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Category: Business and Industry
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Angela Chao (HBS MBA 2001) and Research Associate Kathleen Luchs prepared this case under the supervision of Professor Erik Stafford. HBS
cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or
illustrations of effective or ineffective management.
Copyright © 2001 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685,
write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be
reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical,
photocopying, recording, or otherwise—without the permission of Harvard Business School.
ERIK STAFFORD
KATHLEEN LUCHS
ANGELA CHAO
Ocean Carriers
In January 2001, Mary Linn, Vice President of Finance for Ocean Carriers, a shipping company
with offices in New York and Hong Kong, was evaluating a proposed lease of a ship for a three-year
period, beginning in early 2003. The customer was eager to finalize the contract to meet his own
commitments and offered very attractive terms. No ship in Ocean Carrier’s current fleet met the
customer’s requirements. Linn, therefore, had to decide whether Ocean Carriers should immediately
commission a new capesize carrier that would be completed two years hence and could be leased to
the customer.
Ship Operations
Ocean Carriers Inc. owned and operated capesize dry bulk carriers that mainly carried iron
ore worldwide. This type of vessel ranged in size from 80,000 deadweight tons to 210,000
deadweight tons of cargo carrying capacity. Capesize carriers were too large to transit the Panama
Canal and therefore had to sail around Cape Horn...