Financial Management in Shipping

This essay focuses on financial management in shipping in Singapore. Various educational institutions of Singapore offer shipping courses to the students. Students are requested to write essays and assignments on shipping related topics. These contain reasonable marks hence to be done attentively.

Financial management is a process to plan, control, organize, and monitor financial resources to achieve enterprise goals. This essay will further deal with the Singapore shipping industry, its financial management, and its sources of finances.

Shipping industry of Singapore

Singapore is a shipping hub. It is the world’s greatest transportation hub for air and sea cargo. This has become a leading center for marine engineering, the building of marine vessels, and ship repair.

Singapore has become an international Maritime center (IMC) where shipping logistics services have flourished. The Singapore government has built Offshore and Marine infrastructure to support research and development activities.

Today, the Singapore shipping industry accounts for 172,000 jobs and 7% of Singapore’s GDP. The port attracts around 135,000 vessels a year. Therefore, the maritime industry is a big contributor to accelerating the Singapore economy.

Financial management of Singapore shipping industry

The essentials of financial management involved in shipping industry finances are discussed below.

Perspectives in the industry

Singapore causes highly developed shipping finance sectors. The shipping players are listed on SGX (Singapore exchange). The Monetary Authority of Singapore (MAS) looks over the financial need.

Macroeconomic approach to maritime aids

The macroeconomic approach focuses on mergers and acquisitions in the shipping market. The Baltic forward assessment and the freight derivative market are also included in this.

 Accounting for marine property and equipment

Marine property accounting includes depreciation of vessels, electronic data processing, and freight revenue. Further, accounting includes the allocation of voyage cost and budgetary control procedures.

 Translation of foreign currency operations

The shifting of the exchange rate while importing or exporting the shipping product can be quite risky. To mitigate the risk, fix the exchange rate in a forward contract.

Financial reporting in the inflationary economy

Reporting shipping statistics in the financial statement involves a balance sheet, income statement, and cash flow statement. These should be according to GAAP (Generally Accepted Accounting Principles) and IFRS (International financial reporting standard).

Profitability analysis of voyage performance

The economic cooperation of shipment is significant to reduce operational time loss. The ship owners must focus on environmental awareness, the global economic situation, and escalating oil prices.

Profit planning and control

The shipping industry must be involved in the profit planning process. It involves determining sales volume, estimating expenses, and calculating profit.

Capital expenditure decision

The capital expenditure decisions in the shipping industry include cargo vehicles, manufacturing plants, machinery, and equipment. In this asset, judgment is made by forecasting the need for funds.

Methods of financing shipping business

The Financing of ships and marine facilities involves many methods. The current methods for raising funds for financing Marine facilities include mortgage loans, bank loans, private equity, debt, and Shipyard credit.

Planning financial structures

Good planning of shipping financial structure includes budgeting, managing liquidity, and Taxes. It must include income tax planning insurance and risk management factors.

A closer look at taxation

Foreign ships and shipping prices enjoy tax exemptions on shipping income under section 13a. The tax exemptions involve income deriving from the carriage of livestock, passengers, or goods.

Financial management information systems

The FMIS includes automation of accounting, budget formulation, treasury operations, and reporting debt management. The shipping data entered must be transparent and accountable.

Singapore shipping business financial statistics

Some famous shipping companies operating in Singapore are

• Worldwide shipping management
• Shinoda shipping agency
• Crystal freight services
• Singapore Shipping Corporation

These shipping companies in Singapore deliver clients goods in a timely, flexible, and efficient manner. Why does Singapore have the busiest port in the world?

• Located at the centre of the trade routes
• Connect over 120 countries and to 600 ports
• Offers seamless trade connectivity to the Global companies

Conclusion

From the above discussion, we can conclude that Singapore is the key player in the maritime industry.  It provides effective Maritime Services, Logistic Services, and Maritime insurance.

The shipping industry of Singapore is well-supported by government agencies, administrators, and shipping industry associations.

Singapore has proved its operational and strong capability in the provision of shipbroking services and Ship Management. From this, we can see that Singapore has always attracted top Maritime players in terms of shipping services.

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