Free Essay

Shipping

In: Other Topics

Submitted By wilsongu
Words 1767
Pages 8
Exclusive Summary
Shipping has been an important human activity, especially where prosperity depended primarily on international trade and interregional trade. Transportation has been one of the main factors of globalization, along with communications, international standardization, and trade liberalization. Due to a number of technological, economic, and socio-cultural forces, only limited country can keep itself fully isolated from the economic activities of other countries. Many countries have seen enormous economic growth in the recent past due to their willingness to open their borders and markets to foreign investment and trade. This increased flow of knowledge, resources, goods, and services among world’s nations is called “globalization”, formally defined as the development of an increasingly integrated global economy marked especially by free trade, free flow of capital, and the tapping of cheaper foreign labor markets.

Introduction
Marine transportation is an integral, if sometimes less publicly visible, part of the global economy. The marine transportation system is a network of specialized vessels, the ports they visit, and transportation infrastructure from factories to terminals to distribution centers to markets. Maritime transportation is a necessary complement to and occasional substitute for other modes of freight transportation. For many commodities and trade routes, there is no direct substitute for waterborne commerce.

The Important of Maritime Transport in the Global Economy
Transport is the most important link in economic relations. It is involved in creating of products and delivering it to consumers, provides the link between production and consumption, between different industries, between countries and regions. It affects the development of the economy as a consumer of metal, energy, timber, rubber and other products. More than 100 million people in a world work in the system of transport.
Sea transport is used for external relations. Only in some countries such as USA, Russia, China, Canada, Turkey, France, maritime transport provides internal transportation. This transport carries more than 80% foreign trade goods. This is the cheapest mode of transport because the exploitation of maritime requires greater network costs, as in other types of transport. Modern ships can carry cargo of any size and weight.

Maritime Transportation Impacts on Economy
Studying 2 of the world busiest ports (China and Singapore) provide evidence that maritime transport has an important part to play in their country respective economies.
Singapore
In the 1980s, Singapore acts as a regional processing and distribution center. Re-exports’ share of total exports averaged 35 percent from 1980 – 1987. Although primary commodities were still a factor in trading activities, machinery and transportation equipment dominated. Singapore also served as a back door to trade with Asian communist countries for third world countries, such as Indonesia.
Trade, along with the rest of the economy, reasserted itself by 1987, resulting partly from government economic decisions and partly as a reflection of rising world commodity prices. In 1988 Singapore’s total trade amounted to about S$167.3 billion, with a global trade deficit of about S$8.18billion. Singapore’s GDP grew by 10.8percent in 1988, the best growth rate in fifteen years.
Trade in goods and services was Singapore ‘s life blood as truly in 1989 as it was in the early twentieth century or a century earlier when the British East India Company first began business there. Trade, along with domestic savings and foreign investment, remained key to the country’s growth. It was one of the world’s few countries where total international trade was greater than total GDP. In 1988 trade was more than three times GDP, and two-thirds of the goods and services Singapore produced were exported.
The Singapore marine industry has seen significant growth over the last 30 years, evolving from a small regional ship repair and building centre into a world-class industry that services international clientele. The industry includes ship repair, ship building, rig building and offshore engineering, and other marine supporting services.
Globally renowned for its reliable and convenient range of comprehensive marine services, Singapore is a one-stop marine centre for ship owners, managers and agents around the world. Generating an annual turnover of $3 billion and employing some 30,000 workers, the marine industry plays a crucial part in Singapore's economic growth. Ship repair and conversion form the backbone of the local marine industry, accounting for about 60% of the total revenue.
Singapore is also well supported by its strategic geographic, location and comprehensive and integrated marine infrastructure services. The marine industry has contributed to the economic development of Singapore for the last 30 years. It will continue to play a critical role in the national economy, in view of Singapore's drive to become a leading international maritime hub.
China
Chinese merchant shipping has made considerable progress during the last decade. Its plays an important role in international trade and is a symbol of the growing maritime power of China. In 1996, the Chinese shipping fleet comprised 22.5million tons deadweight tonnage. There was an estimated 11.7million tons dwt fleet tonnage on Chinese owned shipping flying flags of convenience. Container vessels have come to play an important role in the Chinese shipping industry. Besides being the top producer of shipping containers, the Chinese container fleet is making volume of containers handled by Chinese ports has surged forward increasing four fold between 1990 and 1995.
As a result of opening up of the economy and major maritime economic reforms, the Chinese shipping industry has expanded rapidly. Since 1984, when the first foreign ship docked in a Chinese port, there has been a major surge in foreign investments in this sector. At the end of 1995, China had 290 domestic shipping companies engaged in international trade and by 1996; fifteen foreign companies had joined the competition. By 1999, there were more than 120 Sino-foreign joint venture shipping companies in China. There are 350 representative offices of foreign shipping companies and 467 foreign shipping agents. These trends have generated a healthy competition in the shipping market and provided a boost to the sector. China has also concluded ocean and river shipping agreements with 52 countries of the world. Today, more than ninety per cent of the Chinese foreign trade is carried by ships; the shipping industry has turned itself into an engine for impressive economic progress. There are over four hundred domestic and international shipping companies engaged in maritime trade making China an A class member state of the United Nations Maritime Organization.
During the last two decades, Chinese maritime economy has provided statics and developed at an impressive pace. In the 1980s, maritime economy grew at seventeen per cent annually. Since 1990s the average growth has stood at twenty per cent. In 1996, coastal cities which rely mainly on maritime economy accounted for forty-eight per cent of the coastal cities GDP. In 1997, marine industry output value rose to 300million Yuan, accounting 4 per cent of the GDP. This was 7.6 per cent up from the previous year. The coastal provinces have thus contributed substantially to the overall national GDP. The maritime component of the economy of coastal cities and countries experienced a high growth rate amounting to 2244.3 billion Yuan which corresponds to 52.4 per cent of the coastal GDP.
Since its return to mainland China, the Hong Kong Special Administrative Region has continued to maintain its glory as a major maritime center in Asia. It is the 7th largest trading entity in the world. In 1999, Hong Kong port handled 16.2million TEUs up from 12.5 million TEUs in 1995 making it one of the busiest container ports. It is reported that more than 210,000 ships made port calls in 1999 either to land/discharge cargo, maintenance or crew changes. Being the hub of maritime activity, there are over 1000 shipping related companies that cater to needs of ships owners, crew and ship repairs. Hong Kong is also a major center for finance, insurance, brokerage and legal arbitration. The Hong Kong Shipping registry is very popular among ship owners and offers simplified procedures, worldwide coverage and services.
Economic development in Pacific Asia and in China in particular has been the dominant factor behind the growth of international transportation in recent years. Since the trading distances involved are often considerable, this has resulted in increasing demands on the maritime shipping industry and on port activities. As its industrial and manufacturing activities develop, China is importing growing quantities of raw materials and energy and exporting growing quantities of manufactured goods. The outcome has been a surge in demands for long distance international transportation. The ports in the Pearl River delta in Guangdong province now handle almost as many containers as all the ports in the United States combined.

Conclusion
The importance of maritime transportation in global freight trade is unmistakable, particularly in terms of tonnage as it handles about 90% of the global trade. The global maritime transport system is composed of a series of major gateways granting access to major production and consumption regions. Between those gateways are major hubs acting as points of interconnection and transhipment between systems of maritime circulation.
Maritime Transportation is a vital means of transport for the prosperity of a country. It has an impact on the rate of economic development in a country. It is the most optimal cost efficient means of transporting a large number of goods. It creates employment opportunity in other dependant industries like shipbuilding, ship breaking, ship repairing, maritime training etc. It plays a huge role in increasing trade, generating employment.

References
Global Forum on Transport and Environment in a Globalising World. http://www.oecd.org/dataoecd/10/61/41380820.pdf, accessed 20 October 2011

NBER Working Paper Series. Global Trade and the Maritime Transport Revolution. http://www.nber.org/papers/w14139.pdf, accessed 24 October 2011

http://www.unescap.org/ttdw/Publications/TFS_pubs/pub_2017/pub_2017_ch3.pdf, accessed 26 October 2011

Maritime Sector. http://www.windrosenetwork.com/Maritime-Sector.html, accessed 27 October 2011

Maritime Transport Costs and Their Impact on Trade. http://www.etsg.org/ETSG2009/papers/korinek.pdf, accessed 30 October 2011

The Importance of Maritime Transport In the Global Economy. http://foryouarticles.com/index.php/the-importance-of-maritime-transport-in-the-global-economy/, accessed 18 November 2011

Maritime Power of People’s Republic of China: The Economic Dimension. http://www.idsa-india.org/an-feb-5-01.html, accessed 18 November 2011

Singapore – The Economy. http://www.mongabay.com/reference/country_studies/singapore/ECONOMY.html, accessed 18 November 2011

Marine market in Southeast Asia. http://www.nzte.govt.nz/explore-export-markets/market-research-by-industry/Specialised-manufacturing/Documents/Marine-market-in-Southeast-Asia.pdf, accessed 18 November 2011

Similar Documents

Free Essay

Shipping Industry

...SHIPPING TRENDS Capt. S. Pullat BA, MCIT, MCIArb, FICS AUMNI Shipping Consultants In the midst of technological developments, its application and futuristics, the Customers seem to be relegated to the back seat. Beware, if one does not treat them like a King or at least a la Prince, they could be King makers, and any case has a decisive role to play in all our endeavours for success. For, if we are driven by technology alone –as predominantly this forum is- we must ensure that it is affordable, safe, has redundancy and environmentally and user friendly as well. Technology per se does not solve problems, it enables problem solving and must be proactive too so that obsolescence can be planned and replacement provided for. Perhaps there is a lot to learn from the Computer industry, software sector in particular, as to how upgradation or newgradation is to be effected frequently. A cyclical and capital-intensive industry such as shipping has been slow to change and innovate, so much so it is driven by regulators and not industry itself. Such hindsight methodology has considerable time lag before ushering in corrective measures and in the interim the industry’s image and perception has suffered in the eyes of users and the public at large. Handful are the cases where ships are built to higher specifications than the bare minimum that Class calls for. A major operator recently citing experience criticised the need to shell out huge sums to overcome the cost saving nexus...

Words: 1659 - Pages: 7

Free Essay

International Shipping

...Assignment – (Individual) Course: Diploma in Logistics Management Batch: DLM 12/41 Module: International Shipping Management ------------------------------------------------- Lecturer: Mr Eddie Tan Assignment On: What risks and perils are present in global transportation? Discuss how exporters and importers can manage these risks. Submission Date: 27th Feb 2013 Name(s) of Student: Norhazura Binti Zulkafly (Word count –1,882) Table of Content Chapter | Title | Page | 1 Introduction 3 2 Global trends and challenges in transport sector 4 3 Cargo Insurance 8 4 Transportation Perils 10 5 Managing Risks 11 6 Insurable interest 12 7 Summary 13 9 Bibliography 14 1. Introduction The global economy is going through a highly volatile period as highlighted in the Transportation Profile. Diesel and bunker fuel prices have been largely unpredictable, thanks to the wild swings in crude oil prices (peaking at nearly $150 per barrel before plummeting to less than $40 per barrel in 2008). Demand for industrial and consumer products has contracted after years of unprecedented growth, due to rising prices and a global recession, and companies have struggled to secure needed financing because of the global credit crunch. They create extreme challenges in the market for global transportation services. Just a few short years ago during the global trade boom, ports were testing......

Words: 1948 - Pages: 8

Premium Essay

Custom and Shipping

...Custom and shipping Q.1. Explain the role of shipping in international trade. What are the different modes of shipment? MODES OF SHIPPING * Free on board (FOB)–the exporter delivers the goods at the specified location (and on board the vessel). Costs paid by the exporter include load, lash, secure and stow the cargo, including securing cargo not to move in the ships hold, protecting the cargo from contact with the double bottom to prevent slipping, and protection against damage from condensation. For example, "FOB JNPT" means that the exporter delivers the goods to the Jawahar lal Nehru Port, India, and pays for the cargo to be loaded and secured on the ship. This term also declares that where the responsibility of shipper ends and that of buyer starts. The exporter is bound to deliver the goods at his cost and expense. In this case, the freight and other expenses for outbound traffic are borne by the importer. * Carriage and freight (now known in the US as "cost and freight")(C&F, CFR, CNF): Insurance is payable by the importer, and the exporter pays all expenses incurred in transporting the cargo from its place of origin to the port/airport and ocean freight/air freight to the port/airport of destination. For example, C&F Los Angeles (the exporter pays the ocean shipping/air freight costs to Los Angeles). Most of the governments ask their exporters to trade on these terms to promote their exports worldwide such as India and China. Many of the shipping......

Words: 1739 - Pages: 7

Free Essay

Short Sea Shipping

...Garrett Weston Weston 1 Dr. Donna Nincic GMA 105 October 25, 2011 Short Sea Shipping As roads become more congested and trade increases, United States’ ports and businesses begin to look for alternative forms of transportation in order to move cargo off of the roads and onto the water. One solution to this issue is the implication of Short Sea Shipping. Short Sea Shipping is the act of shipping intercontinentally, using waterways such as rivers and inlets to transport people and goods from one destination to another without crossing over oceans. An example of this would be using the Mississippi River as a trade route to transport goods from Canada to the Gulf Coast. Though Short Sea Shipping has been around for centuries, today’s over-congestion of North American highway trade and travel has created a greater demand for this method of transportation. It has already proven to be a successful mean of shipping and is currently at the forefront of Europe’s transportation system. The use of this type of shipping has many benefits, including: the potential to alleviate air pollution, reduce accidents and congestion on our freeways, while also saving the shipping companies money. International trade between Asia and the United States’ West Coast ports, transiting through the ports of Los Angeles and Long Beach, is expected to double in volume in the next fifteen years (ESCAP 2010). These greater volumes of commercial traffic are adding to congestion and......

Words: 2732 - Pages: 11

Free Essay

Economy Shipping

...Economy Shipping Cash Flows Incrementales En la primavera de 1950, el Controller de Economy Shipping Co., ubicada cerca de Pittsburg, estaba preparando un informe para el Comité Ejecutivo sobre la factibilidad de reparar uno de los barcos a vapor de la empresa, el Conway, o reemplazarlo por un nuevo barco con motor diesel. Economy Shipping se dedicaba al transporte de carbón desde las minas hasta las industrias consumidoras en el área de Pittsburgh. Todos los barcos de la empresa eran de vapor. Todos tenían por lo menos 10 años de antiguedad y la mayoría tenían entre 15 y 30 años. El Conway tenía 23 años y requería un trabajo de rehabilitación inmediato o su reemplazo. Si se realizaban los trabajos de reparación y matenimiento requeridos, se estimaba que este barco tendría una vida útil de otros 20 años. El valor de libros del Conway era de $ 39.500, pero el Controller estimaba que la compañía no podría cobrar más de $ 25.000 por su venta. Los costos de rehabilitación ascendían a $ 115.000. En dicha rehabilitación, era posible utilizar partes y repuestos de un barco retirado de la actividad en 1948. El valor de libros de estas partes era de 43.500 y su uso reduciría el costo de rehabilitación de $ 115.000 a $ 71.500. Se estimaba que el valor de venta de esas partes en el mercado era de $ 30.000. Las partes no podían usarse para ningún otro barco. Si se decide rehabilitar el Conway, el valor de libros, incluyendo el costo de rehabilitación, será depreciado a fines impositivos......

Words: 612 - Pages: 3

Premium Essay

Economy Shipping

...Economy Shipping Company (Abridged) Question 1. What are the relevant cash flows under each of the two alternatives? And in what years do they occur? Alternative 1: Rehabilitation of the Conway We decided to divide this alternative in two parts. Part A is Rehabilitation without parts and Part B is Rehabilitation with parts. Facts/Assumptions • Conway’s additional useful life of 20 years. • Book value of Conway: $39,500 • Market value of Conway: $25,000. This is the Opportunity Cost of not selling the Conway at year 0. • Rehabilitation costs: $115,000. If spare parts are used, rehabilitation costs would be $71,500. • Book value of spare parts if used on the Conway: $43,500. • Market value of spare parts: $30,000. This is the Opportunity Cost of not selling the spare parts at year 0. • Annual operating costs of Conway: $203,150 • No dismantling and scrapping costs at the end of useful life (This will be covered by the value of the scrap and used parts). • Return of 10% after taxes. • Tax rate: 48% • Book cost of Conway, including rehabilitation costs, would be depreciated over a 20-year period. • Depreciation according to the straight line method = (Cost - Residual value) / Useful life. For the rehabilitation alternative, residual value is zero at the end of year 20. • ATCF(After-tax cash flow) will be calculated using the formula = Operating Costs after taxes plus Tax shields from......

Words: 1220 - Pages: 5

Premium Essay

Stateline Shipping

...Stateline Shipping and Transport Company Carla Coleman Strayer University MAT 540: Quantitative Method Dr. Luke Howard March 20, 2014 2014 Case Study: Stateline Shipping and Transport Company In this case study, we are introduced to Rachel Sundusky, the manager of the South-Atlantic office of the Stateline Shipping and Transport Company. The information we are given is that Rachel is in the process of negotiating a new contract to haul hazardous chemical waste from six (6) locations to three (3) waste disposal sites for Polychem, a manufacturer or chemicals for industry use. Rachel has estimated both the cost to transport one barrel from each location to each disposal site, as well as between each location. In estimating these costs, Rachel took into account that some towns and municipalities where the six plants are located restrict the transportation of hazardous material within municipal limits, so costs in some cases had to include traversing circutous routes. Rachel is given the number of barrels of waste each of the six plant locations will need picked up and how many barrels each of the waste disposal sights can accept. Given this information, and the esimated shipping costs she has developed, Rachel would like to determine which shipping routes will minimize Stateline’s total cost. She would like to consider the cost to move the waste directly from each plant location to a...

Words: 525 - Pages: 3

Free Essay

Enomy Shipping

...Economía Shipping Company Se recomienda Economía Shipping Company (ESC) sustituir el barco de vapor, Cynthia, con un barco nuevo motor diesel. El análisis supone que no hay costos de operación en 1950 A pesar de ESC fue presumiblemente aún en servicio durante este análisis, los costos asociados con la evaluación del proyecto no han sido valoradas hasta 1951 fue también implícita en los cálculos de VAN que cualquier actualización necesaria posterior a 1950 podría ser realizado sin ninguna interrupción a las operaciones diarias y se realizaron a principios de año. Por lo tanto, la actualización fogonero y los reemplazos de motor fueron considerados en 01 de enero del año previsto y no requieren ningún tiempo de inactividad de la instalación.La evaluación consideró cuatro escenarios diferentes: 1. Rehabilitación de Cynthia con la conversión fogonero que ocurre en 1950 2.Rehabilitación de Cynthia con la conversión fogonero que ocurre en1952 3. La compra de un nuevo barco de motor diesel con 2 turnos de 12 horas día de trabajo 4. La compra de un nuevo barco de motor diesel con 3 turnos, de 8 horas de trabajo días Desde ESC estaba considerando otros proyectos con una tasa de retorno de 10%, cada una de las opciones anteriores se consideraron utilizando la misma tasa de retorno. La compañía? S balance sugiere que la gestión era muy conservadora. La relación deuda-capital en 1950 fue de 0.075, lo que indica que la compañía podría pedir prestado a una tasa que va del 3% y sin temor a......

Words: 912 - Pages: 4

Premium Essay

Shipping 360

...Trans-Pacific route appears attractive as number of shipping lanes has grown by 48.9% between 2002 and 2007, and projected to grow by 42.9% from 2007 to 2012. Loyal customers have also approached David expressing interest in staying with Meli should they provide trans-Pacific operations. Therefore, this market can potentially be a big revenue driver if Meli’s assets are properly aligned to capitalize it. 2.2 Benefits of Diversification: Trans Pacific route, particularly outgoing flows to North America, could offer diversification of income source to Meli Marine in periods when Intra-Asia’s demand is weak. Moreover, in most cases of macroeconomic downturns, countries such as Asia in 1990s will resort to export-push policies to stimulate the economy and a race to affordable transport options; these could enlarge the volume of outgoing freight flows. 2.3 Tit-for-Tat Strategy against Competitors’ Cascading: On a macro level, an expansion move to Asia-NA route will be a strong hit on their competitors “on their profit pool”, and also serve as a possible strategic tool to thwart competitors’ threat of cascading. However, when the financial crisis finally caught up with the shipping industry, combined with other factors, we saw a significant decline in this growth. Combined with economic factors like increasing fuel prices or capital costs associated with operating and maintaining technology advances, and political forces requiring shipping companies to be mindful of the......

Words: 400 - Pages: 2

Free Essay

Shipping Industry

...Indian shipping industry growth and constraints The Indian shipping industry accounts for 95% of the Indian trade by volume and approx. 70% of Indias trade by value. This industry mainly relies on Indian exports and imports and has been severely impacted by the recession of 2008-09 as felt by the Indian industries. The main components of industry include Dry cargo which is required for the import of iron ore , coal etc ( accounting for 66% of indias shipping trade). and the wet cargo which includes crude oil etc (34.7%).The Indian shipping industry with its fleet of 1029 ships as on 2012 is the 15th largest in the world and has grown at a CAGR of 3.3% since 1970’s, but however there are plenty of new opportunities for growth as well as severe constraints facing the industry. With the liberalization of the Indian economy and during the period of economic boom, there has been an ever increasing demand for LNG to be imported in the country in order to sustain Indias fertilizer and power plants. This is followed by a need to integrate and develop multimodal logistics in order to ensure that the cargo once unloaded is delivered to the desired location in a speedy manner. This is being taken up by India by planning 16 multimodal logistic parks along Delhi to Mumbai highways and also with the Modi government’s vision of connecting all the rivers in India in order to boost up intra country trade. Another opportunity for growth for the Indian shipping industry which is primarily......

Words: 610 - Pages: 3

Free Essay

Shipping Logistics

...Retrieved March 19, 2014 from http://www.china-briefing.com/news/2013/03/11/import-export-taxes-and-duties-in-china.html High Connectivity Hong Kong port has a high connectivity to other ports around the world. It is because Hong Kong is located between Europe and Pacific Ocean. It is among the world ports one of the most central ports in port networks. Hong Kong also has deep harbor in South China. It depth around 15.5 meters(Planning Department, 2004). Hong Kong is very closed to Pearl Rive Delta, which is not to our sources. It also one of the world’s largest exporter so most of cargoes handling are from or destined for Pearl River Delta area. According to Hong Kong Government(2001), Hong Kong is served by about 80 international shipping lines with 380 liner services per week to 550 destinations worldwide. This advantage helps shippers to directly ship their cargoes to the destinations and minimize the needs for transshipment when sing other ports. (2014). Retrieved March 15, 2014 from, Planning Department Web site: http://www.psdas.gov.hk/content/doc/PowerPoint_Bosco_Fung.pdf Well-developed transport network Another strength in Hong Kong Port is well-developed transport network. Firstly, Hong Kong port is located at Kwai Chung and Tsing Yi. The Port is closed to Hong Kong International Airport. Cargoes can delivery between port and airport by Tsing Ma Bridge faster. This is one of the reason that exporters choose Hong kong to deliver cargoes to over the......

Words: 1133 - Pages: 5

Premium Essay

Stateline Shipping

...Assignment #4: Case Problem “Stateline Shipping and Transport Company” 1. In Excel, or other suitable program, develop a model for shipping the waste directly from the 6 plants to the 3 waste disposal sites. White water Los Canos Duras Availability Kingsport $12.00 $15.00 $17.00 35 Danville $14.00 $9.00 $10.00 26 Macon $13.00 $20.00 $11.00 42 Selma $17.00 $16.00 $19.00 53 Columbus $7.00 $14.00 $12.00 29 Allentown $22.00 $16.00 $18.00 38 Capacity 65 80 105 223 The objective of the problem is to develop a shipping schedule that minimizes the total cost of transportation. Suppose Xij denotes the number of barrels of wastes to be transported from the “i” plant to “j” site. Then the total cost of transportation is: Z = 12 X11 + 15 X12 + 17 X13 + 14 X21 + 9 X22 + 10 X23 + 13 X31 + 20 X32 + 11 X33 + 17 X41+ 16 X42 + 19 X43 + 7 X51 + 14 X52+ 12 X53 + 22 X61 + 16 X62 + 18 X63. Thus the objective function of the problem is to minimize Z = 12 X11 + 15 X12 + 17 X13 + 14 X21 + 9 X22 + 10 X23 + 13 X31 + 20 X32 + 11 X33 + 17 X41+ 16 X42 + 19 X43 + 7 X51 + 14 X52+ 12 X53 + 22 X61 + 16 X62 + 18 X63. Constraints Availability in plants: X11 + X12 + X13 = 35 X21 + X22 + X23 = 26 X31 + X32 + X33 = 42 X41 + X42 + X43 = 53 X51 + X52 + X53 = 29 X61 + X62 + X63 = 38 Capacity of the sites: X11 + X21+ X31+X41 + X51 + X61 ≤ 65 X12 + X22+ X32+X42 + X52 + X62 ≤ 80 X13 + X23+ X33+X43 + X53 + X63 ≤ 105 Non- Negativity restrictions Xij ≥ 0 , i = 1,2,3,4,5,6 ; j = 1,2,3...

Words: 2300 - Pages: 10

Premium Essay

Shipping Logistics

...Abstract This chapter analyses the freight rate mechanism in the shipping market. Sea transport is a derived demand where shipping demand occurs as a result of seaborne trade. The demand determinants affecting sea transport include government and political factors, the world economy, seaborne commodity trade, average haul, and transport costs. On the other hand, determinants for shipping supply are fleet size and operational efficiency. The shipping supply function shows the quantity of shipping services by sea transport carriers that would be offered at each level of the freight rate, whereas the shipping demand function shows how shippers adjust their demand requirements to changes in freight rates. In the shipping market, the supply and demand curves intersect at the equilibrium price, where both carriers and shippers have reached a mutually acceptable freight rate. Furthermore, the concept of the “shipping cycle” is introduced in this chapter. A shipping cycle starts with a shortage of ships and increases in freight rates, which in turn stimulates excessive ordering of new ships. The delivery of new ships leads to more supply in shipping capacity. The shipping cycle is a competitive process in which supply and demand interact to determine freight rates. 2.1 Demand for Sea Transport The shipping business uses the market mechanism to regulate supply and demand. Demand for freight transport is determined by demand for physical commodities in a given......

Words: 5686 - Pages: 23

Premium Essay

Stateline Shipping

...Stateline Shipping and Transport In the “Stateline Shipping and Transport Company” case there is the manager Rachel Sundusky of the South –Atlantic office of the Stateline Shipping and Transport Company. She is trying to negotiate a new shipping contract with Polychem where Stateline picks up and transport waste product form its six plants to three waste disposal sites. In this problem we are trying to determine the shipping routes the will minimize Stateline total cost. In the first part I set up the problem in excel showing the shipping to the waste directly from the six plants to the three waste disposal site. In the result I had a Z value which is the minimum cost of $3090.00 that Polychem will pay Stateline to transport their products. It also shows that Danville and Columbus is not safe to ship from because they cannot provide the supply that is needed. In the second part I develop a transshipment model in which each of the plants and disposal sites can be used as intermediate points. In the results it shows that I had a Z value which is the minimum cost of 2884.00 that Polychem will pay Stateline to transport their products. Also shows that Danville is not worth using to ship from because they cannot provide the supply that is needed. The overall results show that it is cheaper for Stateline to use the routes where the plants and disposal sites can be used as intermediate points. In both models it shows that Danville is not a good shipping site. Over all......

Words: 292 - Pages: 2

Premium Essay

Economy Shipping

...Economy Shipping Company It is recommended that Economy Shipping Company (ESC) replace the steamboat, Cynthia, with a new diesel powered boat. The analysis assumed no operating cost in 1950. Although ESC was presumably still in service during this analysis, the costs associated with the project evaluation were not accounted for until 1951. It was also implicit in the NPV calculations that any upgrade required subsequent to 1950 could be performed without any interruption to the daily operations and were performed at the beginning of the year. Therefore, the stoker upgrade and the engine replacements were considered on Jan 1st of the intended year and did not require any downtime for the installation. The evaluation considered four different scenarios: 1. Rehabilitation of Cynthia with the stoker conversion occurring in 1950 2. Rehabilitation of Cynthia with the stoker conversion occurring in 1952 3. Purchase of a new diesel-powered boat with 2 shifts, 12-hour working day 4. Purchase of a new diesel-powered boat with 3 shifts, 8-hour working day Since ESC was considering other projects with a rate of return of 10%, each of the above options were considered using the same rate of return. The company?s balance sheet suggests that management was very conservative. The debt-to-equity ratio in 1950 was 0.075, indicating that the company could easily borrow at the going rate of 3% without fear of bankruptcy.......

Words: 827 - Pages: 4