Showing papers in "Maritime economics and logistics in 2004"

An Application of AHP on Transhipment Port Selection: A Global Perspective

Abstract: The research presented in this paper applies the Analytic Hierarchy Process (AHP) to reveal and analyse transhipment port selection by global carriers. In all, 47 relevant service attributes were recorded from a literature review. Two rounds of Delphi surveys – followed by brainstorming sessions – were conducted among experts in industry and academia, in order to narrow their number to four main service attributes|[sol]|criteria comprising 12 sub-criteria. An AHP designed questionnaire survey was distributed to 20 port users, which covered the total population of global ocean container operators, and to 20 transhipment service providers (port operators|[sol]|authorities). The results of the AHP analysis revealed that both global container carriers and port service providers had a similar perception of the most important service attributes for transhipment port selection. However, the AHP weight ranking of the sub-criteria involved was not identical between the two surveys, providing scope for further adaptation of service providers to users' priorities. Differences in the performance ranking of six major container ports by global carriers, as revealed in the AHP survey, were then combined with the calculated weights for the 12 transhipment port selection sub-criteria to explore critical attributes where transhipment market strategy could focus. Maritime Economics & Logistics (2004) 6, 70–91.

Efficiency in European Seaports with DEA: Evidence from Greece and Portugal

Abstract: In this paper, we compare the seaport efficiency of two European countries, Greece and Portugal, using data envelopment analysis (DEA). The international benchmarking procedure is implemented, in which the seaports in each country are compared against each other. The broader aim of this study is to seek out those best practices that will lead to improved performance in the context of European seaport policy. We rank the seaports according to their total productivity for the period 1998–2000. Economic implications arising from the study are considered.

A Competitive Analysis of Chinese Container Ports Using the Analytic Hierarchy Process

Abstract: Over 20% of the world's container traffic occurs from Asian ports. China's entry into the market has significantly stimulated this process. Since China adopted its liberalised economic policy in the 1970s, its economy has grown at an average rate of 10% or more per annum. In particular, the efforts and investments that have been poured into its container ports are conspicuous, since approximately 90% of the country's international trade (in volume terms) is handled through maritime transport. Chinese ports (especially container ports), however, have a number of problems, such as bureaucratic administration, insufficient facilities, the lack of service and commercial orientation and inefficient operations. This paper aims to identify the competitiveness of container ports in China including Hong Kong from the outsiders’ perspective, using the framework of the Analytic Hierarchy Process, and to provide managerial and strategic implications. As expected, the findings reveal that, in terms of competitiveness, Hong Kong, Shanghai and Yantian rank first, second and third, respectively.

An Alternative Approach to Efficiency Measurement of Seaports

Abstract: A whole series of changes in world economic order in the last decade such as globalisation of production and consumption, and structural changes in inter- port relations, port-hinterland relationships and logistics have strengthened the role of ports as nodes in the global transport system. In such an environment, port production economics plays an important role in port management considerations. This paper reviews approaches to performance measurement and provides an examination of the applicability of alternative (four-stage) Data Envelopment Analysis to seaport efficiency measurement. The study finds that alternative DEA is a potentially powerful approach to the evaluation of the overall efficiency of seaports.

Governance in seaport clusters

Abstract: Seaports can be meaningfully analysed with a cluster perspective. In this perspective, seaports are regarded as concentrations of economic activity related to the arrival and service of ships and cargoes at ports. This perspective has two main advantages: first, it draws attention to forces of agglomeration and disagglomeration in seaports. Some seaports are able to become concentrations of logistics activities, commercial centres, ‘information hubs’ and ’shipping hubs’, while others do not attract such activities. The cluster perspective allows for an analysis of such processes of agglomeration. Second, the cluster perspective enriches existing theories on governance in seaports. The analysis of governance in seaports has mostly been limited to the role of the port authority. Notwithstanding the central role of port authorities in ports (port clusters), we argue that a port authority is one ‘arrangement’ to improve the governance in clusters, but not the only ‘arrangement‘. Other arrangements include the formation of associations, the development of public-private partnerships and the use of networks. The literature on governance in clusters provides a broad analytical framework. This framework has implications for analysing the important and complex issue of the role of port authorities in seaports. In this paper, we deal in depth with the issue of cluster governance in seaports and illustrate our approach to cluster governance with an analysis of the port of Rotterdam.

The ISPS Code and The Cost of Port Compliance: An Initial Logistics and Supply Chain Framework for Port Security Assessment and Management

Abstract: Following a description of ISPS and non-ISPS security initiatives, the main risk factors and security threats to ports are identified and analysed, with a focus on the risks stemming from non-tangible assets, flows and processes. Similarly, the various economic approaches to risk management and cost control in shipping are reviewed, and their shortcomings highlighted from the perspective of port logistics and supply chain security. By adopting a channel orientation to ports, the paper suggests that the subject of port security must shift from the current agenda of port-facility security to the wider context of port supply chain security, with a view to ensuring superior security standards and practices in ports and across their supply chain networks. Based on the rationale of logistics integration and supply chain partnership, a conceptual framework to port security is proposed through integrating and optimising three initial models relating, respectively, to channel design and process mapping, risk assessment and management, and cost control and performance monitoring.

Forecasting Tanker Market Using Artificial Neural Networks

Abstract: Investing in the tanker market, especially in the VLCC sector constitutes a risky undertaking due to the volatility of tanker freight rates. This paper attempts to uncover the benefits of using Artificial Neural Networks (ANNs) in forecasting VLCC spot freight rates. This is achieved by analysing the period from October 1979 to December 2002, in order to detect possible causes of fluctuations, thus determine the independent variables of the analysis, and then use them to construct reliable ANNs. The aim is to reduce error and, most important, allow the model to maintain a stable error variance during high volatility periods. Among the findings are: ANNs can, with the appropriate architecture and training, constitute valuable decision-making tools especially when the tanker market is volatile; the use of variables in differential form enhances the ANN performance in high volatility periods while variables in normal form demonstrated better performance in median periods; ANN demonstrated mean errors comparable to the naive model for 1-month forecasts but significantly outperformed it in the 3-, 6-, 9- and 12-month cases; finally, the use of informative variables such as the arbitrage between types of crude oil as well as Capesize rates can improve ANN performance.

Market Efficiency in the Second-hand Market for Bulk Ships

Abstract: According to the Efficient Market Hypothesis (EMH), the use of technical trading rules, where buy and sell decisions are based on past price patterns, should not consistently yield an economically significant excess profit. This paper evaluates the validity of the EMH in the second-hand market for bulk ships based on the out-of-sample performance of technical trading rules. We evaluate a large number of different parameterisations of three of the simplest and most popular trading rules in the financial markets: filter rules, moving averages, and support and resistance levels. The empirical results suggest that trading rules are generally not capable of producing excess wealth over the buy-and-hold benchmark when accounting for transaction costs and the potential price slippage in an illiquid market. The results in this paper therefore support the validity of the EMH in the second-hand markets for bulk vessels.

An empirical taxonomy for logistics service providers

Abstract: The paper investigates the existence of different types of logistics service providers (LSPs) and the relationship of type with service performance. A cluster analysis of survey data from 221 LSPs resulted in the identification of four types of LSPs. A taxonomy was developed that reveals that LSPs are at various stages of development in terms of service capability. The taxonomy highlights the service strategies of different LSP types and their performance implications. In addition, the taxonomy provides insights into the characteristics of different types of LSPs, which underpin different market segments of the logistics service business. Discussions of the use of the taxonomy, to improve LSP service capability and performance, are provided.

New Building Prices: Demand Inelastic or Perfectly Competitive?

Abstract: Since the pioneering work of Zannetos in maritime economics, it has been well understood that prices of new vessels are non-stabilising. In the earlier literature, most of this behaviour has been attributed to market imperfections and externalities. In this paper, we test empirically the stabilising role of the prices of new vessels through the application of advanced econometric tests. Finally, we challenge the assertion that the sub-optimal behaviour of new building prices is due to market anomalies, such as subsidies, and propose a perfectly competitive paradigm that can successfully accommodate the observed patterns of new building price behaviour.

Intra-Port Competition, Regulatory Challenges and the Concession of Callao Port

Abstract: The goal of this paper is to analyse which concession alternative for Callao port, mono- or multi-operator, is more beneficial for the Peruvian society. The author uses the regulation theory, publicly available data, Monte Carlo simulation and real-option theory to analyse the viability of the concession under both alternatives. Its main findings are the following: (a) Although it seems preferable to concession Callao under a multi-operator scheme, superiority of one option over the other will depend on the nature of the port's cost function. If the latter is sub-additive for the forecasted demand, a mono-operator option would be more desirable. (b) If the concession of Callao port was to be carried out under a mono-operator scheme, the Peruvian Government could obtain proceeds in excess of US$ 60 million, or port users could expect to pay 22% lower tariffs for the use of the infrastructure. (c) Without a subsidy, the mono-operator alternative is the only viable one. (d) The real cost of the required subsidy, imposed on the Peruvian society, could amount up to US$ 12 million, while the benefits of the multi-operator alternative would amount up to US$ 60 million. Therefore, its benefits being higher than its costs, it is preferable to concession Callao port under a multi-operator scheme, even if a subsidy is required.

Is Liner Shipping Supply Fixed

Abstract: Liner shipping firms have long argued that the task of providing adequate service to shippers while earning reasonable rates of return on capital requires at least some form of limited antitrust immunity. Carriers contend that because scheduling requirements unique to liner shipping firms constrains their ability to adjust capacity to meet market conditions, liner shipping capacity is essentially fixed in the short term while demand is variable. And because individual firms have incentive to minimise unit costs by maximising capacity utilisation on every voyage, the threat of destructive price wars looms large. Consequently, carriers have advocated that governments leave them free to form collusive arrangements called conferences in which members are free to meet to discuss and fix prices. But how rigid is liner shipping capacity? Because of a lack of useable data on prices and capacity, this question has never been resolved empirically. But recently, new data have become available from public and industry sources that permit researchers to look more deeply into this issue. In this paper, those data are used to estimate a partial adjustment, distributed lag supply function for liner shipping services in US trade lanes. The results reveal that, on the major US import trade lanes, liner shipping supply curve exhibits more flexibility than the ‘stylised facts’ of the industry would suggest.

No Need for Speed in Short Sea Shipping

Abstract: The European Community has an established policy of encouraging sustainable transport, such as multimodal transport operations involving road, rail, inland waterway and short sea shipping (SSS). To stimulate modal-shift to short sea shipping, the European Union is seeking for extra policy actions. One of the research topics in the 5th Framework Programme for Research and Development (FP5) is the potential benefits in lead-time of deploying high-speed vessels (HSV) in short sea shipping freight transport. This paper discusses the policy recommendations of the FP5 project ‘SPIN-HSV’. It analyses the European SSS freight market, studies the need for deploying high-speed vessels to speed up SSS transport along the supply chain, and suggests the main topics of E.U. policy in the near future. We conclude that Community policy should not focus on promoting HSV for short sea freight transport. If there is a need for speed in SSS, market parties will seek HSV solutions by themselves. Community policy should primarily focus on promoting SSS in general in order to achieve further growth in SSS transport volumes.

Investigating the Feasibility of Fast Sea Transport Services

Abstract: Each sea route is different and will demand a different solution to ensure customer acceptance, commercial viability, effective integration, and compliance with regulatory requirements. In seeking to investigate the feasibility of any fast ship route, a holistic appraisal must therefore encompass a range of disciplines including economics, ship design, integration, and regulation. Ultimately, the challenge for the designer, builder and operator is to ensure the entire system functions in such a way as to offer best prospects for sustainable competitive advantage. Economic analysis, including assessment of market demand, is a vital part of the overall equation, but this must be undertaken in unison with other analyses. Port selection and node related factors (ie integration) are critical in this regard, as the ports determine the route as well as provide an interchange. It is not necessarily the case that traditional ports used by conventional vessels on a given route are the same ports that should be used by successor fast craft. Indeed, this may in practice render the fast service uneconomic. New kinds of services may therefore require new routes to be developed, with new ports of call, and this needs new ways of thinking. The overall quality of an ‘interchange’ must also fully match the quality of the vessels employed, ensuring excellent integration, especially vis-a-vis turnaround time, through ticketing, and customer expectations. An absence of consensus in terms of ship design means there are many options to choose from and a key challenge for both operator and designer, in relation to the route and service in question, is to get the design right first time. This is best achieved through a detailed evaluation of alternative options, taking account of user needs, of competitive services, and operational and regulatory demands. Regulations continue to change as new situations arise and this poses added challenges. Vessel design and operation has to take account of and, where possible, anticipate changing regulations, while minimising the adverse impacts such changes may have over route economics.

The Pricing of Forward Ship Value Agreements and the Unbiasedness of Implied Forward Prices in the Second-Hand Market for Ships

Abstract: This paper outlines the methodology to price the newly introduced Forward Ship Value Agreements (FOSVAs). FOSVAs are derivatives aimed at managing asset risk in the second-hand markets for bulk vessels and are traded over the counter. We then estimate the implied forward prices from historical data for vessel prices and the term structure of freight rates under the assumption that the cost-of-carry relationship holds and investigate whether the implied forward prices have been unbiased predictors of realised prices. The empirical evidence rejects the unbiasedness hypothesis in all the cases studied and supports the presence of a risk premium.

Container Shipping and Security Issues: the Carriers' Responsibility in the Fight Against Terrorism

Abstract: Today, the container shipping industry faces a threat from terrorism that could not be envisaged before 9/11. While the public sector has already initiated a variety of aggressive programs to tackle such threats, the private industry also needs to prove its ability to share the burden. An imminent challenge is to deter and prevent the use of ocean containers as weapons of mass destruction. This paper specifically focuses on an effective use of information technology to assist the fight against terrorism. It proposes a new idea to the container shipping industry, namely that the container shipping industry must approach security issues through the use of interconnected standardised databases within a common information system. The industry was born in the late 1960s, when technology was not readily available to accommodate an information system at this level. The dramatic progress of information technology, however, permits the industry today to embrace new business solutions in order to strengthen security. Many years ago, this was just a concept and a theory, but today it can be put into actual practice. These solutions would ensure the authorities' fast and timely response against terrorism. Immediate action by the industry is now necessary to prevent any ocean container from being used as a weapon of mass destruction.

Evaluation of the Economic Impact of Proposed Non-Indigenous Species Control Measures for the St Lawrence Seaway Using Multi-Attribute Decision Theory

Abstract: Mandatory ballast water management, resulting in an increase of required freight rates (RFR) on the St Lawrence Seaway, may cause modal shifts from the marine transportation mode to other modes. However, the modal shifts could well produce several undesirable side effects, such as worse air pollution, lower transportation safety, etc. To evaluate the trade-off between these and the positive ballast water management effects, a multi-attribute decision problem is formulated and solved, using the Analytic Hierarchy Process method, fuzzy set theory, and utility theory. A numerical example is presented. The results indicate that such modal shifts should be avoided, since the more the cargo is shifted from the marine mode to other modes, the more unfavourable the consequences are for the system.

Malaysian Seafarers: The Need for Policy Review

Abstract: In 2001, a study on Malaysian seafarers was conducted by the Maritime Institute of Malaysia (MIMA). It was discovered that Malaysia relies on the services of foreign seafarers to fulfil about 44% of the manning requirements for its ships. Various reasons were cited for this situation. Among others, the lack of adequate numbers of Malaysian choosing seafaring as a profession. The issue is revisited in 2004, to determine the current profile of seafarers serving Malaysian ships and to identify issues and challenges. This paper presents the findings and provides recommendations on steps to be taken to remedy this situation.

Experiences from Liberalisation of Road and Rail Transport

Abstract: Firstly, we discuss about the participation of transport cost to the total product cost. Secondly, we analyse how the liberalisation of road and rail freight transport in Germany, UK, and the USA is affecting the efficiency market shares, the oligopolistic situations, the safety and the service of isolated areas, while an estimation of effects within the EU is conducted. Finally, we examine the consequences of freight liberalisation on the fields of investment, cost, and productivity.

China’s Strategic Oil Reserves and the Establishment of the Oil Spill Contingency System

Abstract: China will soon initiate its strategic oil reserves programme. This programme will be of great significance, politically and economically, in offsetting the risks of the world oil market and in guaranteeing the speedy development of China's economy. In the implementation phase of the programme however, large amounts of oil will have to be imported by sea. While promoting prosperity of the domestic marine transportation sector, this will certainly enhance the risk of environmental pollution in coastal waters. This paper analyses the relationship between strategic reserves, transportation of oil, and the environment of China's coastal waters. In view of the existing problems in the contingency management of China's marine transportation, the paper brings forward ideas and approaches towards building up and improving China's contingency system for marine transport oil spillages. The paper proposes an organisational structure; a coordination and control mechanism; and concrete preventive measures against oil spillage. It draws upon experiences from other countries, while taking into account China's existing marine management system.