Developing strategies for Maritrans' business units

After the Pollution Act of 1990 mandated early retirement for all large single-hulled vessels that carry petroleum and petroleum products, Maritrans' stock lost 80 percent of its value. Through a sequence of studies, Maritrans improved its understanding of its market and developed a strategy for rebuilding its single-hulled fleet and dealing with a further threat to its profitability from a government program of loan guarantees to build new ships. We demonstrated to the US Maritime Administration that giving out loan guarantees would lead to excess capacity and depressed rates and to government expenditures to cover loan losses. Maritrans backed off from operating petroleum-product terminals after we showed that it would not gain synergies with marine transportation. Combining the models for these two studies, we modeled the marine-transportation market for the eastern United States and developed an integral strategy for rebuilding the Gulf Coast fleet. Maritrans announced its new strategy in 1997 and its stock almost doubled, reaching levels not seen since the Oil Pollution Act was passed.