Προσφορά θαλάσσιων μεταφορών

Decision makers - supply• Πλοιοκτήτες (παραγγελίες deliveries, διαλυτήρια

scrap,παροπλισμός τονάζ – distinctive markets!)• Ναυλωτές (πολιτικές ναυλώσεων). May become ship-owners

themselves…• Τράπεζες (επιτοκιακή και επενδυτική πολιτική)• Institutions (Μονοπύθμενα – κυβερνητικό regulation) (affect supply

through safety + environmental regulations).Κυκλική και αντι-κυκλική behavior (πολιτική orders σε growth-

contraction-restructuring of markets).Abnormal cyclicality! Market behavior can not be explained in

economic terms only! See below late 1970s, the relation bet. Trade growth rates ↓ and orders ↑ !!

Before 1973 and after 1997, supply is less than demand! That is fleet growth less than tm of sea trade

Compos (wet&dry combined) , 10 mil. Dwt only nowBulk carriers (1960: 17 mil. Dwt, 2008: 350 mil Dwt). Substitute traditional cargo gradually

Tankers 2008: more than 350 mil. Dwt. During ’62-’74 demand quadrupled. 1973: tremendous shortage of supply! Then, it came the free fall…It took many year for the downsize of the fleet!

Scrapping and SB determine in the long run the rate of fleet growth!Deeper specialization but also substitution!

+ escalation in the size of ships! (OBOs=Oil-Bulk-Ore)

Ship/Fleet productivity

• Productivity= tm / dwt (time-year), depending on:

1. Speed (average operating [11.5 knots] # design speed [15.1 tankers]. + ships with high speed potential increase transport capacity)

2. Port time (physical performance increase due to containers…(liner).

3. Mode of deadweight utilization (dw cargo capacity usually 95-6%)

4. Loaded days at sea (total days – off hire - port stay – ballast (+repair+laid up+incidents etc) ). On the contrary, backhaul cargoes increase productivity.

Tramp productivity=20-25.000 tm/dwt/year.35.000 in 1973!When low, then ships used as stores, reduce speed, offhire

A separate market contributing to Supply: Shipbuilding deliveries.

CharacteristicsThe ‘new-building market’ plays active role in fleet size. It deals with

transactions between shipowners and shipbuilders. Contract negotiation can be very complex and extend beyond price. They also cover ship specifications, delivery date, stage payments and finance. The prices on the new-building market are very volatile

and sometimes follow the prices on the sale and purchase market. • Demand expectations really matter• Time lag bet. ordering & delivery 1-3 years according to ship size• Bulk (20 mil. dwt & tankers 30 mil. Dwt) dominate the markets (217).

Numbers are before the crisis. • Construction of a bulk 5 times more complicated (+compos, ro-ro,

ferries, containerships).• A long-cycle business. Ships take 20-30 years to deliver…• Demand side opportunism (liquid investors like today…take

advantage of the drop of the prices and bargain) –supply side inflexibility! (procyclical, slows the adjustment))629

SB demand and supplyDemand for SB is influenced by:

1.Freight rates (positive correlation. The more cash, the more …SB. Watch out again: time lag!)

2.Second-hand prices (positive again! The higher the SH prices, the more demand for SB)

3.Market expectations (positive…). Watch out again!: higher freights=more old ships continue trading!

So, ship-owners, when freights are high, decide to SB mainly only when market expectations are high!!!

4.Credit availability!Supply

1. Shipyard capacity & availability2. Unit cost (labor cost, material costs, subsidies, exch. rates)3. Exch. Rates4. Production subsidies (local), flattening the supply curve!5. How long is the …orderbook..? If short, yards offer low price…). Q to the

students: what about today?

Time scale for adjusting supply

• Short term: either yards are full and supply inelastic or are empty, so they offer lower prices

• Medium terms (2 years): if they have berth spaces, price depends on demand. If shortage, expensive yards get in expanding supply

• Longterm:profitable SBs increase capacityWe look below how SB model works

SBd supply and Demand functions

• Supply curve: links ship price with sb capacity available (ex. 5cgt ships will be supplied at a price of $33 mil. – At a price of $52mil. 22.5cgt ships will be supplied

• Demand curve: How many ships investors want to buy• Demand’s curve elasticity (<1, inelastic) (1< elastic)

Esbp=% Δorders / %ΔpriceExample D2: If ship price is $50 mil. Investors will buy 14 mil. Cgt. If

price is $35mil Will buy 24 (Compensated Gross Tonnage (CGT) is an indicator of the amount of work that is necessary to build a given ship and is calculated by multiplying the tonnage of a ship by a coefficient, which is determined according to type and size of a particular ship).

D2= price elastic. (degree of order responsiveness to a change in price: price does have an effect on orders!)

D3: strong demand makes less productive shipyards viable!If investors have plenty of money and want to order regardless the

price due to great expectations…then demand curve goes …steep.(If demand falls, then even if SB prices go down, no further ships are

ordered).

SBd market short-term equil. (if price $1500, less cgt demanded than supplied- very expensive…. If $750, sb will offer only 30, despite demand for 37

Market adjustment: In the long term, more capacity owners (S curve to the right, send prices down and hit high cost yards (a).In b, the pace of ship demand is falling from 3 to 2.8%, so D1 to D2 and hits again high cost yards.

Xt: Expansion of Demand since last year

Rt: Replacement demand (scrap+removals)

Question ???

• Xt: see trade projected to grow 70mil.tonnes & P=7 tonnes per dw per annum. So, Demand forecast = ? mil. Dw

(P= weight of cargo delivered / ship dw)

• Rt (forecasting): if fleet has 10 mil. Dwt of tankers 25 years old (econ. Life 25 y.),

R-demand is ? mil. Dwt.

So SBDt=Xt?+Rt?=?mil. Dwt in t year

Shipbuilding

• Tonnage is a measure of the size or cargo-carrying capacity of a ship.  = βελτιώνει ποιότητα πλοίων...και φυσικά ποσότητα, that is productivity!

• Time lag bet. Order and delivery, 1-3years

• Tankers and Bulk dominate orders + other types (ro-ro, containerships, ferries, general cargo ships, etc)

Major shipbuildersWorld shipbuilding market share by countries (2012)[15]

Rank Country Combined GT  %

1        China 67,000,000 45%

2        South Korea 53,000,000 29%

3        Japan 28,000,000 18%

4        European Union 4,500,000 1%

Rest of the world 11,000,000 7%

SB yard productivity

• Output measurements (many ships types)

• Differences in subcontracting (amount..)

• Delivery peaks and troughs (difficult to estimate)

• Joint product manufacture (other works in parallel..)

Another separate market: Scrapping and supply change

• 1973 supply boom (few scraps)• 1982 more scraps than deliveries!

Why to scrap? Scrap value higher than trading value (expected)

Age, old technology, new regulations, low freight, price of scrap/steel according to Light Displacement Tonnage. Also, ‘sale price’ vis-à-vis scrap + future demand (freight) is of critical importance

But keep in mind! Expectations and the ‘gut feeling’ is everything!

Scrapping & losses

• 1973: 50 mil. Dwt input, 5 mil. Dwt scrap!• Ship age is a factor but…also freight rates, scrap

rates (vis-à-vis potential trade value), technical progress, current earning minus totals costs, demand expectations + the gut feeling of the owner(!), the price of steel..(in turn depended on scrap!).

• Scrap: current scrap value greater than SALEt (present value of years till the sale year)

Supply elasticity

E= Δ transport supply / Δ Price.

Δq/q / Δp/p = Δq·p / q·Δp

Inelastic supply for technical/institutional reasons. So, a shift in Demand to the right will sharply increase freight rate.

• Region A: Συμφέρει να είναι στην αγορά

• Region B: Παροπλισμένα πλοία, δεν συμφέρει να απασχολούνται, σποτ ναύλο μικρότερο των εξόδων τους. Θέλουν υψηλότερο σποτ ναύλο για να μπουν στην αγορά!

Freight expectations A Wholesale business!

• No retail shipping business (multiple customers, different prices, fixed prices)

• Bulk= few, big customers but…free market• Ναύλα: οι προσδοκίες καθορίζουν orders• Χύδην φορτία: free market mostly in the short

term. Ships fluctuate speed, lay-up παροπλισμό, to adjust in demand. In the long term, the efficiency of ships is the main factor + price of fuels

• Liner: no / semi free market

• Lets freight!