5 1.INTRODUCTION Ocean shipping is a lucrative and risky business.As pointed out by many of its students. its charter market component is perhaps the purest form of a perfectly competitive market, barriers to entry being smaller than in any other big business and government regulation being extremely difficult to enforce.However,the near perfect market character of chartered shipping coupled with the long lead time required for newbuildings makes it subject to particular violent dynamic effects.As supply of shipping services can only sluggishly adapt to fast changes in demand,the market is plagued by violent fluctuations long periods of depressions followed by booms. One would expect that such competitive conditions make shipping a prime target for the application of quantitative managerial methods,which we will in general refer to as Management Science for short,while making explicit mention of other fields such as Economics,Finance or Forecasting as appropriate.Indeed such analyses began in the 30's with Koopmans'(1939)celebrated work and were revitalized in the 60's by several eminent researchers among which the late Zenon Zannetos.Since then,several efforts have been made to adapt to shipping successful quantitative methods from other fields such as Decision Theory,Mathematical Programming or Portfolio Theory,as evidenced in the 1972 Seminaron Shipping Management in Bergen(Lorange and Norman,1973).The textbooks by Devanney (1971)and Evans-Marlow(1985)are also evident of this trend. In the 80's computer literacy has greatly increased in the shipping business,providing thus data for more sophisticated analyses.Sophistication was also vastly increased in the analyses performed by banks at the wake of heavy losses in their shipping loans following the depressions of the period.However,there is a strong feeling between those involved in shipping that any sort of formal analysis plays a secondary or even tertiary role compared to other qualities such as the gut feeling for the ups and downs of the market, knowledge of the technical details and quirks of the particular fleet and various other trade secrets.Thus,even highly successful operators claim that they avoid using any but the most rudimentary form of analysis.Of course this is not true for big users of shipping services,and in particular of oil companies who routinely use Management Science to assess their shipping needs and coordinate them with their other activities -refining and finished product deliveries. The objective of this report is to survey quantitative methods developed in the fields of Management Science and Operations Research with regard to shipping-especially those aimed at the shipping operator;to assess their impact especially in the setting of Piraeus; and finally to point out specific refinements to existing methods or even suggest completely new methods whose development will hopefully serve pressing shipping decision making needs. In Chapter 2 of the Report we provide a synopsis of the role played by the major participants in the shipping scene with emphasis on the nature of the decisions they have to make.Chapter 3 gives an outline of the well-established Management Science methods in shipping.Chapter 4 surveys the actual use of hese methods in several Greek shipping firms,while Chapter 5 examines possible promising directions for research relevant to shipping needs.A detailed,technical exposition of the methodologies,existing or proposed is given in the Appendix.5 1. INTRODUCTION Ocean shipping is a lucrative and risky business. As pointed out by many of its students, its charter market component is perhaps the purest form of a perfectly competitive market, barriers to entry being smaller than in any other big business and government regulation being extremely difficult to enforce. However, the near perfect market character of chartered shipping coupled with the long lead time required for newbuildings makes it subject to particular violent dynamic effects. As supply of shipping services can only sluggishly adapt to fast changes in demand, the market is plagued by violent fluctuations - long periods of depressions followed by booms. One would expect that such competitive conditions make shipping a prime target for the application of quantitative managerial methods, which we will in general refer to as Management Science for short, while making explicit mention of other fields such as Economics, Finance or Forecasting as appropriate. Indeed such analyses began in the 30's with Koopmans' (1939) celebrated work and were revitalized in the 60's by several eminent researchers among which the late Zenon Zannetos. Since then, several efforts have been made to adapt to shipping successful quantitative methods from other fields such as Decision Theory, Mathematical Programming or Portfolio Theory, as evidenced in the 1972 Seminaron Shipping Management in Bergen (Lorange and Norman, 1973). The textbooks by Devanney (1971) and Evans-Marlow (1985) are also evident of this trend. In the 80's computer literacy has greatly increased in the shipping business, providing thus data for more sophisticated analyses. Sophistication was also vastly increased in the analyses performed by banks at the wake of heavy losses in their shipping loans following the depressions of the period. However, there is a strong feeling between those involved in shipping that any sort of formal analysis plays a secondary or even tertiary role compared to other qualities such as the gut feeling for the ups and downs of the market, knowledge of the technical details and quirks of the particular fleet and various other trade secrets. Thus, even highly successful operators claim that they avoid using any but the most rudimentary form of analysis. Of course this is not true for big users of shipping services, and in particular of oil companies who routinely use Management Science to assess their shipping needs and coordinate them with their other activities - refining and finished product deliveries. The objective of this report is to survey quantitative methods developed in the fields of Management Science and Operations Research with regard to shipping - especially those aimed at the shipping operator; to assess their impact especially in the setting of Piraeus; and finally to point out specific refinements to existing methods or even suggest completely new methods whose development will hopefully serve pressing shipping decision making needs. In Chapter 2 of the Report we provide a synopsis of the role played by the major participants in the shipping scene with emphasis on the nature of the decisions they have to make. Chapter 3 gives an outline of the well-established Management Science methods in shipping. Chapter 4 surveys the actual use of hese methods in several Greek shipping firms, while Chapter 5 examines possible promising directions for research relevant to shipping needs. A detailed, technical exposition of the methodologies, existing or proposed is given in the Appendix