Supply Demand Freight rates

Question 1

What risks Shipowners may face reagrding his decisions?

Answer 1

Financial risks

Question 2

What opportunties shipping company management should seize regarding Shipping cycles?

Answer 2

Take advantage of the shipping cycles by buying low and selling high

Question 3

Define:

Charter Market

Answer 3

It is a vital component of the transportation sector, functioning as a marketplace where shipowners and shippers meet to arrange temporary vessel leases.

Question 4

What are the small decisions any shipowner could make?

Give an example

Answer 4

When to buy or sell ships , and whether to tie them up in long-term time chartering, or to keep them available for spot market commitments

Question 5

List the following:

Factors that affect demand for seatransport

Answer 5

1. World economy
2. Seaborne Commodity
3. Average haul
4. Transport Costs
5. Political Events

Question 6

List the following:

Factors that affect Supply for seatransport

Answer 6

1. World fleet
2. Fleet Productivity
3. Shipbuilding production
4. Scrapping and losses
5. Freight rates

Question 7

Whih of the demand factors generate the most demand for sea transport and How?

Answer 7

The world economy through the import of raw materials for manufacturing industry, or the trade in manufactured products

Question 8

What is the three aspects of the world economy that may
bring about change in the demand for sea transport?

Answer 8

• Business ycle
• Trade elasticity
• Trade development cycle

Question 9

How can Seaborne commodities influence the demand on sea transport?

Answer 9

Some of the commodties traded such as agriculture are prone to seasonal variations caused by harvest

Question 10

Describe:

Fluctuations in the grain market and its influence on the charter market

Answer 10

An unpredictable market such as the grain market could result in a sudden high demand. Shippers transporting wheat will scramble to find available ships (spot charters). These fluctuations in grain prices directly impact the spot charter market.

Question 12

What is the “Distance effect” in the context of Transport Ecnomics?

Answer 12

Average Haul of Trade

Question 13

What does Average haul measure?

Answer 13

Sea Transport demand in ‘Ton miles’

Question 14

How can average haul be defined?

Answer 14

Tonnage of cargo shipped, multiplied by the average distance over which it is transported

Question 15

What has lead to a reduction in transport costs over the several years?

Answer 15

improved efficiency, bigger ships and more effective organization of the shipping operation

Question 16

What determines the rate of fleet growth in the longrun

Answer 16

Scrapping and deliveries

Question 17

Given that supply of shipping services is slow:

What is the mechanism of the shipping market model?

Answer 17

supply adjusts when ship demand does not turn out as expected.

Question 18

The effeiency variable is generally refered to as

Answer 18

Productivity of the fleet

It is expressed in ton miles per dwt per annum

Question 19

What was Adam smith’s argument regarding the role of port activities on regional development?

Answer 19

As by means of water-carriage, a more extensive market is opened to every sort of industry than what land-carriage alone can afford it, so it is upon the sea-coast and along the banks of navigable rivers that industry of every kind
naturally begins to subdivide and improve itself

Question 20

What was Alfred weber’s argument regarding the role of port activities on regional development?

Answer 20

Firms look for locations where two or more modes of transportation may connect

Question 21

What are the advantages of port activities on the cost and efficiency of the production sector?

Answer 21

1. Reduce transportation cost
2. Increased effeciency
3. Expand the market opportunity of firms
4. Accessability of global markets