Skip to main content
SpringerLink
Log in

Financial Performance Evaluation of Shipping Companies Using Entropy and Grey Relation Analysis

  • Chapter
  • First Online:
Multi-Criteria Decision Making in Maritime Studies and Logistics

Part of the book series: International Series in Operations Research & Management Science ((ISOR,volume 260))

Abstract

The international trade of Korea and Taiwan has been heavily dependent upon international sea transportation owing to geo-political aspects. Therefore, the two countries have promoted ocean-going shipping industry in order to support their export-oriented economies. Recent financial crisis in together with the economic slowdown has reduced seaborne trade cargoes, which resulted in remarkably deteriorated revenues of the container shipping sector. Major container shipping companies of both countries such as Evergreen, Yang Ming, Hyundai, and Hanjin under our study are no exception. This chapter aims to achieve two-fold aims. The first applies Entropy to find the relative weights of financial ratios of the four companies each year. In so doing, we can find the weights variance for the period of 1999–2009 based on the financial performance of the above companies. The second aim is to evaluate financial performance of the companies in the period by grey relation analysis. The findings in this chapter help shipping managers to mitigate impacts of the financial crisis on their companies.

This chapter is a reprint of Lee TW, Lin CW, Shin SH (2012) A Comparative Study on Financial Positions of Shipping Companies in Taiwan and Korea Using Entropy and Grey Relation Analysis. Expert Systems with Application, 39(5): 5649–5657. The authors have slightly revised it. They would like to express their sincere thanks to the Elsevier Publisher for giving them its copyright permission for this book chapter.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution

Subscribe and save

Springer+ Basic
$34.99 /Month
  • Get 10 units per month
  • Download Article/Chapter or eBook
  • 1 Unit = 1 Article or 1 Chapter
  • Cancel anytime
Subscribe now

Buy Now

Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 149.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 199.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 199.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Similar content being viewed by others

Notes

  1. 1.

    For example, as of November, 2009, prices were falling throughout the industry. In the spring, large commercial shipping companies like Maersk and Hapag-Lloyd were still charging about $2,000 (€1,600) to ship a container from Asia to Europe. Some companies collected only $500 (€400) for the same service. In the spring in 2008, it cost $30,000 (€24,000) a day to charter a ship containing 2,500 standard containers (TEU). As of 5th December 2008, that price dropped to less than $12,000 (€9,600). Alexander Jung, Thomas Schulz and Wieland Wagner (2009), “Shipping industry drowning in financial woes”, Der Spiegel, August 14 2009.

References

  • Atanassov K (1986) Intuitionistic Fuzzy Set. Fuzzy Sets Syst 20:87–96

    Article  Google Scholar 

  • Atanassov K, Pasi G, Yager R (2005) Intuitionistic fuzzy interpretations of multi-criteria multi-person and multi-measurement tool decision making. Int J Syst Sci 36:859–868

    Article  Google Scholar 

  • Benayoun R, Roy B, Sussmann B (1966) Manuel de réference du programme electre. Note de synthèse, formation n.25, Direction scientifique. SEMA, France

    Google Scholar 

  • Bergantino A, Marlow P (1998) Factors influencing the choice of flag: empirical evidence. Marit Policy Manag 25:157–174

    Article  Google Scholar 

  • Bowlin WF (2004) Financial analysis of civil reserve air fleet participants using data envelopment analysis. Eur J Oper Res 154:691–709

    Article  Google Scholar 

  • Brownrigg M, Dawe G, Mann M, Weston P (2001) Developments in UK shipping: the tonnage tax. Marit Policy Manag 28:213–223

    Article  Google Scholar 

  • Capobianco HMP, Fernandes E (2004) Capital structure in the world airline industry. Transp Res Part A Policy Pract 38:421–434

    Article  Google Scholar 

  • Celik M, Deha Er I, Ozok AF (2009) Application of fuzzy extended AHP methodology on shipping registry selection: the case of Turkish maritime industry. Expert Syst Appl 36:190–198

    Article  Google Scholar 

  • Chang CC, Lin K, J yuan B (2006) Developing direct shipping across the Taiwan Straits. Mar Policy 30:392–399

    Article  Google Scholar 

  • Chen CT (2000) Extensions of the TOPSIS for group decision-making under fuzzy environment. Fuzzy Sets Syst 114:1–9

    Article  Google Scholar 

  • Chen S, Tan J (1994) Handling multicriteria fuzzy decision-making problems based on vague set theory. Fuzzy Sets Syst 67:163–172

    Article  Google Scholar 

  • Cheng CH (1998) A new approach for ranking fuzzy numbers by distance method. Fuzzy Sets Syst 95:307–317

    Article  Google Scholar 

  • Chiu RH (2007) The liberalization of shipping in Taiwan. Mar Policy 31:258–265

    Article  Google Scholar 

  • Chou SY, Chang YH (2008) A decision support system for supplier selection based on a strategy-aligned fuzzy SMART approach. Expert Syst Appl 34:2241–2253

    Article  Google Scholar 

  • Chuang IY, Chiu YC, Edward Wang C (2008) The performance of Asian airlines in the recent financial turmoil based on VaR and modified Sharpe ratio. J Air Transp Manag 14:257–262

    Article  Google Scholar 

  • Cullinane K, Robertshaw M (1996) The influence of qualitative factors in Isle of Man ship registration decisions. Marit Policy Manag 23:321–336

    Article  Google Scholar 

  • Deng J (1982) Control problems of grey systems. Syst Control Lett 5:288–294

    Google Scholar 

  • Drewry Publishing (2009) Container market review and forecast. Annual Report

    Google Scholar 

  • Feng CM, Wang RT (2000) Performance evaluation for airlines including the consideration of financial ratios. J Air Transp Manag 6:133–142

    Article  Google Scholar 

  • Goulielmos AM (1998) Flagging out and the need for a new Greek maritime policy. Transp Policy 5:115–125

    Article  Google Scholar 

  • Guzhva VS, Pagiavlas N (2003) Corporate capital structure in turbulent times: a case study of the US airline industry. J Air Transp Manag 9:371–379

    Article  Google Scholar 

  • Halkos GE, Salamouris DS (2004) Efficiency measurement of the Greek commercial banks with the use of financial ratios: a data envelopment analysis approach. Manag Account Res 15:201–224

    Article  Google Scholar 

  • Heaver TD (2002) The Evolving Roles of Shipping Lines in International Logistics. Marit Econ Logist 4(3):210–230

    Article  Google Scholar 

  • Hsu HM, Chen CT (1997) Fuzzy credibility relation method for multiple criteria decision-making problems. Inf Sci (Ny) 96:79–91

    Article  Google Scholar 

  • Hus HM, Chen CT (1994) Fuzzy hierarchical weight analysis model for multicriteria decision problem. J Chinese Inst Industrial Eng 11(3):129–136

    Google Scholar 

  • Hus HM, Chen CT (1996) Aggregation of fuzzy opinions under group decision making. Fuzzy Sets Syst 79:279–285

    Article  Google Scholar 

  • Hwang CL, Yoon K (1981) Multiple attributes decision making methods and applications. Springer, Berlin Heidelberg

    Book  Google Scholar 

  • Jessop A (2004) Minimally biased weight determination in personnel selection. Eur J Oper Res 153:433–444

    Article  Google Scholar 

  • Jung A, Schulz T, Wangner W (2009) Shipping industry drowning in financial woes, Der Spiegel 14

    Google Scholar 

  • Lee TW (1996) Flagging options for the future: a turning point in Korean shipping policy? Marit Policy Manag 23:177–186

    Article  Google Scholar 

  • Lee HS (1999a) Automatic clustering of business processes in business systems planning. Eur J Oper Res 114:354–362. doi:10.1016/S0377-2217(98)00125-8

  • Lee TW (1999b) Restructuring of the economy and its impacts on the Korean maritime industry. Marit Policy Manag 26:311–325

    Google Scholar 

  • Lee TW, Lin CW, Shin SH (2012) A comparative study on financial positions of shipping companies in Taiwan and Korea using entropy and grey relation analysis. Expert Syst Appl 39(5):5649–5657

    Article  Google Scholar 

  • Lee TW, Lin CW, Chung YS (2014) Comparison analysis for subjective and objective weights of financial position of container shipping companies. Marit Policy Manag 41(3):241–250

    Article  Google Scholar 

  • Leggate H, McConville J (2005) Tonnage tax: is it working? Marit Policy Manag 32:177–186

    Article  Google Scholar 

  • Levinson M (2006) The box: how the shipping container made the world smaller and the world economy bigger. Princeton University Press, Princeton

    Google Scholar 

  • Liang GS, Liu CF, Lin WC, Yeh CH (2006) A data envelopment analysis of shipping industry bond ratings. Tamkang J Sci Eng 9:403–408

    Google Scholar 

  • Lin WC, Liu CF, Chu CW (2005) Performance efficiency evaluation of the Taiwan’s shipping industry : an application of data envelopment analysis. Proc East Asia Soc Transp Stud 5:467–476

    Google Scholar 

  • Llácer FJM (2003) Open registers: past, present and future. Mar Policy 27:513–523

    Article  Google Scholar 

  • Ma J, Fan ZP, Huang LH (1999) A subjective and objective integrated approach to determine attribute weights. Eur J Oper Res 112:397–404

    Article  Google Scholar 

  • Notteboom T, Rodrigue J-P (2008) Containerisation, box logistics and global supply chains: the integration of ports and liner shipping networks. Marit Econ Logist 10:152–174. doi:10.1057/palgrave.mel.9100196

    Article  Google Scholar 

  • Opricovic S, Tzeng GH (2004) Compromise solution by MCDM methods: a comparative analysis of VIKOR and TOPSIS. Eur J Oper Res 156:445–455

    Article  Google Scholar 

  • Panayides PM (2006) Maritime logistics and global supply chains: towards a research agenda. Marit Econ Logist 8:3–18

    Article  Google Scholar 

  • Saaty TL (1980) The analytic hierarchy process. McGraw-Hill, New York

    Google Scholar 

  • Scheraga CA (2004) Operational efficiency versus financial mobility in the global airline industry: a data envelopment and Tobit analysis. Transp Res Part A Policy Pract 38:383–404

    Article  Google Scholar 

  • Shannon CE (1948) A mathematical theory of communication. Bell Syst Tech J 27:379–423

    Article  Google Scholar 

  • Shih HS (2008) Incremental analysis for MCDM with an application to group TOPSIS. Eur J Oper Res 186:720–734

    Article  Google Scholar 

  • Song DW, Lee PT-W (2009) Maritime logistics in the global supply chain. Int J Logist Res Appl 12:83–84

    Article  Google Scholar 

  • Triantaphyllou E, Shu B, Sanchez SN, Ray T (1998) Multi-criteria decision Making: an operations research approach. In: Webster JG (ed) Encyclopedia of electrical and electronics engineering. John Wiley & Sons, New York, pp 175–186

    Google Scholar 

  • Tung CT, Lee Y-J (2009) A novel approach to construct grey principal component analysis evaluation model. Expert Syst Appl 36:5916–5920

    Article  Google Scholar 

  • Tzeng GH, Lin CW, Opricovic S (2005) Multi-criteria analysis of alternative-fuel buses for public transportation. Energy Policy 33:1373–1383

    Article  Google Scholar 

  • Tzeng GH, Chiang CH, Li CW (2007) Evaluating intertwined effects in e-learning programs: a novel hybrid MCDM model based on factor analysis and DEMATEL. Expert Syst Appl 32:1028–1044

    Article  Google Scholar 

  • Wang YJ (2008) Applying FMCDM to evaluate financial performance of domestic airlines in Taiwan. Expert Syst Appl 34:1837–1845

    Article  Google Scholar 

  • Wang YJ (2009) Combining grey relation analysis with FMCGDM to evaluate financial performance of Taiwan container lines. Expert Syst Appl 36:2424–2432

    Article  Google Scholar 

  • Wang YJ, Lee HS (2007) Generalizing TOPSIS for fuzzy multiple-criteria group decision-making. Comput Math with Appl 53:1762–1772

    Article  Google Scholar 

  • Wang YJ, Lee HS (2008) A clustering method to identify representative financial ratios. Inf Sci (Ny) 178:1087–1097

    Article  Google Scholar 

  • Wang YJ, Lee HS (2010) Evaluating financial performance of Taiwan container shipping companies by strength and weakness indices. Int J Comput Math 87:38–52

    Article  Google Scholar 

  • Wang YJ, Lee HS, Lin K (2003) Fuzzy TOPSIS for multi-criteria decision-making. Int Math J 3:367–379

    Google Scholar 

  • Wang RT, Ho CT, Feng CM, Yang YK (2004) A comparative analysis of the operational performance of Taiwan’s major airports. J Air Transp Manag 10:353–360

    Article  Google Scholar 

  • Wang YJ (2008) Applying FMCDM to evaluate financial performance of domestic airlines in 572 Taiwan. Expert Syst Appl 34:1837–1845 573

    Google Scholar 

  • Wang YJ (2009) Combining grey relation analysis with FMCGDM to evaluate financial performance of Taiwan container lines. Expert Syst Appl 36:2424–2432

    Google Scholar 

  • Xu X (2004) A note on the subjective and objective integrated approach to determine attribute weights. Eur J Oper Res 156:530–532

    Article  Google Scholar 

  • Zadeh LA (1965) Fuzzy sets. Inf Control 8(2):338–353

    Article  Google Scholar 

  • Zhang G, Zhang N, Wang Q (2005) Container ports development and regional economic growth: an empirical research on the pearl river delta region of China. Proc East Asia Soc Transp Stud 5:2136–2150

    Google Scholar 

  • Zou ZH, Yun Y, Sun JN (2006) Entropy method for determination of weight of evaluating indicators in fuzzy synthetic evaluation for water quality assessment. J Environ Sci (China) 18:1020–1023

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Ocean College, Zhejiang University, Zhoushan, 316021, Zhejiang Province, China

    Paul Tae-Woo Lee

  2. Department of Logistics and Shipping Management, Kainan University, Taoyuan City, Taiwan

    Cheng-Wei Lin

  3. Department of Logistics and Maritime Studies, The Hong Kong Polytechnic University, Kowloon, Hong Kong, SAR, China

    Sung-Ho Shin

Authors
  1. Paul Tae-Woo Lee
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Cheng-Wei Lin
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Sung-Ho Shin
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Paul Tae-Woo Lee .

Editor information

Editors and Affiliations

  1. Institute of Maritime Logistics, Ocean College, Zhejiang University, Zhoushan, Zhejiang Province, China

    Paul Tae-Woo Lee

  2. School of Maritime and Mechanical Engineering, Liverpool John Moores University, Liverpool, United Kingdom

    Zaili Yang

Rights and permissions

Reprints and permissions

Copyright information

© 2018 Springer International Publishing AG

About this chapter

Cite this chapter

Lee, P.TW., Lin, CW., Shin, SH. (2018). Financial Performance Evaluation of Shipping Companies Using Entropy and Grey Relation Analysis. In: Lee, PW., Yang, Z. (eds) Multi-Criteria Decision Making in Maritime Studies and Logistics. International Series in Operations Research & Management Science, vol 260. Springer, Cham. https://doi.org/10.1007/978-3-319-62338-2_9

Download citation

Publish with us

Policies and ethics

Search

Navigation