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Developing Strategies for Maritrans’ Business Units

Author

Listed:
  • Murthy V. Mudrageda

    (Maritrans, Inc., 2 International Plaza, Suite 335, Philadelphia, Pennsylvania 19113)

  • Frederic H. Murphy

    (Fox School of Business and Management, Temple University, Philadelphia, Pennsylvania 19122)

  • Steve Welch

    (Meredith Management Group, Inc., Station Square 3, Suite 200, 37 North Valley Road, Paoli, Pennsylvania 19301)

Abstract

After the Oil Pollution Act of 1990 mandated early retirement for all large single-hulled vessels that carry petroleum and petroleum products, Maritrans’ stock lost 80 percent of its value. Through a sequence of studies, Maritrans improved its understanding of its market and developed a strategy for rebuilding its single-hulled fleet and dealing with a further threat to its profitability from a government program of loan guarantees to build new ships. We demonstrated to the US Maritime Administration that giving out loan guarantees would lead to excess capacity and depressed rates and to government expenditures to cover loan losses. Maritrans backed off from operating petroleum-product terminals after we showed that it would not gain synergies with marine transportation. Combining the models for these two studies, we modeled the marine-transportation market for the eastern United States and developed an integrated strategy for rebuilding the Gulf Coast fleet. Maritrans announced its new strategy in 1997 and its stock almost doubled, reaching levels not seen since the Oil Pollution Act was passed.

Suggested Citation

  • Murthy V. Mudrageda & Frederic H. Murphy & Steve Welch, 2004. "Developing Strategies for Maritrans’ Business Units," Interfaces, INFORMS, vol. 34(2), pages 149-161, April.
    • Handle: RePEc:inm:orinte:v:34:y:2004:i:2:p:149-161
    DOI: 10.1287/inte.1030.0047
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    References listed on IDEAS

    as
    1. Scott Andrews & Frederic H. Murphy & Xiao Pei Wang & Steve Welch, 1996. "Modeling Crude Oil Lightering in Delaware Bay," Interfaces, INFORMS, vol. 26(6), pages 68-78, December.
    2. Frederic H. Murphy & Murthy V. Mudrageda, 1998. "A Decomposition Approach for a Class of Economic Equilibrium Models," Operations Research, INFORMS, vol. 46(3), pages 368-377, June.
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    Cited by:

    1. Murthy Mudrageda & Frederic H. Murphy, 2008. "OR PRACTICE---An Economic Equilibrium Model of the Market for Marine Transportation Services in Petroleum Products," Operations Research, INFORMS, vol. 56(2), pages 278-285, April.
    2. Rioux, Bertrand & Galkin, Philipp & Murphy, Frederic & Feijoo, Felipe & Pierru, Axel & Malov, Artem & Li, Yan & Wu, Kang, 2019. "The economic impact of price controls on China's natural gas supply chain," Energy Economics, Elsevier, vol. 80(C), pages 394-410.
    3. Arigoni, Ashley & Newman, Alexandra & Turner, Cameron & Kaptur, Casey, 2017. "Optimizing global thermal coal shipments," Omega, Elsevier, vol. 72(C), pages 118-127.

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