options are already being used in the industry to create flexibility without having any price attached to them and then comes up with new ideas of using them. It concludes by, first, stating that both shippers and carriers can benefit from managing uncertainty together and, second, suggesting future areas of research.

Department dc:contributor.department

Massachusetts Institute of Technology. Engineering Systems Division.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2005

Author dc:creator

• Pálsson, Sigurjón

Advisor dc:contributor.advisor

• Chris Caplice.

• Engineering Systems Division.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/33339

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/33339