Ocean Carriers

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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,

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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...