Chapter 2 Flashcards
How does deep sea shipping compete with air freight?
High value and perishable commodities - development of reefers and reefer containers
What are the international transport zones and sectors?
- Inter-regional ; deep-sea shipping and air freight
- Short-sea : coastal seas
- Land : river and canal, road, rail
Discuss short-sea shipping
Provides further transport from regional centers where deep-sea vessels arrive. Smaller ships and can compete with rail between ports. Operates between ports on coast. None in Africa, maybe EU wants to do it in Africa?
Define cabotage
Practice by which countries enact laws reserving coastal trade to ships of their national fleet
What is the integration of transport modes (land)?
Inland system is a network of roads, railways and waterways using trucks, railways and barges. Interfaces with shipping through ports and specialist terminals.
How does cargo flow smoothly with minimal handling between land and sea? (three ways)
- Adopting standards for units of cargo
- Investing in integrated handling systems that move cargo efficiently from one mode to another
- Designing vehicles to integrate with facilities
Understand and draw up the global transport demand model figure
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What are the three underlying economic forces that drive trade?
- Deficit trade - surplus in one area, physical shortage in another - trade flow fills gap in importing country. Common in raw materials and semi-manufactures
- Competitive trade - cheaper supplies available from other countries, want for diverse products. E.g. car trade
- Cyclical trade - times of temporary shortages - poor harvests/business cycles. Steel products, cement and grain usually.
What are the types of commodities shipped by sea?
In the graph.
1. Energy - crude oil, oil, oil products, liquified gas, thermal coal. These compete with each other
2. Metal - raw materials and products of steel and non-ferrous metal industries: iron ore, metallurgical grade coal, non-ferrous metal ores, steel products, scrap
3. Agriculture and forestry - wheat, barley, soya beans, sugar, agribulks, fertilisers, forest products. Analysis concerned with foodstuffs and animal feed
4. Other cargoes - some industrial products: cement, salt, gypsum, sands, chemicals. Some semi-manufactures and manufactures: textiles, machinery, capital goods and vehicles - high value, mainstay of liners
What is parcel size distribution? Why is it important?
A parcel is an individual consignment of cargo for shipment (10000 tonnes of grain, 100 cases of wine e.g.). Each commodity has its own PSD function shaped by its economic characteristics. Important as it answers which cargoes go in which ships
What three factors impact the shape of a PSD function?
- Stock levels held by users
- Depth of water at loading and discharge terminals
- Economies of scale potential
What are the four methods for product differentiation in shipping?
- Price - proportion of freight in overall cost equation important. Demand is price inelastic - dropping transport cost has little to no impact on volume transported in the short term
- Speed - time in transit incurs inventory cost, shippers of high-value commodities want fast delivery. Might be cheaper to ship small quantities more frequently in the case of high-value commodities
- Reliability - Importance of ‘Just in time’. Some shippers prepared to pay more for guaranteed time of delivery.
- Security - loss/damage raises many difficulties for shipper. Shippers may be prepared to pay more for more secure transportation with lower risk of damage.
What does the economic model for sea transport look like today, draw the graph
notes
Discuss bulk shipping, specialized shipping and liner shipping in terms of types of business (number of transactions per year/voyages per year), service levels, overheads, transaction costs, how prices are determined
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