Decision Analysis on the Financial Management of Shipping Companies using Goal Programming Model

Being capital intensive, the shipping industry's asset and liability management (ALM) is very distinctive due to its difficulty for speculation. Credits and financing of the shipping industry are constrained especially in developing countries. With this, this paper aims to analyze the ALM of shipping companies in Malaysia with goal programming (GP) model to determine the balanced blend of assets, liabilities and equities for their profits, earnings and optimum management item. Malaysian shipping companies face many disturbances since the great lockdown and are now moving into the recovery phase. Hence a study on the ALM of the shipping companies would provide an overview of the assets and liabilities to make decisions on investment, expansion and succession activities. This GP model is enhanced by taking the best values of all goals as the target values to ensure better comparison of goal achievements. The results show that COMPLET, FREIGHT and HARBOUR have achieved the asset, equity and optimum management item goals. COMPLET and HABOUR have also achieved the profit and earnings goals. The quantifiable optimal allocation of resources serves as improvement values to revamp the companies. The overachievements and underachievement of goals provide insights for the shipping companies in their investment decisions, financing and risk management strategies. Even though GP model is highly flexible, the shipping industry must satisfy the interests of all the stakeholders simultaneously which cannot be fully reflected in this model. Future studies may include expert opinions which can then integrate with other multi-criteria decision-making model to reduce subjectivity.