Shipping is a very important sector of the world economy. The aim of the module is to provide an overview of the fundamentals of shipping markets and describe the operating and investment practices of modern shipping companies. The main aims are:
- To examine in depth the fundamentals of shipping investment.
- To equip students with the analytical tools and skills for making shipping investment and finance decisions.
- Understand how revenue is earned by shipping companies.
- Understand the importance of the industry's cost structure and the necessity for cost minimisation.
- Understand the risks involved in a shipping project and how these can be managed
At the end of the module you should be able to appreciate the specific details of operating and investing in shipping, to form your own views about shipping investment and to evaluate the potential of operating and investment in shipping:
- The importance and position of the shipping industry in the world economy.
- Analysis and features of various shipping sectors: dry-bulk; tanker; container and specialised sectors.
- Analysis of the four shipping markets: freight; new-building; second-hand and demolition.
- Supply and demand factors in shipping.
- Market equilibrium and freight rate determination.
- Contracting and cost and revenue responsibilities in different shipping contracts.
- Stylized features of freight rates: analysis of volatility, term structure and seasonality.
- Analysis of shipping risks; risk management of shipping revenues and costs.
- Freight risks and the use of derivative contracts.
- Project evaluation and cash flow analysis of a shipping project.
- Financing a shipping project.
- Sources of capital for shipping companies; bank loans; bonds; private and public equity
On successful completion of this module, you will be expected to be able to:
Knowledge & Understanding
- Understand the fundamental principles of shipping markets.
- Comprehend the economics of shipping and its inter-related markets, including freight, new-building, second hand and demolition.
- Comprehend the key parameters involved in shipping investment decisions and the tools used in a shipping investment feasibility study.
- Assess and evaluate the major financial risks involved in a shipping project.
- Undertake a shipping feasibility study.
- Carry out a cash-flow analysis for a shipping project and critically evaluate a shipping investment appraisal.
- Understand and assess different sources of funding for a shipping project.
- Identify different sources of risk in shipping operations and measure exposure to such risks.
- Measure and compare the effectiveness of different derivatives instruments in the management of financial risks in shipping.
Values & Attitudes
- Demonstrate confidence in applying financial concepts for shipping projects.
- Demonstrate the use of judgement in the comparison and evaluation of projects and clarity and unbiased-ness in describing the relative merits of investments to others.
Module Leaders: Professor Nikos Nomikos and Dr Nikos C. Papapostolou
Nikos Nomikos is Professor of Shipping Risk Management at Cass Business School. He commenced his career at the Baltic Exchange as Senior Market Analyst where he was responsible for the development of the shipping indices that are currently used in the market as pricing benchmarks. For the last 10 years he has been with the Faculty of Finance at Cass Business School, where he is also the Director of the MSc course in Shipping, Trade and Finance. His area of expertise is Ship Finance and Risk Management. As such, he particularly enjoys lecturing on the topics of shipping economics, ship finance and shipping risk management as well as quantitative finance and risk management in financial and commodity markets.
Nikos Papapostolou is a Senior Lecturer in Shipping Finance at the Costas Grammenos Centre for Shipping, Trade and Finance. He holds a BSc in Money, Banking and Finance from the University of Birmingham, an MSc in Shipping, Trade and Finance and a PhD in Finance from City, University of London. He is involved in Shipping Finance Executive training in collaboration with the Baltic Exchange and acts as a consultant to industry clients.
His research interests are in the field of shipping investment and finance, with a focus on capital markets as a source of finance for shipping companies, investors’ sentiment and behavior in the shipping industry, freight options pricing and vessel valuation, technical analysis trading rules, and commodity derivatives.
See Nikos Nomikos discussing the shipping industry, post financial crisis on a recent episode of Cass Talks.
The course is open to current undergraduates and recent graduates of any discipline. Students on this course are not expected to have previously studied finance at University level. It is recommended that students wishing to enrol on this course have mathematical skills to the equivalent of a UK A-level in Mathematics.
Students who have not studied a degree programme taught in English before are required to have an overall IELTS score of at least 6.5 (with a minimum of 6.5 in writing).