Economics Of Sea Transport And International Trade
A Group One Subject/Course : N.B. This syllabus does not require an understanding of statistical techniques or methods.
- To give a basic understanding of the economic theory of shipping and international trade.
- To develop analytical skills and relate theory to empirical evidence.
- To communicate effectively through the use of graphs and have an appreciation of statistical evidence.
Basic Economic Concepts
- Price mechanism.
- Factors affecting demand and supply; opportunity cost.
The Demand For Shipping
- The demand for shipping – derived demand, elasticity of demand.
- Demand measurement – distance, ton/miles and tonnes/kilometres.
The Supply Of Shipping
- Factors influencing the supply of shipping – tonnage, number and flag.
- Productivity and supply trends – surplus tonnage, active fleet, short run supply.
- Measuring elasticity of supply.
Cost Analysis And Economies Of Sale
- Basic economic cost concepts – conventional cost analysis in shipping.
- Economies of scale in shipping and optimal ship size.
- Factors affecting costs including fiscal regimes and flag of registry.
Competitive Markets – Tramps
- The dry cargo sector and its market characteristics. The cost structure of tramp ships.
- The use of breakeven analysis in determining minimum freight rates.
- Determination of the equilibrium freight rate.
Competitive Markets – Tankers
- Seaborne trade in crude and products. The structure of the tanker market.
- The relationship between the tanker and dry cargo markets. The effect of political and environmental factors and recent changes in the tanker fleet.
Liner Trades – Oligopoly And The Competitive Market
- Characteristics and demand for liner services. Pricing behaviour including price discrimination. The relationship between profit maximisation and optimal utilisation
- Conferences, alliances and consortia. The effect of international regulation
- Customer demand and operators’ search for market dominence.
Ports, Canals And Waterways
- The functions of ports, canals and waterways. Structure, costs and efficiency.
- Policy with reference to tariffs and investment. Ownership and regulation.
Shipping And International Trade
- The pattern of world trade and the demand for shipping.
- Trade and economic development – trade flows; absolute and comparative advantage.
- Global trading. Free trade versus protectionism.
- The role of the World Trade Organisation and G8.
Exchange Rates And Balance Of Payments
- How exchange rates are determined – free floating and regulated markets.
- The effect of fluctuations on shipping.
- The components of a balance of payments with particular reference to shipping.
- The relationship between exchange rates and the factors affecting their fluctuations and a country’s balance of payments.