The National Shipping Company of Saudi Arabia
Annual Report 2008
15
Economic Highlights
At the end of 2008, the global economy has experienced a significant decline in growth rates which impacted most economic sectors following the global financial crisis that were rampant in many countries at varying degrees. This decline coincided with a disruption in financial markets, decline in crude oil prices, high rates of unemployment, winding up of many companies especially in the USA and other Western countries, contraction by many companies of their business activities and suspension of many large construction projects. In light of this sharp decline and the recession that the global economy has gone through, most countries adopted incentive policies to face the economic recession and to avoid going into depression. These policies included an increase of In 2006, the company embarked on the implementation of its strategic plan, which focused on expansion in the shipment of crude oil, liquefied petroleum gas and chemicals, as manifested in the contract duly concluded to build six (6) giant oil tankers (VLCCs) and sixteen (16) chemical carriers. At the end of 2008, the Board of Directors adopted a new five-year plan (2009 – 2013), which was prepared in co-ordination with an international consulting firm. Results of this plan confirmed the soundness of the company's financial and operational position and its competitive edge in the global markets, especially after increasing its VLCCs fleet and chemical tankers over the last three years, which NSCSA will continue to receive until the end of 2012. The current strategy recommends, continuing the main activities of the company, which are manifested in the transportation of crude oil, chemicals, general cargo and at the same time continue to analyze the
government at spending, support of basic industries and reduction of interest rates. However, economic outlook indicates a continued economic recession in 2009. The company was not immune to this crisis, which witnessed a decline in the world trade activities and, consequently, a reduction in shipping rates. However, the impact of this decline on the company was limited due to the balanced policies pursued by the company in chartering and operating of vessels and diversification of its activities. In spite of the current fluctuations in the global economic markets, the shipping industry augurs a promising future, especially with the current expansion in infrastructure projects, and chemical industries. shipping industry in order to engage in other investments in maritime transport sector and supplementary services. NSCSA will continue to exploit the opportunities available on a timely manner, after conducting necessary studies to ensure the economic feasibility of prospective projects based on a number of factors, including fair return on investment, expected growth of activity and the ability to participate in such projects in a manner that asserts the competitive edge of NSCSA. Recommendations of this plan also include, administrative and organizational restructuring of the company to ensure the highest degree of operational, financial and administrative competence, to enhance the company’s capability in tacklingpotential global changes and optimal use of available resources. Controls and governance systems have also been in place in line with generally acceptable international practices and applicable regulations of the Kingdom of Saudi Arabia.
Strategy, Future Objectives and Projects
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