Shipping of natural gas across the oceans is of significant importance – linking the energy production business with the consuming nations around the globe. Natural gas supply is predicted to increment 1.9% p.a. until 2035, therewith facilitating its transportation as a commodity on board of currently 415 liquefied natural gas vessels and further 168 more to come by 2020. Despite its comparably small size of not even one percent of the worldwide merchant fleet within the industry of shipping, the carriage of natural gas on board of vessels has been overall on an upwind within the last twenty years, foremost due to the greater discovery of natural gas as a source of energy and an increased demand for energy resources in general.
Particularly the natural gas shipping industry underlies peculiar states of affairs: It is a highly technologized, investment intense segment which is affected by currents of political, economic, and environmental origin. Hence, natural gas shipowners as well as other participants upstream and downstream of this sector find themselves in difficulty of strategic decision-making. The purpose for this study has therefore been to investigate in how a natural gas shipping company and other market participants can take a farsighted strategic decision in the complex and uncertain business environment of today and, thereby, planning for the future. By using the scenario approach of modelling a complex world in single happenings, it will be thought deeply and creatively about the future whereof the most salient factors affecting this industry are illuminated. Upon these scenarios, various economic theories and models including an equation of natural gas ships demand are applied whose concepts could be exercised by market participants in order to adapt to ever-changing circumstances with vigilance and to reduce the risk of being unprepared for the future.
The study found that the global natural gas industry is impacted by the dynamics deriving from conditions enforced by, for instance, the ongoing financial and economic crisis, legislative forces, substitutionary effects of energy products, and political discord in natural gas providing as well as receiving countries. The outer-firm global contexts leave a footprint on the strategic decision-making of a firm. In addition, it was proofed that scenario conduction is a viable tool for strategic planning of a firm active in the natural gas shipping field in order to address the business ...
Table of Contents
1. Introduction
1.1 Background
1.2 Problem analysis
1.3 Purpose
1.4 Research questions
1.5 Delimitations
2. Methodology
2.1 Scenario planning approach
2.2 Research strategy
2.3 Research design
2.4 Line of action
2.5 Description of methods
2.5.1 Scenario planning methodology
2.5.2 Analysis of economic models and theories
2.6 Limitations of methods
2.7 Research ethics
2.8 Trustworthiness
3. The global energy market
4. The natural gas market
4.1 The supply chain of natural gas
4.2 The specific features of natural gas
4.3 The consumption patterns and reserves of natural gas
4.3.1 The consumption patterns of natural gas
4.3.2 The reserves of natural gas
4.4 The determinants of demand and supply of natural gas
4.5 The prices and future trends of natural gas
4.5.1 The prices of natural gas
4.5.2 The trends of natural gas
4.6 The natural gas shipping industry
5. Theoretical frameworks
5.1 The equation of natural gas ships demand
5.2 The absolute and comparative advantage theories
5.3 The competitive and sustained competitive advantage
5.4 The Heckscher-Ohlin theorem
5.5 The Porter’s five forces model
5.6 The theory of consumer choice
6. Scenarios in practice
6.1 Scenario development technique
6.1.1 Global Business Network
6.1.2 Limitations of the scenario development technique
6.2 Scenario I: Boom and bloom
6.2.1 Scenario I: Plot description
6.2.2 Scenario I: Analysis
6.3 Scenario II: Deep in depression
6.3.1 Scenario II: Plot description
6.3.2 Scenario II: Analysis
6.4 Scenario III: Shutting the gates
6.4.1 Scenario III: Plot description
6.4.2 Scenario III: Analysis
7. Discussion
7.1 Scenario I: Reflections on demand function
7.2 Scenario II: Reflections on demand function
7.3 Scenario III: Reflections on demand function
8. Recommendations for strategic management
8.1 Learning experience as a key to success
8.2 The necessary requirement for amendment
8.3 To respond strategically to competition
9. Limitations and recommendations for further research
10. Final reflections and lessons learned
11. References
Objectives and Research Themes
The primary goal of this research is to investigate how participants in the natural gas shipping industry can make farsighted strategic decisions within a complex and uncertain business environment. The study explores the application of scenario planning as a methodology to model potential future developments and support strategic management processes, specifically by evaluating how various global macroeconomic factors impact the supply and demand of natural gas shipping.
- The implementation of the scenario planning approach to address market uncertainty.
- Evaluation of the natural gas supply chain and global market dynamics.
- Application of economic models and theories to support strategic decision-making.
- Development and analysis of future scenarios (Boom and bloom, Deep in depression, Shutting the gates).
- Recommendations for strategic positioning and product differentiation in the LNG shipping sector.
Extract from the Book
1.1 Background
In the shadow of the global economic problems ramps and rages a crisis within the international shipping industry, which has caused and most probably will further cause substantial difficulties. Since in all aspects the maritime segment underlies the international market environment, its high vulnerability gives evidence that the future of the blue sector of international trade is by no means certain.
The shipping markets and international growth cycles are to a great degree interconnected. No matter if considerable loss or high profit potential arises, the world trade defines maritime trade (see figure 1). Hence, the worldwide decline of the economic cycle led to the market phenomena that fewer goods were demanded and produced directly affecting the shipping industry. Thereby, resulting in overcapacity of vessels since the need for transportation means decreased against the profit and legislatively-driven surge of newbuilding orders, and an intensification of market competition on the remaining cargo to be conveyed.
Especially, the comparably newly emerged natural gas shipping industry might appear less affected by these outer conditions: Considering its small stake of 0.3 percent of liquefied natural gas (LNG) tankers in relation to the worldwide merchant fleet, their particular segment transports a commodity which is predicted to mount 1.9 percent of annual growth in global demand until 2035 according to the BP Energy Outlook 2035 (BP p.l.c., 2014, I. H. S. Global Limited, 2015, review appendix 2). Yet, in their crucial role of delivering an increasingly demanded natural resource, being exposed to technological advancements, high capital intensity, demanding environmental and labor regulations, currently deteriorating natural gas prices and volatile consumer markets display examples of how easily the wind of change can pose risks to the natural gas shipping businesses if these influencing variables, among others, shift (Go-Maritime.net, 2015).
Summary of Chapters
1. Introduction: Outlines the dependence of the global economy on trade and the specific challenges faced by the natural gas shipping industry due to its complex and uncertain environment.
2. Methodology: Details the use of qualitative scenario planning and collective case study research to model market uncertainties.
3. The global energy market: Provides an overview of global energy consumption trends and the shift in resource preferences.
4. The natural gas market: Examines the supply chain, consumption patterns, price formation, and the specific dynamics of the natural gas industry.
5. Theoretical frameworks: Introduces economic theories, including a specific demand equation, to analyze how macro and micro factors influence natural gas ship demand.
6. Scenarios in practice: Presents three distinct scenarios—"Boom and bloom," "Deep in depression," and "Shutting the gates"—to explore potential future developments.
7. Discussion: Reflects on the impacts of the analyzed scenarios on natural gas prices, economic growth, and infrastructure requirements.
8. Recommendations for strategic management: Offers practical guidance for firms on leveraging scenario planning and product differentiation to maintain competitiveness.
9. Limitations and recommendations for further research: Critically evaluates the study's methodologies and suggests areas for future improvement.
10. Final reflections and lessons learned: Concludes with insights into the importance of adopting a "thinking the unthinkable" mindset for strategic navigation in the shipping industry.
Keywords
natural gas shipping, scenario planning, strategic management, global energy demand, LNG industry, economic models, uncertainty, market analysis, supply chain, business strategy, future studies, energy transition, shipping logistics, industry competition, risk management.
Frequently Asked Questions
What is the core focus of this thesis?
The thesis focuses on how participants in the natural gas shipping industry can navigate a highly volatile and uncertain future by utilizing scenario planning as a strategic management tool.
What are the central themes examined in the work?
Central themes include the dynamics of the global natural gas market, the role of natural gas shipping, the application of economic theories in strategic decision-making, and the importance of long-term planning.
What is the primary objective of the research?
The primary goal is to provide a framework for LNG shipowners and market participants to make more informed, farsighted strategic decisions rather than simply reacting to short-term market fluctuations.
Which scientific methodology does the author employ?
The author employs a qualitative research strategy based on collective case studies, utilizing scenario development techniques derived from the Global Business Network to model potential market realities.
What content is covered in the main body of the work?
The main body covers the global energy context, the natural gas supply chain, theoretical economic frameworks, the construction of three specific future scenarios, and detailed discussions on the implications for management.
Which keywords best characterize this research?
Key terms include natural gas shipping, scenario planning, strategic management, market uncertainty, and industry analysis.
How does the "Boom and bloom" scenario affect LNG shipping?
This scenario assumes high economic growth and low environmental policies, leading to increased demand for natural gas and potentially higher freight rates for shipowners.
What are the implications of the "Shutting the gates" scenario?
This scenario describes a world where major producers like Qatar withdraw from global export, leading to supply shocks, sudden price increases, and a dramatic shift in trade routes.
Why does the author argue that forecasts are insufficient?
The author argues that traditional forecasting relies on past patterns to predict the future, which is inadequate in an uncertain, fast-moving market that requires "foresight" to adapt to unexpected structural changes.
What role do "predetermined elements" play in the scenario process?
Predetermined elements represent slow-changing, relatively predictable phenomena that provide a constant background for the scenarios, contrasting with the critical uncertainties that drive the differences between them.
- Citation du texte
- Ulrike Niemann (Auteur), 2015, The natural gas shipping industry in cross sea of the global circumstances, Munich, GRIN Verlag, https://www.grin.com/document/315556
