Real Option Method Of Port Investment Decision For Shipping Companies

The competition in shipping industry becomes furious with the rapid growth of global economy and trade. Shipping giants take port investment as an important strategy decision while they are striving to strengthen their fleets. The reason for this is that the competition in shipping industry takes its face not only on the scale of the fleet but on the possession and control of shipping knots, that is, port.In order to enjoy customized service and not to be affected by others, to assure their own transportation and logistics chain undisturbed and their priority to use or control the port to keep their goods flow smooth, shipping companies at home and abroad have attained much importance to port investment.At present, research on port investment at home and abroad has developed soundly. But the achievement we've had now is generally the evaluation of project feasibility, investment appraisal, financial profits, inland economic and social benefits and national economy balance with traditional investment decision methods, such as NPV. Such methods, of course, have their natural advantages, but at the same time, they just neglect the future investment profits brought by potential investment chances and the probable increments brought by investment planners who are flexibly informed of investment chances. We will see a further discussion in section 1, Chapter 3.Real Option Method (ROM) is an amendment to traditional investment theory, and it can solve effectively some limitations and mistakes that traditional theories have met in practice.As a new decision-making tool for investment, ROM, nowadays, is seldom exercised and studied in China. Research on ROM in domestic domain stays currently at qualitative concept-discussion stage, with little referring to quantitative analysis, and less probing into practical application.