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ECN Lecture 1 Economic Environment

This document provides an overview of a lecture on the economics of ship design and marine transportation given by Kho Shahriar Iqbal at Ecole Centrale de Nantes in France in 2012. The lecture covers topics including the demand and supply factors that influence the marine transportation market, operating costs and freight rates, and how economic analyses can be applied to ship design to evaluate technical and economic performance of alternative designs. The goal is to show how economics and ship design are related and help ship designers evaluate design options.

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64 views

ECN Lecture 1 Economic Environment

This document provides an overview of a lecture on the economics of ship design and marine transportation given by Kho Shahriar Iqbal at Ecole Centrale de Nantes in France in 2012. The lecture covers topics including the demand and supply factors that influence the marine transportation market, operating costs and freight rates, and how economic analyses can be applied to ship design to evaluate technical and economic performance of alternative designs. The goal is to show how economics and ship design are related and help ship designers evaluate design options.

Uploaded by

carlosnavalmaster
Copyright
© Attribution Non-Commercial (BY-NC)
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Download as PDF, TXT or read online on Scribd
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ECONOMICS OF SHIP DESIGN & MARINE TRANSPORTATION

ECOLE CENTRALE DE NANTES, NANTES, FRANCE MAY-JUNE 2012

KHO SHAHRIAR IQBAL


EX-PROFESSOR DEPARTMENT OF NAVAL ARCHITECTURE AND MARINE ENGINEERING BANGLADESH UNIVERSITY OF ENGINEERING AND TECHNOLOGY DHAKA, BANGLADESH
B. Sc. in Naval Architecture and Marine Engineering Bangladesh University of Engineering and Technology M. Sc. in Naval Architecture and Marine Engineering Bangladesh University of Engineering and Technology Diplome Etude Complimantaire de 2em Cycle in Naval Architecture and Transport System Analysis University of Liege, Belgium Ph. D. in Naval Architecture and Ocean Engineering Osaka University, Japan

Lecture Contents
Shippings economic environment
The demand for marine transportation The supply of marine transport The freight market Operating economics The basic interest relationship Economic criteria Practical cash flow Some economic complexities A complex cash flow example Application The general approach Comparison of alternative ship design The optimal ship The wider scene

Engineering economy calculations

Application to ship design

Why Economics of Ship Design/Marine Transportation?

to show how the economics and ship design related to help the practicing designer who needs sufficient information to evaluate the technical and economic performance of alternative designs of ships and their equipments

Economics for Ships


In the last few decades rigorous economic evaluations have been seriously applied to ships, mostly because,
The scope for making wrong decisions in the ship design has increased with expansion in ship sizes and types The main criteria must be of economic nature, giving full weight to technical factors in its calculation, complying with all required social, safety and environmental regulations. The optimal design is that which is most profitable. There has been increasing complexity in the financial conditions surrounding ship procurement. Cheap loans, accelerated depreciation, subsidies and tax relief add greatly to the difficulties of estimating ship profitability.

Shippings Economic Environment

The Demand for Marine Transport (Past)


Man has used boats and ships for commerce and trade for centuries. Transporting passengers and high value cargoes drew the accent in the 19th century, as it happened to the present day airlines. Industrial revolution increased the demand for raw materials especially for textile industry. New demand for cargoes like bunker coal, iron ore, grains etc. evolved Telegraph networks created further hikes of transport demand Application of steam to ship propulsion enabled reliable shipping initially in short-distance trades. Steam propulsion and iron shipbuilding proved an unbeatable combination in world trade

The Demand for Marine Transport (Present)


The present demand for marine transport massively increased for raw materials and manufactured goods Freight rather than passengers, dominate the shipping; more ton-kms of international freight are carried by sea than road, rail, and air altogether Oil and container are now become more important than other cargoes

Demand for Transport

Quarterly GDP Growth %

Growth of World Trade

World Seaborne Trade

World Seaborne Trade, Container Separated

World Seaborne Cargo


Over the last four decades total seaborne trade estimates have quadrupled, from just over 8 thousand billion tonne-miles in 1968 to over 32 thousand billion tonne-miles in 2008.

World total Dry Bulk Trade Forecast

World Total Liquid Bulk Trade Forecast

The Supply of Marine Transport

World Fleet Size

World Fleet by Category


Numbers of ships, by sector. General Cargo Ships =16,224 Bulk Carriers = 8,687 Container ships = 4,831 Tankers = 13,175 Passenger ships = 6,597 TOTAL = 50,054 as of 31st October 2010

New Ship Ordering

World Fleet, Number of Ships

World Fleet, Number by Country/Region

World Fleet, DWT

World Fleet, DWT by Country/Region

World Fleet, GT

World Fleet, GT by Country/Region

Number of Ships, Service Fleet

Service Fleet by Country

Ferry and Passenger Cruise Fleet

Why Marine Transport?

Dry Bulk Rates, US$/ton

Container Freight Rates

Container Ship, Charter Rates

Worldscale for Tanker


Worldscale is a unified system of establishing payment of freight rate for a given oil tankers cargo. Worldscale was established in November 1952 by London Tanker Brokers Panel on the request of British Petroleum and Shell as an average total cost of shipping oil from one port to another by ship. A large table was created. Charter rates are typically quoted in an designated index. These rates published almost annually, list the cost per tonne of oil to carry between designated ports in a 19,500 dwt tanker at 14 knot speed. The base rate is designated as worldscale100. A larger tanker can carry crude more cheaply than a smaller one, so the rate will be some percentage of the base rate. For example, Wroldscale50 indicates that the freight rate per barrel of oil will be 50% of the published Worldscale between the designated ports.

A list of average rates are shown in the table that attained in 2003 (% of W100) Route WorldSacle Dirty Tanker Arabian Gulf to West Arabian Gulf to East Mediterranean to US Atlantic Coast 105 140.5 193.5 Clean Tanker Mediterranean to NW Europe Mediterranean to US Atlantic Coast 271.5 261.5

Comparative Fuel Consumption

Source: NTM (Swedish Network for Transport and the Environment)

CO2 Emission by Transports

Source: NTM (Swedish Network for Transport and the Environment)

Exhaust Gas Emission by Transports

Source: NTM (Swedish Network for Transport and the Environment)

Seaborne Trade Value

World Seaborne Trade approximating US$ 7 trillion annually

Low Cost of Shipping by Sea

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