Abstracts of accepted papers IAME Panama 2002 by cZQHmlb

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									          Annual Conference and Meeting of the
  International Association of Maritime Economists - IAME




                 Maritime Economics:
Setting the Foundations for Port and Shipping Policies




                        Abstracts
  of peer reviewed, accepted and presented Papers




              Panama, 12-15 November 2002
ii
      Welcome!
      The preparatory work for this conference started more than two years ago, when, in July
2000, during a seminar about port facilitation in Panama, representatives of the Panama Canal
Authority (ACP), Trainmar Americas, and the United Nations Economic Commission for Latin
America and the Caribbean (ECLAC) agreed that the time was right for Latin American and
Caribbean economists to become more involved in international research activities concerning
ports and shipping. Topics such as the regulation of privatised ports, the economic impact of a
potential Panama Canal expansion, future transhipment patterns, or the relationship between
transport costs and trade all need to be analysed in our region. At present, most research is taking
place in an uncoordinated manner, and IAME membership in Latin America and the Caribbean
has – so far – far been relatively low. What better way to encourage more research in and about
maritime transport in our region than to host an IAME meeting? Additional enthusiastic support
was immediately provided by friends and colleagues from AMP, CDS, the Panama Chamber of
Shipping, and ULACIT. We sent our proposal to IAME‘s Council, and were very pleased and
honoured to find this to be accepted at the beginning of 2001.
       Two years later, the feed back from maritime economists from all over the world promises
that this event is going to be one of the most widely attended IAME conference so far, with active
participation of maritime economists from all continents, with the sole exception of the Antarctic.
This success surely reflects expectations following the positive opinions IAME members hold of
the previous highly acclaimed conferences, the attractiveness of Panama as a particularly
intriguing location, as well as the tremendous work of the National Organizing Committee in
Panama.
       Being assigned by the ACP the task to create and preside the event‘s International Steering
Committee has been a great privilege – and a big challenge. This Committee‘s main
responsibilities have been to encourage colleagues to submit abstracts with proposals for topics
(October 2001 until January 2002); to evaluate and select the topics (February); to remind authors
to write and submit their draft research papers (until June or later); to organize the anonymous
peer reviews and send the feedback to the authors (until September); and, finally, to receive and
arrange all finished papers and put together the agenda (September and October). The
organisation of three to five anonymous referee reports for almost one hundred papers has been a
tremendous networking exercise; more than 300 received referee reports were sent to authors, and
I would like to personally thank all steering committee members and many other colleagues for
their outstanding collaboration during this extensive process.
      Efficient maritime transport is one of the cornerstones of the globalisation process, just as
maritime business itself is in return strongly affected by it. Panama has one or the most open
economies of Latin America and the Caribbean. Positioned at the crossroads of major East-West
and North-South trade routes, with its canal, ship registry, and container terminals, it is probably
the country that best encompasses this mutual relationship between globalisation and maritime
transport; and it is surely a very well chosen location for IAME‘s Tenth Anniversary Congress.
      I look forward to personally meeting you in Panama on 12-15 November.
      Dr. Jan Hoffmann
     Economic Affairs Officer, Transport Unit, United Nations Economic Commission for Latin
America and the Caribbean (ECLAC), Santiago de Chile




                                                 iii
                   IAME PANAMA 2002 is organized by


                        Panama Canal Authority, ACP
                                  with
                                       Trainmar
 Universidad Latinoamericana de Ciencia y Tecnología, ULACIT
                        Panama Chamber of Shipping
                            City of Knowledge, CDS
                     Panama Maritime Authority, AMP
United Nations Economic Commission for Latin America and the
                     Caribbean, ECLAC



                       National Organizing Committee
                        Iame2002org@pancanal.com

Lilibeth Langoni (President), Panama Canal Authority
Aldemar Suárez, Trainmar Panama
Anna María San Filippo, Panama Chamber of Shipping
Argelis V. Wesley, Panama Canal Authority
Carmen Arias V., City of Knowledge
Eduardo Lugo, Panama Canal Authority
Eyra Ng Schouwe, Siclamar
Guadalupe Blotta, Panama Maritime Authority
Gustavo Gutiérrez, Panama Canal Authority
Miguel A. Cañizales, ULACIT
Walter A. McGoven, Centro de Aventuras




                                            iv
                        International Steering Committee



Name                         Country       E-mail
Jan Hoffmann (President)     Chile         jhoffmann@eclac.cl
Alf Baird                    UK            a.baird@napier.ac.uk
Carlos Martner               Mexico        carlos.martner@imt.mx
Ernst Frankel                USA           efrankel@mit.edu
Floriano Pires               Brasil        floriano@peno.coppe.ufrj.br
Heather Leggate              UK            leggate@lgu.ac.uk
Henriëtte van Niekerk        Sudafrica     hvcn@akad.sun.ac.za
Hercules Haralambides        Netherlands   haralambides@few.eur.nl
John Ricklefs                USA           jricklefs@moffattnichol.com
José Alfredo Sabatino        Venezuela     mail@sabatinop.com
Kevin Cullinane              Hong Kong     stlkcull@polyu.edu.hk
Leigh Boske                  USA           leigh.boske@mail.utexas.edu
Martin Sgut                  Argentina     martin.sgut@attglobal.net
Martin Stopford              UK            mstopford@clarksons.co.uk
Mary Brooks                  Canada        mbrooks@mgmt.dal.ca
Olga Bosquez                 UK            obosquez@imo.org
Raymond Byl                  Guadeloupe    bylmail@aol.com
Rodolfo Sabonge              Panama        cp@pancanal.com
Rodrigo García               Chile         rgarcia@ctcinternet.cl
Sheila Farrell               UK            s_p_farrell@compuserve.com
Siri Strandenes              Norway        siri.strandenes@nhh.no
Ted Prince                   USA           tedprince@aol.com
Trevor Heaver                Canada        heaver@interchange.ubc.ca
William Sjostrom             Ireland       w.sjostrom@ucc.ie




                                           v
                            Index of authors


Acosta, María José 34      Eenhuizen, Joost H.A. 5     Joop A. Stam 31
Adland, Roar 9             Everett, Sophia 13          Juan, C. 39
Adland, Roar 66            Fafaliou, Irene 12          Kavussanos, Manolis G.
Akarsu, Mahir 68           Farrell, Sheila 64                35
Alizadeh, Amir H. 63       Firth, Michael 3            Kavussanos, Manolis G.
                                                             67
Alizadeh, Amir H. 15       Fitzgerald, Rob H. 58
                                                       Kent, Paul 38
Assis, Luiz Felipe 6       Flor, Lincoln 43
                                                       Kolenc, Jurij 60
Baird, Alfred 47           Foschi, Alga D. 37
                                                       Kumar, Shashi 1
Baird, Alfred 55           Foschi, Alga D. 58
                                                       Kumar, Shashi 68
Bergantino, Angela S. 46   Fourie, Yolanda 7
                                                       Lee, Dong-Won 16
Bergantino, Angela S. 5    Frankel, Ernst G. 54
                                                       Lee, Tae-Woo 15
Blond, David L. 9          Frounfelker, Terry 58
                                                       Lekakou, Maria 12
Bolis, Simona 5            Fuentes, Porfirio 19
                                                       Lekakou, Maria 48
Bonilla, María 66          Fusillo, Mike 20
                                                       Li, Kevin X. 8
Boske, Leigh 36            García Menéndez,
                                  Leandro 32           Li, Kevin X. 34
Breuillet G., Alfonso 62
                           Gerstenberger, Heide 14     Lim, Chin Soo 47
Byl, Raymond 51
                           Gilman, Sidney 52           Lugo, Eduardo E. 33
Cariou, Pierre 50
                           Glen, David 16              Luo, Meifeng 4
Carrasco, José G. 23
                           Gonçalves Serra, Eduardo    Lynch, Valentine D. Jr. 62
Casasus, Trinidad 39
                                  7                    Marlow, Peter B. 36
Casasús, Trinidad 66
                           Gong, Stephen X.H. 3        Martin, B. T. 16
Cazzaniga Francesetti,
       Dionisia 37         Gray, Richard 10            Martin, Edgar 30
Cazzaniga Francesetti,     Grigalunas, Thomas A. 4     Martínez-Zarzoso,
       Dionisia 58         Haezendonck, Elvira 24            Inmaculada 32
Cerit, A. Guldem 44        Haralambides, Hercules E.   Martner Peyrelongue,
                                  17                         Carlos 65
Coeck , Chris 24
                           Harding, Alan 62            Marucci, Silvia 26
Cridland, Colin 17
                           Heaver, Trevor D. 57        Mattos, José Carlos S. 35
Cullinane, Kevin 3
                           Heaver, Trevor D. 58        Maucci, Gerardo 33
Cullinane, Kevin 8
                           Herndon, Cary W. 19         Medal, Amparo 66
Cullinane, Kevin 53
                           Hoffmann, Jan 41            Menachof, David 67
Cuttino, John 37
                           Hoffmann, Jan 55            Micco, Alejandro 41
De Langen, Peter 24
                           Inozu, Bahadir 49           Moreno Martinez, Aurora
De Langen, Peter 4
                                                             65
Defilippi, Enzo 43         Ircha, Michael C. 43
                                                       Mulder, Henry Martyn 56
Dougall, Colin 2           Jia, Jackie H. Jia 9
                                                       Nielsen, Detlef 8


                                      vi
Nielsen, Detlef 21             Sagrera, Carlos 29          Van der Lugt, Larissa M. 5
Nikolaidis, Emmanouil 11       Sala, Ramon 66              van Niekerk, Henriëtte C.
Nomikos, Nikos K. 15           Sánchez, María Eugenia            45
Nomikos, Nikos K. 63                  de 17                van Niekerk, Henriëtte C.
                               Sanchez, Ricardo 41               7
Notteboom, Theo E. 50
                               Sgut, Martin 42             Veenstra, Albert W. 1
Notteboom, Theo E. 59
                               Shinohara, Masato 31        Veenstra, Albert W. 46
Olmos, F. 39
                               Shiping Dalian, Zhang 34    Veenstra, Albert W. 56
Paixao, Ana Cristina 36
                               Silan, Mustafa 22           Verbeke, Alain 24
Panayides, Photis M. 21
                               Song, Dong-Wook 21          Visvikis, Ilias D. 35
Papandreou, Nicholas 48
                               Song, Dong-Wook 53          Visvikis, Ilias D. 67
Park, Nam-Kyu 15
                               Stergiopoulos, George 48    Vlachos, George P. 11
Payer, Hans G. 19
                               Suárez Burguet, Celestino   Waals, Frans A.J. 1
Perez, J.C. 39
                                      32                   Wang, Teng-Fei 3
Pires Jr., Floriano C. M . 6
                               Terada, Hideko 40           Wang, Teng-Fei 53
Pizzolitto, Georgina 42
                               Theotokas, John 12          West, Robert 62
Radovic, Ivan 49
                               Tongzon, Jose 40            Wilmsmeier, Gordon 42
Robinson, Ross 27
                               Tretheway, Michael 57       Wilmsmeier, Gordon 55
Roos, Hugo B. 31
                               Trupac, Igor 60             Winkelmans, Willy 50
Rowlinson, Mervyn 25
                               Tsolakis, Stavros D. 17     Wixey, Sarah 60
Rowlinson, Mervyn 60
                               Tuna, Okan 22               Talley, Wayne K. 69
Sabatino Pizzolante, José
       Alfredo 12              Valentine, Vince F. 10




                                          vii
                                   Abstracts




                                                                               Page
A Decision Support Model for the Liner Shipping Competition Policy Debate        1
     Kumar, Shashi
A Forecast Model and Benchmarking of the Supply and Demand of Maritime
Officers                                                                         1
     Waals, Frans A.J.
     Veenstra, Albert W.
A Generalized Cost Methodology for Short-Sea Shipping – Preliminary Evidence
from Three Economic Impact Studies                                           2
     Dougall, Colin
A High Risk - Low Beta Business? Beta Estimation in the International
Transport Industry                                                               3
     Gong, Stephen X.H.
     Firth, Michael
     Cullinane, Kevin
     Wang, Teng-Fei
A Spatial-Economic Multimodal Transportation Simulation Model for US
Coastal Container Ports                                                          4
     Luo, Meifeng
     Grigalunas, Thomas A.
A Stylised Container Port Hierarchy: A Theoretical and Empirical Exploration     4
     De Langen, Peter
     Van der Lugt, Larissa M.
     Eenhuizen, Joost H.A.
An Adaptive Cojoint Analysis of Freight Service Alternatives: Evaluating the
Maritime Option                                                                  5
     Bergantino, Angela S.
     Bolis, Simona




                                        ix
An Analysis of Brazilian Maritime Industry Policies                             6
     Pires Jr., Floriano C. M .
     Assis, Luiz Felipe
     Gonçalves Serra, Eduardo
An Analysis of Maritime Supply Chains in South Africa                           7
     van Niekerk, Henriëtte C.
     Fourie, Yolanda
An Economic Approach to Maritime Legal Liability                                8
     Li, Kevin X.
     Cullinane, Kevin
     Nielsen, Detlef
An Empirical Analysis of the Time-varying Correlation of Returns in
International Shipping                                                          9
     Jia, Jackie H. Jia
     Adland, Roar
An Hybrid Econometric Model for Forecasting Short, Medium, and Long-term
Traffic and Transits at the Panama Canal                                        9
     Blond, David L.
An Organisational Approach to Port Efficiency                                  10
     Valentine, Vince F.
     Gray, Richard
Analysis of Primary Causes Concerning Shipping Safety – Owner‟s and
Shipmaster‟s Point of View                                                     11
     Vlachos, George P.
     Nikolaidis, Emmanouil
Cabotage in the Andean Community: The Rebirth of the Merchant Marine?          12
     Sabatino Pizzolante, José Alfredo
Corporate Social Responsibility in Greek Shipping                              12
     Fafaliou, Irene
     Lekakou, Maria
     Theotokas, John
Corporatisation Legislation: the Key to Effective Port Management              13
     Everett, Sophia
Cost Elements with a Soul                                                      14
     Gerstenberger, Heide
Cost of Carry, Causality and Arbitrage between Oil Futures and Tanker Freight
Markets                                                                       15
     Alizadeh, Amir H
     Nomikos, Nikos K.
Design of Simulation System for Port Resources Availability in Logistics Supply
Chain                                                                           15
     Lee, Tae-Woo
     Park, Nam-Kyu
     Lee, Dong-Won




                                         x
Do Tanker Pools Influence Market Rates? The Case of Tankers International         16
     Glen, David
     Martin, B. T.
Econometric Model for Projecting Panama Canal Traffic, Transits, and
Revenues – Evaluation of Results and Application at the Panama Canal              17
     Sánchez, María Eugenia de
Econometric Modelling of Second-hand Ship Prices                                  17
     Tsolakis, Stavros D.
     Cridland, Colin
     Haralambides, Hercules E.
Economic and Technical Aspects of Mega-Container Carriers                         19
     Payer, Hans G.
Economic Evaluation of Fast Ship and the Trade in Time Sensitive Commodities:
A Spatial Equilibrium Analysis                                                19
     Fuentes, Porfirio
     Herndon, Cary W.
Excess Capacity and Entry Deterrence: The Case of Ocean Liner Shipping
Markets                                                                           20
     Fusillo, Mike
Foreign Direct Investment in China: The Case of Shipping and Logistics
Corporations                                                                      21
     Panayides, Photis M.
     Song, Dong-Wook
     Nielsen, Detlef
Freight Transportation Selection Criteria: An Empirical Investigation of Turkish
Liner Shipping                                                                   22
     Tuna, Okan
     Silan, Mustafa
From EDI to ebXML – Rocking the Boat                                              23
     Carrasco, José G.
Governance in Seaport Clusters                                                    24
     De Langen, Peter
Green „Port‟ Portfolio: A Basis for Sustainable Strategic Decisions in Port Policy
and Management                                                                     24
     Haezendonck, Elvira
     Coeck , Chris
     Verbeke, Alain
Harbour Towage: Perfect or Imperfect Competition in the Global Market?            25
     Rowlinson, Mervyn
Impact of El Niño Southern Oscillation Phenomenon on the Panama Canal and
its Markets                                                                       26
     Marucci, Silvia
Integrated and Intermodal Freight Systems: A Conceptual Framework                 27
     Robinson, Ross




                                         xi
Integrated Maritime-Coastal and Port Environmental Developments: New Forms
of Cooperation from International Funding Organizations – the Uruguayan Case 29
     Sagrera, Carlos
International Waterway in Crisis: The Case of the River Danube                  30
     Martin, Edgar
Japanese Choice of a Logistics Hub in Europe: Dutch Experience and a
Suggestion on the Human Resource Aspect                                         31
     Shinohara, Masato
     Roos, Hugo B.
     Joop A. Stam
Maritime and Overland Transport Costs and Infrastructure: Do they Influence
Exports?                                                                        32
     Martínez-Zarzoso, Inmaculada
     García Menéndez, Leandro
     Suárez Burguet, Celestino
Maritime Clusters – The Panamanian Case                                         33
     Maucci, Gerardo
     Lugo, Eduardo E.
Maritime Professional Safety: Prevention and Legislation on Personal Injuries on
Board Ships                                                                      34
     Li, Kevin X.
     Shiping Dalian, Zhang
Maritime Transport Liberalization and the Challenges to Further its
Implementation in Chile                                                         34
     Acosta, María José
     Mattos, José Carlos S.
Market Interactions in Returns and Volatilities Between Spot and Forward
Shipping Markets                                                                35
     Kavussanos, Manolis G.
     Visvikis, Ilias D.
Measuring Lean Ports Performance                                                36
     Marlow, Peter B.
     Paixao, Ana Cristina
Measuring the Economic and Transportation Impacts of Maritime-Related
Trade                                                                           36
     Boske, Leigh
     Cuttino, John
Mediterranean Versus Northern Range Ports. Why do Italian containers Still
Prefer Routing Via the Northern Range Ports? Advice for a New Policy            37
     Cazzaniga Francesetti, Dionisia
     Foschi, Alga D.
Monitoring for Port Antitrust Behavior: An Operational Model and Future
Challenges                                                                      38
     Kent, Paul




                                        xii
Optimal Investment Management in a Port Project                                39
     Casasus, Trinidad
     Juan, C.
     Olmos, F.
     Perez, J.C.
Port Choice Determinants in a Competitive Environment                          40
     Tongzon, Jose
Port Construction Subsidies in Japan and the Way they Discourage Private
Sector Investment in Port Development                                          40
     Terada, Hideko
Port Efficiency and International Trade: Port Efficiency as a Determinant of
Maritime Transport Cost                                                        41
     Sanchez, Ricardo
     Hoffmann, Jan
     Micco, Alejandro
     Pizzolitto, Georgina
     Sgut, Martin
     Wilmsmeier, Gordon
Port Infrastructure: An Access Model for the Essential Facility                43
     Flor, Lincoln
     Defilippi, Enzo
Port Privatisation: Commerce and Recreation                                    43
     Ircha, Michael C.
Ports and Community Effects: Analysis of the Impact of Marketing Public
Relations                                                                      44
     Cerit, A. Guldem
Ports Restructuring, Policy and Regulation: The South African Case             45
     van Niekerk, Henriëtte C.
Principal Agent Problems in Shipping: An Investigation into the Formation of
Charter Contracts                                                              46
     Bergantino, Angela S.
     Veenstra, Albert W.
Private Participation System on Port Development Projects                      47
     Lim, Chin Soo
Public Goods in Seaports: A Necessity or Market Distortion?                    47
     Baird, Alfred
Setting Foundations for Coastal Shipping Policy: The Case of Greece            48
     Lekakou, Maria
     Papandreou, Nicholas
     Stergiopoulos, George
Six Sigma Implementation for Ship Maintenance and Safety Management            49
     Inozu, Bahadir
     Radovic, Ivan




                                        xiii
Stakeholder Relations Management in ports: Dealing with the Interplay of
Forces among Stakeholders in a Changing Competitive Environment                 50
     Notteboom, Theo E.
     Winkelmans, Willy
Strategic Alliances in Liner Shipping: An Analysis of “Operational Synergies”   50
     Cariou, Pierre
Strategic Planning Using Scenarios                                              51
     Byl, Raymond
Sustainability and National Policy in UK Port Development                       52
     Gilman, Sidney
The Applicability of Data Envelopment Analysis to Efficiency Measurement of
Container Ports                                                                 53
     Wang, Teng-Fei
     Song, Dong-Wook
     Cullinane, Kevin
The Challenge of Container Transshipment in the Caribbean                       54
     Frankel, Ernst G.
The Chilean Maritime Highway                                                    55
     Baird, Alfred
     Hoffmann, Jan
     Wilmsmeier, Gordon
The Development of a Network Analysis Tool Analysing Container Flows in the
Caribbean                                                                       56
     Veenstra, Albert W.
     Mulder, Henry Martyn
The Economics and Politics of Taxation and Subsidies for Ports and Airports     57
     Heaver, Trevor D.
     Tretheway, Michael
The Effects of Local Taxes and Subsidies on Port Competition in the Pacific
Northwest of North America                                                      58
     Fitzgerald, Rob H.
     Frounfelker, Terry
     Heaver, Trevor D.
The Impact of Hub and Spokes Networks in The Mediterranean Peculiarity          58
     Cazzaniga Francesetti, Dionisia
     Foschi, Alga D.
The Interdependence Between Liner Shipping Networks and Intermodal
Networks                                                                        59
     Notteboom, Theo E.
The Northern Adriatic Ports – Joint Approach to the European Transport
Market                                                                          60
     Trupac, Igor
     Kolenc, Jurij




                                        xiv
The Politics and Economics of Developing Coastal Shipping                       60
     Rowlinson, Mervyn
     Wixey, Sarah
The Potential For Regional Cabotage In Central America                          62
     Breuillet G., Alfonso
     Harding, Alan
     West, Robert
The Price is Right! – Pricing Policy at the Panama Canal                        62
     Lynch, Valentine D. Jr.
The Price Volume Relationship in the Sale and Purchase Market for Dry Bulk
Vessels                                                                         63
     Alizadeh, Amir H.
     Nomikos, Nikos K.
The Regulation of Privatised Ports: What are we Trying to Achieve?              64
     Farrell, Sheila
The Restructuring of Mexican Ports and Modal Integration of Transport in
Mexico                                                                          65
     Martner Peyrelongue, Carlos
     Moreno Martinez, Aurora
The Time-Varying Risk Premium in Bulk Shipping: New Empirical Evidence
from the Term Structure of Freight Rates                                        66
     Adland, Roar
The Traffic in Spanish ports: An Efficiency Analysis with Tolerances            66
     Bonilla, María
     Medal, Amparo
     Casasús, Trinidad
     Sala, Ramon
The Unbiasedness Hypothesis in the Freight Forward Market: Evidence from
Cointegration Tests                                                             67
     Kavussanos, Manolis G.
     Menachof, David
     Visvikis, Ilias D.
Turkish Container Ports: An Analysis of Problems and Potential Opportunities    68
     Akarsu, Mahir
     Kumar, Shashi
Wage Differentials of U. S. Ports and Transportation Industries: Deregulation
Versus Regulation                                                               69
     Talley, Wayne K.




                                        xv
                          Additional agenda items

     In addition to the presentation of the above listed peer reviewed articles, the
conference includes the following items.
          Official Opening Ceremony
          Several plenary introductory presentations about Panama and Latin
           America and the Caribbean
          Three plenary introductory presentations about maritime policies, port
           reform, and intermodal developments
          Presentations on pre-conference event organized by ECLAC
          Presentations on pre-conference event organized by TRB
          Presentations on pre-conference event organized by Port Devolution
           Working Group
          A plenary discussion session about maritime policies, port reform, and
           intermodal developments
          One plenary session about institutional IAME matters
          Social events, lunches, and official dinner
          Ceremonies with prizes for presented papers
          Tour by transcontinental train to the port of Colon. Courtesy of Panama
           Canal Railway to visitors and international participants




                                         xvi
xvii
A Decision Support Model for the Liner Shipping
Competition Policy Debate

Kumar, Shashi
   Loeb-Sullivan School, Maine Maritime Academy
   skumar@mma.edu

      The recent OECD Report calling for a revision of the liner shipping competition
rules has met with predictable response from the liner operators. What appears to be
lacking in this perennial dilemma is once again the absence of adequate supporting data
to make a case for regulatory changes. Furthermore, the present saga appears to be a
continuation of the past, reiterating the pros and cons of anti-trust exemptions and
rhetoric supporting the viewpoints of the respective stakeholders albeit by a different set
of principal authors. The author does not believe that this approach will aid in finding
objective solutions. Furthermore, the dialog has paid scant attention to the ongoing
changes in the broader context of global supply chains and their inherent expectations.
      Hence, the author proposes a new approach that takes into account contemporary
business practices and the predominance of global supply chains seeking sustainable
competitive advantage. Accordingly, a logical and rational hierarchical model is
proposed that fuses the expectations from an efficient supply chain partnership with the
current regulatory freedoms in the U.S. liner trades. The model, based on the principles
of analytic hierarchy process, is suggested for gathering objective data from groups of
large, medium and small shippers before advocating further changes in the regulatory
environment.




A Forecast Model and Benchmarking of the Supply
and Demand of Maritime Officers

Waals, Frans A.J.
   Erasmus University, Rotterdam, Netherlands
   Waals@few.eur.nl

Veenstra, Albert W.
    Erasmus University, Rotterdam, Netherlands
    Veenstr@few.eur.nl




                                            1
      In traditional maritime countries a number of developments can be observed. The
nautical profession is apparently becoming less and less popular. This may be partly due
to economic and demographic circumstances, since unemployment rates are low and the
number of young people that enter the labour market is declining. This results in a
smaller supply of people in the labour market. Due to advantageous shipping policies of
some European countries, national fleets are growing significantly and, as a result, the
demand for nautical officers increases as well. Finally, ISF/BIMCO indicates that 40 per
cent of OECD officers is over 50. Within 10 years they will all have retired.
      These three developments in shipping lead to a general maritime labour market
shortage. Traditional maritime countries try to solve their shortages by filling positions
with non-nationally trained seafarers. However, while a number of maritime nations has
adopted this solution, the ISF/BIMCO 2000 manpower survey predicts a worldwide
shortage of 16,000 officers. Then, there is a considerable chance that various maritime
countries will compete in an international labour market to man their national fleets.
      A method to gain some insight into these developments is a long-term forecast of
worldwide maritime labour markets. The paper describes such a method developed to
carry out a twenty-year forecast on the supply and demand of maritime officers. Unique
is that, contrary to other forecast studies on this subject, it does not forecast the
development of the world labour market as a whole, but it focuses on making forecasts
for separate countries and in order to enable benchmarking of the results of these
countries.
     The paper starts with a description of the forecast model and a sensitivity analysis.
Then the model is applied on the following countries: The Netherlands, Japan, UK,
Greece, Italy and Norway. The specifics of each labour market are described and a
benchmark is made by comparing the development of each labour market with the Dutch
labour market.




A Generalized Cost Methodology for Short -Sea
Shipping – Preliminary Evidence from Three Economic
Impact Studies

Dougall, Colin
    TRI Maritime Research Group, Napier University, Edinburgh, Scotland
    c.dougall@napier.ac.uk

      This paper sets out to analyse freight transport costs on selected proposed new
routes. In doing so it presents a method of modelling such costs found to be most
appropriated to the major question being asked, namely what are the respective costs for
the existing all-road option and the proposed road-sea alternative.




                                           2
      This paper will be of interest to maritime economists with an interest in short sea
shipping and its impact on the environment since we focus not only on the private or
internal costs of road versus sea transport but also on the wider external costs incurred.
     The methodology used is drawn from generalised cost analysis which has been
modified to suit the context and requirements of the Clyde Ferry Service study (CFS) and
UK Marine Motorways study (UKMM).
      Our tentative conclusions are that switching targeted volumes of freight to sea on
the selected routes yields both internal and external cost benefits, however the overall
environmental impact may prove to be negative.




A High Risk - Low Beta Business? Beta Estimation in
the International Transport Industry

Gong, Stephen X.H.
   Department of Shipping and Transport Logistics, The Hong Kong Polytechnic
   University, Hong Kong
   Stlxhg@Polyu.Edu.Hk

Firth, Michael
     Department of Accountancy, The Hong Kong Polytechnic University, Hong Kong
Cullinane, Kevin
     Department of Shipping and Transport Logistics, The Hong Kong Polytechnic
     University, Hong Kong
Wang, Teng-Fei
   Department of Shipping and Transport Logistics, The Hong Kong Polytechnic
   University, Hong Kong
      The water and air transport industries are perceived as risk-laden, cyclical
businesses suffering from high financial and operating leverage. Contradicting this
common perception, however, existing studies have documented relatively low beta risks
for the securities of these industry sectors. On the basis of the theoretical determinants of
beta, we argue that the reported low beta risk levels may not be representative of the
industries‘ true beta risk, and are not robust to different estimation procedures.
      Our analyses using alternative estimation procedures reveal that the industry beta
estimates are indeed sensitive to different estimation designs. In addition, we find that
the beta estimates reported in previous studies are confounded by problems in the sample
selection. By obtaining a more representative sample of industry firms and by
implementing a number of different estimation procedures, we produce a range of
industry beta estimates. Overall, our results lead us to conclude that the qualitative
conclusion about beta risk for water and air transportation securities varies with the
estimation procedure and that the industries‘ beta risk may not be stable over time.



                                             3
A Spatial-Economic Multimodal Transportation
Simulation Model for US Coastal Container Ports

Luo, Meifeng
    Department of Environmental and Natural Resource Economics, University of
    Rhode Island, Kingston, RI 02881 USA
    Mluo8596@postoffice.uri.edu

Grigalunas, Thomas A.
    Department of Environmental and Natural Resource Economics, University of
    Rhode Island, Kingston, RI 02881 USA
    grig@uri.edu

      This paper develops and applies a spatial-economic, multi-modal container
transportation simulation model for US coastal container ports. The model is validated
and then used to evaluate the impact on port demand from varying port use fees, i.e., to
evaluate the responsiveness (price elasticity) of demand to varying port use fees. The
paper draws upon results from the Ph.D. dissertation of Luo (2002), which is part of a
multi-year study by the authors and their colleagues at the University of Rhode Island and
the Korea Maritime Institute from 1999 to now (Grigalunas et al, 2001).
      The underlying theoretical framework is based on fundamental microeconomic
theory and assumes shippers minimize the total general cost of moving containers from
sources to markets. We apply the model to estimate annual container transportation
service demand for major container ports in the United States (US). First, we outline the
model formulation, focusing on the model and the underlying economic reasoning. We
also provide a very brief introduction to the assumptions, computational algorithms, and
the software architecture. Then, we explain the data used in applying the model,
including trade data, transportation networks, and economic variables. After that, we use
the estimated container transportation flow origin-destination (OD) matrix to illustrate the
model simulation results.         All models, including the one presented here, are
simplifications, and we stress that the model remains a work in progress. Limitations in
the modelling approach, needed refinements, ongoing work, and future directions are
briefly described in the final section.




A Stylised Container Port Hierarchy: A Theoretical
and Empirical Exploration

De Langen, Peter
    Erasums University, Rotterdam, Netherlands
    delangen@few.eur.nl



                                            4
Van der Lugt, Larissa M.
    Erasums University, Rotterdam, Netherlands
Eenhuizen, Joost H.A.
    Erasums University, Rotterdam, Netherlands
      The structure of liner shipping networks evolves over time. As a consequence, the
position of ports as nodes in the network also changes over time. Understanding these
changes is crucial for analysing the development (potential) of container ports.
      In this paper, we explore the concept of a ‗container port hierarchy‘. According to
this concept, container ports have different –stylised- roles in a liner-shipping network.
This concept has been discussed in academic circles by De Monie and Robinson and –
especially the term ‗hub port‘- is widely used in the liner shipping industry. However, the
concept has remained somewhat vague and empirical work on a port typology is limited.
      First, we discuss relevant theoretical issues regarding the port hierarchy concept.
Second, we present our hierarchy, consisting of four stylised types: global pivots, load
centres, regional ports and minor ports. We discuss characteristics of each of those four
ports. Third, we use the port to typology classify all containerports of substantial size.
Furthermore, the number of ‗global pivots‘ in different continents and the evolution of
port types over time are discussed . Fourth the use of the port typology is illustrated with
the case of India. We finalise this paper with conclusions and suggestions for further
research of port typologies.




An Adaptive Cojoint Analysis of Freight Service
Alternatives: Evaluating the Maritime Option

Bergantino, Angela S.
    Department of Economics, University of Bari, Via C. Rosalba, Italy
    abergan@tin.it

Bolis, Simona
     IRE - Department of Economics, University of Lugano, Via G. Buffi, 13 – 6900,
     Lugano, Switzerland
     simona.bolis@lu.unisi.ch




                                            5
      The growing interest towards a re-balancing of freight traffic over the different
modes, has brought renewed focus on the opportunities of enhancing the use of short sea
shipping and, in particular, on the so called "Motorways of the sea" (EU Commission,
2001). The term was first coined in Italy in the seventies and it referred to the maritime
routes running parallel to the Tyrrenian and Adriatic coast of Italy. Since then, although it
is widely acknowledged that these ―special‖ motorways could constitute a valid
alternative to land transport over medium-long distance, favouring, at the same time, a
greater integration among different modes, the various policy proposals put forward
during the last thirty years have had little tangible results. The potential capacity of this
alternative is still highly unexploited. While a number of documents acknowledge the
great opportunities offered by the development of maritime ro/ro transport services in re-
directing freight flows, little has been done to empirically identifying the factors which
might induce operators to opt for this alternative. In other words, the determinants of the
operators‘ demand have not yet been object of a detailed investigation.
      In this work we present the preliminary results of a pilot study aimed at identifying
the value that the user assigns to the specific transport alternative and the factors - related
to both the mode and the specific organisation of the companies - that exert a significant
influence on the choice of the shipper in relation to the transport service. These elements
represent a necessary prerequisite for traffic flow predictions and investment decisions.
Using a methodology falling within the broad definition of conjoint analysis – the
adaptive stated preferences approach – we have been able to measure the trade-offs
among services‘ characteristics shippers make when evaluating alternative services both
already present on the market or still hypothetical. We have demonstrated how, this
methodology, which has already gained overwhelming success in surface transport
studies, can be successfully applied, making the appropriate variations, in the analysis of
maritime services, and, in particular in verifying the potential success of initiatives
directed at enhancing the use of the ―Motorways of the sea‖.




An Analysis of Brazilian Maritime Industry Policies

Pires Jr., Floriano C. M .
     Laboratorio de Informatica de Graduacao, Departamento de Engenharia Naval e
     Oceanica - Poli – UFRJ, Programa de Engenharia Oceanica - COPPE – UFRJ
     floriano@peno.coppe.ufrj.br

Assis, Luiz Felipe
     Laboratorio de Informatica de Graduacao, Departamento de Engenharia Naval e
     Oceanica - Poli – UFRJ, Programa de Engenharia Oceanica - COPPE – UFRJ




                                              6
Gonçalves Serra, Eduardo
    Laboratorio de Informatica de Graduacao, Departamento de Engenharia Naval e
    Oceanica - Poli – UFRJ, Programa de Engenharia Oceanica - COPPE – UFRJ


      The Brazilian modern maritime industry was established in the 1960 decade,
induced by a broad and effective governmental policy. The shipbuilding, marine
equipment, and shipping industries, as well as engineering and other maritime related
service sectors, experienced a very fast growth period, up to the mid 1980s. Since then
the Brazilian maritime industry as a whole has sharply declined. The shipbuilding
industry was downsized and the merchant fleet was greatly reduced and most of the
remainder shipping companies were sold to foreign firms. The marine equipment industry
practically disappeared.
      Presently the shipbuilding industry is showing a recovery trend, mainly in
consequence of the upsurge of deep water oil and gas offshore industry. The state-owned
tanker fleet and supply vessel fleet are the segments of the Brazilian-controlled shipping
industry in better conditions.
      The paper broadly describes and analyses the maritime industry policies rationale
and instruments adopted during this period. The mechanisms considered are related to
cargo reservation laws, fiscal devices, financing, subsidies, and other forms of
governmental intervention in the production chain, from the shipbuilding input
manufacturing sector up to maritime transportation itself.




An Analysis of Maritime Supply Chains in South
Africa

van Niekerk, Henriëtte C.
    Unit for Maritime Studies, Department of Logistics, University of Stellenbosch,
    Private Bag X1, 7602 Matieland, South Africa
    HCVN@Akad.sun.ac.za

Fourie, Yolanda
    Unit for Maritime Studies, Department of Logistics, University of Stellenbosch,
    Private Bag X1, 7602 Matieland, South Africa
    HCVN@Akad.sun.ac.za




                                           7
      With the breaking down of trade barriers and the greater scope to source supplies at
the lowest prices, producers must continuously reassess the cost of their existing supply
chains and seek cheaper alternatives in order to maintain a comparative advantage in their
markets. In seeking cheaper alternatives only the existing infrastructure is evaluated and
modelled. As a result of fierce competition, shipping lines have engaged in horizontal and
vertical integration to ensure control over the total supply chain in order to minimise
costs. This integration in one way or another has led to infrastructure investments,
especially where limitations or weak links existed in the supply chain.
      In this paper maritime supply chain is defined and a case study in South Africa is
used to illustrate the influence that shipping lines can have on the container supply chain,
especially where limitations and weak links exist and essential improvements are needed
to maintain international competitiveness. The problems analysed relate specifically to
infrastructural and management issues.




An Economic Approach to Maritime Legal Liability

Li, Kevin X.
     Department of Shipping & Transport Logistics, The Hong Kong Polytechnic
     University
     stlkxli@polyu.edu.hk

Cullinane, Kevin
     Department of Shipping & Transport Logistics, The Hong Kong Polytechnic
     University
     stlkcull@polyu.edu.hk

Nielsen, Detlef
     Department of Shipping & Transport Logistics, The Hong Kong Polytechnic
     University
     stlkdn@polyu.edu.hk

       With the implementation of the International Safety Management (ISM) Code and
the introduction of the concept of Formal Safety Assessment (FSA) into the shipping
industry, research into the area of Maritime Risk Management (MRM) has reached a
status whereby it can be regarded as an independent field with its own concepts and
paradigms. Following a description of fundamental concepts and terms applicable in
MRM, the paper analyses various methods by which shipowners might reduce their
liability risk. Based upon the premise of rational decision-making, an economic
explanation for MRM is deduced from first principles and a distinction is drawn between
the choice context of individual shipowners and that of maritime authorities. By
integrating these two contexts, a conceptual approach to the application of cost-benefit
analysis in maritime safety regulation is derived.




                                            8
      The work concludes by advocating the adoption of such an approach as a means of
ensuring that safety regulation sets optimum targets such that the level of compliance
yields maximum economic benefit and that the MRM which shipowners implement is
effective in satisfying the regulatory targets.




An Empirical Analysis of the Time-varying Correlation
of Returns in International Shipping

Jia, Jackie H. Jia
     Norwegian School of Economics and Business Administration, Norway
     haiyingjia@hotmail.com

Adland, Roar
    Massachusetts Institute of Technology, USA
    roaaad@mit.edu

       This paper provides some preliminary empirical evidence on the time-varying
nature of the correlation of investment returns in shipping. The correlation of returns
across shipping sectors is of great practical importance to shipowners, as it determines the
degree to which they can reduce their exposure to shipping market risk by diversifying
their fleet. The empirical results in this paper suggest that the correlation of returns is
time varying and fluctuates around a constant positive average value. Unfortunately for
shipowners, the correlation appears to be the highest during market downturns,
suggesting that the benefit of having a diversified fleet as a protection against severe
negative investment returns is negligible.




An Hybrid Econometric Model for Forecasting Short,
Medium, and Long-term Traffic and Transits at the
Panama Canal

Blond, David L.
    MergeGlobal, Inc. Arlington, USA
    dblond@mergeglobal.com

      The Panama Canal Authority (ACP) is responsible for the operation, maintenance,
and improvement of the Panama Canal. Three years ago the Canal authority contracted
with a MergeGlobal to develop a complex model to allow analysts to develop short term,
medium and long-term forecasts for the Canal. The model was developed with two
purposes in mind:



                                            9
        - to offer a scientifically driven assessment of Canal traffic in the short to medium-
term;
       - to allow the planning staff to develop estimates of future revenues based on a
changing mix of infrastructure improvements (from channel deepening to adding a third
set of locks of a larger size).
      MergeGlobal, an Arlington, Virginia based trade, transportation, and industry
consultancy, developed an integrated planning model for the Canal linking external data
on global economic growth and trade with internal Canal traffic and transit data using
semi-automatic computer links to refine and improve coefficients and statistically
developed parameters for translating traffic into ship transits. The goal of this model was
to provide both short-term forecasts for projecting Canal revenues and traffic patterns and
to allow the Canal staff to develop sophisticated, fact-based, analyses of future traffic
patterns under differing conditions including the development of a ―third set of locks‖
allowing the transit of vessels larger than Panamax sized.




An Organisational Approach to Port Efficiency

Valentine, Vince F.
    Institute of Marine Studies, University of Plymouth, Drake Circus, Plymouth, PL4
    8AA United Kingdom
    vvalentine@plymouth.ac.uk

Gray, Richard
    Institute of Marine Studies, University of Plymouth, Drake Circus, Plymouth, PL4
    8AA United Kingdom
    rgray@plymouth.ac.uk

       This paper will focus on the ports of North America and Europe comparing
efficiency with organisational structure and ownership factors.
      There are many factors that have an effect upon the performance of a port; the
location, infrastructure, superstructure and connectivity to other ports are but a few.
However, the way an organisation is structured can also have a significant effect on its
performance in terms of efficiency. Over the last twenty years much reorganisation has
occurred within ports following the global adoption of privatisation policies by individual
governments. Between 1990 and 1998 there were 112 port projects with private
participation in 28 developing countries providing an investment totalling more than
US$9 billion (Sommer 1999). The value of world-wide privatisations in all industries for
1999 grew by 10% over the preceding year providing governments with US$145 billion
(Washington Times 2000).




                                             10
      Numerous studies have been conducted on port efficiency, some made using the
assessment of productivity based upon output per worker (DeMonie 1987), output per
wharf (Frankel 1991) whilst others use production functions (Kim and Sachish 1986,
DeNeufville and Tsunokawa 1981). This paper will use a technique known as Data
Envelopment Analysis (DEA) to calculate the relative efficiency of container ports using
output by size of the port. Martinez-Budria et al (1999) and Tongzon (2001) conducted
research using DEA on Spanish and Australian ports respectively.
       The conclusions show that organisational structure does have a relationship to
efficiency whereas ownership and location have only a negligible relationship.




Analysis of Primary Causes Concerning S hipping
Safety – Owner‟s and Shipmaster‟s Point of View

Vlachos, George P.
    University of Piraeus - Faculty of Maritime Studies, 13-15, Dioharous str.,
    Kaisariani 16121, Athens- Greece
    mar-econ@ath.forthnet.gr

Nikolaidis, Emmanouil
    38, Ag. Fanouriou Str. Pagrati – Athens 11633
    mnik@hol.gr

       A number of accidents in the shipping industry has increased the public and
political pressure to improve safety. In response, safety regulations require a new
approach in the prevention of accidents by the use of risk management. The reason is that
underlying causes of major accidents are not failures of technical systems, but rather
failures of safety management practices, which have been designed to prevent them.
      The primary purpose of this paper is to test the hypothesis: ―When a vessel is
becoming substandard?‖, and ―How can the shipowner solve the problem in a cost
effective way?‖. The authors are based on real cases and examine the master‘s point of
view, as well as the owner‘s. Authors are introducing a risk-based safety management
system, in an attempt to identify the proper barriers that could help to absolve the
phenomenon of substandard ships.
      The first option for the introduction of a risk -based Safety Management System,
aims to show that all possible hazard controls and emergency preparation measures are in
place. The second option is that the ‗‘Safety Case types‘‘ demonstrate how safety has
been considered and incorporated into the design or modification of a vessel (this
comprises of quantitative risk assessment and Safety Management System).
      The authors believe that the subject is well – timed, since the phenomenon of
shipping safety is strongly related to the existence of substandard ships, affecting the
shipping industry in a down-rate way.



                                          11
Cabotage in the Andean Community: The Rebirth of
the Merchant Marine?

Sabatino Pizzolante, José Alfredo
    Sabatino Pizzolante Maritime & Commercial Attorneys. Puerto Cabello, Venezuela
    mail@sabatinop.com

      In the past, cargo reservation and the restriction of foreign participation in the
shipping activity, were mechanisms intended to foster the merchant marines of Andean
countries. In practice, however, these measures proved useless to achieve that goal.
       On the contrary, following enactment of Decision 314, the Andean Community
adopted a different approach to the matter, leading to the liberalization of shipping
activities and urging members (Bolivia, Colombia, Ecuador, Peru and Venezuela) to
review their legislation accordingly. In fact, countries like Venezuela have managed to
revise their whole shipping legislation, with the aim of ensuring the development of the
national merchant marine. Cabotage, nevertheless, was not within the scope of the said
Decision 314.
      This paper deals with the feasibility, for Andean countries, individually to establish
a merchant marine able to compete in the containerised traffic of international trade; what
are the main constraints in the achievement of this, and how cabotage could ensure for
the Andean Community, the rebirth of a merchant marine fleet to support the movement
of domestic cargoes.




Corporate Social Responsibility in Greek Shipping

Fafaliou, Irene
    Department of Economics, University of Piraeus, Greece
    fafaliou@unipi.gr

Lekakou, Maria
    Department of Shipping, Trade and Transport, University of the Aegean, Greece
    mlek@stt.aegean.gr

Theotokas, John
    Department of Shipping, Trade and Transport, University of the Aegean, Greece
    gtheotokas@aegean.gr




                                           12
      At the Lisbon Summit in March 2000, European leaders and governments defined a
new strategic goal: to make Europe the most competitive and dynamic knowledge based
economy in the world by 2010 with better jobs and more social cohesion. Recognizing
the crucial role of business in achieving this goal, they challenged business alliances and
stakeholders to mainstream Corporate Social Responsibility (CSR) in business practice
and policy making. The introduction of European and national policies on this matter
will also facilitate the awareness of the maritime sector to this goal.
      The paper examines whether the maritime sector and in particular short sea
shipping services (ssss) providers, have already commenced to place a greater emphasis
on the social role they can play as responsible corporate actors. For this, a survey among
the Greek-owned short sea shipping companies (sssc) has been conducted. From the
findings of the qualitative research (i.e. semi-structured interviews) it can be concluded
that CSR‘s application is limited only to companies that either are subsidiaries of
international conglomerates or are owned by shipowners personally aware on the matter.




Corporatisation Legislation: the Key to Effective Port
Management

Everett, Sophia
    Intermodal Transport Teaching Program, Victoria University, Australia
    sophiaeverett@bigpond.com

      Some seven years have passed since Australian state governments embarked on
port corporatisation programs. Since that time some regional bulk ports in Victoria –
Geelong and Portland – were privatised and with the exception of the Western Australian
government which opted for commercialisation, all other Australian states have set in
place some form of corporatisation model. The objectives of port reform were part of a
broader government agenda aimed at reforming the public sector performance more
generally. The policy for port reform was an endeavour to improve efficiency in the port
environment notably by distancing government from day to day operations – that element
that was seen to be the cause of suboptimal port performance.
      Undoubtedly reform has improved port performance (Hirst 2000) but
dissatisfaction persists that the various corporatisation models have failed to ‗deliver the
goods‘. Clearly the objective has not been met and political input continues to impede
commercial objectives. Hirst has argued, for example, that ‗while the corporatised ports
are far more responsive to customer needs and are prepared to work more closely with
their customers to obtain better transport solutions, many continuing disadvantages with
the corporatised structure persists which portrays considerable and on-going bureaucratic
and political interference in port issues that can affect port operations, delay unnecessary
capital and other expenditure and cause delays to projects required to meet market
development needs, basically to suit short term government agendas‘ (Ibid).




                                           13
      This paper argues that the fundamental problem of corporatisation lies with the
various models themselves, with the legislation under which ports were corporatised and
the inability of government to establish a model which, while imposing commercial
demands and expectations, has been unable to set in place a structure which has allowed
commercial freedom, independence from political control and the ability to respond to
market demands. While commentators (Hirst 2000, Meyrick 2000) argue that political
interference is the cause of port inefficiency this is a somewhat erroneous and myopic
view. Political interference is not the cause of port inefficiency but an effect of
something more endemic - of a model and legislative framework which is not appropriate
for any commercially focused operation – government owned or otherwise.




Cost Elements with a Soul

Gerstenberger, Heide
    Universität Bremen, Germany
    gerstenb@uni -bremen.de

     This article discusses some of the reasons for the deterioration of living and
working conditions on board merchant ships. It describes some of the aspects of this
development and it debates if any change is to be expected from considerations of
economic rationality.
       Struggles to improve the sort of seafarers in the merchant marine are old. They
were led by trade union strategies of protest and resistance as well as by public
campaigns, and they resulted in a body of national as well as of international regulation.
Since the radical internationalisation of the shipping industry, which started in the mid-
seventies of the 20th century, many gains of these strategies have been lost. The process
is well known. By cutting the genuine link between ship and flag state the domain of
traditional Flag State Control as well as the domain of national trade union struggles was
greatly reduced. Free choice of Flag State as well as the introduction of international
registers in traditional seafaring states made it possible to react to the hardening of
competition by doing away with many improvements which, since the end of the fifties of
the 20th century, had been introduced aboard merchant ships of highly industrialised
countries. The globalisation of the shipping industry produced a situation in which
demands for improvement had to either hope for the success of appeals to managers or
for the success of ITF policies.




                                          14
Cost of Carry, Causality and Arbitrage between Oil
Futures and Tanker Freight Markets

Alizadeh, Amir H
     Centre for Shipping, Trade and Finance, City University Business School,
     Frobisher Crescent, Barbican Centre, London EC2Y 8BH, United Kingdom
     a.alizadeh@city.ac.uk

Nomikos, Nikos K.
   Centre for Shipping, Trade and Finance, City University Business School,
   Frobisher Crescent, Barbican Centre, London EC2Y 8BH, United Kingdom
   n.nomikos@city.ac.uk

       This paper investigates the dynamic relationship between oil futures markets and
tanker freight rates across the two Atlantic routes of Bonny-Philadelphia and Sullom
Voe- US Atlantic Coast. In particular, we examine the cost of carry relationship in the
WTI futures market, which implies that spot and futures prices should be related through
the cost of financing, storing and transporting the underlying commodity until the
maturity of the futures contract. Therefore, one would expect that physical crudes (Brent
and Bonny) which can be delivered against WTI futures to be related to the latter and
their difference to reflect the financing and transportation costs.
       Using physical oil (Brent and Bonny), WTI futures prices and freight rates (in the
routes which connect these markets) we find evidence against the existence of a
relationship between tanker freight rates and physical - futures differential. This is mainly
attributed to regional supply and demand imbalances and suggests that arbitrage
opportunities between oil derivatives and tanker freight markets exist. Simulated trading
strategies reveal the existence of excess profits, which are robust to variations in
transaction costs, pipeline transfers and timing of initiation of arbitrage.




Design of Simulation System for Port Resources
Availability in Logistics Supply Chain

Lee, Tae-Woo
     Korea Maritime University, Busan, Korea
     tlee@hanara.kmaritime.ac.kr

Park, Nam-Kyu
    Tongmyung University of Information and Technology, Busan, Korea
    nkpark@tmic.tit.ac.kr



                                            15
Lee, Dong-Won
     LG-CNS, Prime Tower #10-1, Hoehyun-dong, 2-ga, Jung-gu, Seoul, Korea
     dwyi@lgeds.lg.co.kr

      This paper aims to apply a supply chain modeling and its analysis framework to the
supply chain in the port industry, each of which has its own objective. The simulation
approach serves two purposes: to model a supply chain network in quantity approach and
to evaluate its supply chain performance based on proposed strategies. The simulation
model will be applied to quantifying the flow of a supply chain, the involved information
and material flow and conducted to simulate the supply chain operations. The model will
also be used which strategic and operational policies are the most effective in smoothing
the variations in the supply chain.




Do Tanker Pools Influence Market Rates? The Case of
Tankers International

Glen, David
    CITM, Dept of Business Studies, London Guildhall University, 84 Moorgate
    London EC2M 6SQ, UK
    glen@lgu.ac.uk

Martin, B. T.
    E A Gibson Shiprokers Ltd., 16-20 Ely Place, London, EC1P 1HP, UK


       Whilst there have been many studies of the tanker market at the industry level, the
number of studies that explore an issue within the market are quite rare. This paper
provides an outline of the number and structure of tanker pools, and then provides some
statistical results of testing the simple hypothesis that pool members earn higher rates
than non-pool members operating on the same routes. It focuses on two pools in
particular, the Alliance and Tankers International. Both of these are ‗vehicles‘ for
Frontline, a large company run by Mr. J. Frederiksen. Tankers International is of
particular interest because of its recent creation, and of its apparent success in obtaining a
significant share of tonnage of modern very large crude carriers (VLCCs). The statistical
tests focus on the possibility that Tankers International may be able to influence market
rates as a consequence.




                                            16
Econometric Model for Projecting Panama Canal
Traffic, Transits, and Revenues – Evaluation of
Results and Application at the Panama Canal

Sánchez, María Eugenia de
    Panamá Canal Authority, Panama
    mesanchez@pancanal.com

      In order to evaluate the market potential of a possible Canal expansion, the ACP
contracted MergeGlobal Inc, a management-consulting group specialized in quantitative
solutions for trade and transportation, to develop a model for traffic, transits, and
revenues long-term projections. This paper will evaluate the effectiveness of the
econometric model developed by Mergeglobal Inc from a users‘ point of view, will
review the problems encountered, overview alternative approaches to long-term
forecasting, and present insights to ACP‘s managerial solutions oriented to improve and
strengthen the reliability of long-term forecasting.
      The purpose of this paper is to share our views about the limitations of long-term
forecasting of shipping trends and the factors that we have identified as critical to
improve the reliability of ACP‘s forecasts as basis for important investment decisions at
the Panama Canal. At the same time, this paper is an invitation to maritime economists
for inputs, suggestions, and recommendations to further strengthen ACP‘s challenges in
predicting future shipping patterns and commodity trades.




Econometric Modelling of Second -hand Ship Prices

Tsolakis, Stavros D.
    Center for Maritime Economics and Logistics, Erasmus University Rotterdam, The
    Netherlands
    tsolakis@few.eur.nl

Cridland, Colin
    Braemar Seascope, London, United Kingdom
    research@braema r.co.uk

Haralambides, Hercules E.
    Center for Maritime Economics and Logistics, Erasmus University Rotterdam, The
    Netherlands
    haralambides@few.eur.nl




                                          17
      This paper provides an econometric analysis of second-hand ship prices. The
cyclical nature of second-hand ship prices is analysed within the context of Econometric
Business Cycle Research (EBCR). Two econometric methods (Structural Equation
Models and Vector Autoregression models) are introduced, analysed and assessed with
respect to achieving the classical objectives of EBCR simultaneously, which are to
describe and forecast cycles and to evaluate policies.
      Annual data covering the period 1968-2001 for all major types of bulkers and
tankers are used. Two models are estimated, a structural and an unrestricted two lagged
VAR.
      Newbuilding prices and timecharter rates have a positive effect on second-hand
prices. In all segments (Panamax and Capesize Bulkers, Panamax, Aframax, Suezmax
and VLCCs) except handy bulk carriers and tankers, the newbuilding price variable has a
higher impact on second-hand prices than the timecharter rate one. A reason behind this
may be asset play.
      For bulk carriers in particular this may be attributed to:
           The low values of the dry cargo commodities carried by bulkers
            compared to those carried by tankers.
           The lower performance of the dry bulk carriers both in terms of absolute
            earnings and return on investment compared to that of tankers.
           Dry bulk carrier owners have tended to be far more readily attracted by
            low newbuilding prices than tanker owners as the cost of the vessel is
            more crucial to the return on investment.
           The fact that the timing of the dry bulk carrier order is more crucial than
            in tankers and often takes place when demand for new tankers has fallen
            and shipbuilding prices have fallen.
      Capital costs as a proportion of earnings were found to be more significant for bulk
carriers. This can also be attributed to the higher liquidity of tanker owners.
      Orderbook expressed as a percentage of the existing fleet is significant only for the
Suezmax tankers, and handy bulkers and tankers. For Suezmaxes this can be attributed to
the special characteristics of this type of vessel. In handy tankers and bulkers, shipowners
tend to operate their fleet mostly on the spot market. Therefore, an expected fleet
increase, stemming from a large orderbook, will spread concern among the small
shipowners, with negative effects on second-hand ship prices.
      Finally, by assessing the two models, the paper finds that SEMs are still to be
preferred if the classical objectives of EBCR need to be achieved simultaneously.




                                             18
Economic and Technical Aspects of Mega -Container
Carriers

Payer, Hans G.
    Germanischer Lloyd, Hamburg
    pay@germanlloyd.org

      Economy of scale has driven the development of container shipping right from its
beginning. The trend towards larger ships has accelerated in recent years and can be
observed with the increasing size of long haul ships as well as feeder vessels. Container
ships have been developed close to the limits of the technically possible right from their
beginning in the 1960ies. The largest Post-Panamax container ships today have a carrying
capacity of over 7,500 TEU and ships with 9,000 and 10,000 TEU are on the drawing
board. The present slow-down in the growth of the world economy has delayed the
realisation of such very large ships. The expected return to healthy growth rates for the
major economies in the world will, however, lead to a resumption of the significant
growth in container volume to be transported by sea. This will be connected with orders
for even larger vessels than are in operation today.
      Technical aspects and implications of the very large ships are discussed in the
paper. The limits on ship size have more to do with the ports and with constraints of their
infrastructure rather than with the ships themselves. The technological challenges of large
Post-Panamaxes need detailed attention, but can be coped with by designers and
engineers. After an overview of possible future developments and limitations, economic
aspects are briefly addressed. The implications of a possible widening of the Panama-
Canal for the layout and design of containerships in the future are discussed.




Economic Evaluation of Fast Ship and the Trade in
Time Sensitive Commodities: A Spatial Eq uilibrium
Analysis

Fuentes, Porfirio
    Agricultural Economics Department at Mississippi State University, Mississippi
    State, 39762, USA
    fuentes@agecon.msstate.edu

Herndon, Cary W.
    Agricultural Economics Department at Mississippi State University, Mississippi
    State, 39762, USA
    herndon@agecon.msstate.edu




                                           19
       Price differential between spatially separated trading regions are substantial, due to
different factors like: import demand, exports supply, import tariffs, quotas and other
artificial trade restrictions, and to natural trade barriers like transportation cost.
Transportation cost is an important factor that affects the trade of agricultural products,
especially when high value/time sensitive or perishable types of commodities are
involved, due to their high cost of transportation.
      Given the importance of high transportation cost as a natural trade barrier in the
trade of perishable and high value commodities, there is a large body of literature on
applied research that has studied the effect of transportation rate structure changes in
inter- and intra-regional trade. The commonly used method in this type of research is
Spatial Equilibrium Models (SEM), which are useful to analyze price relationships
between two or more regions and the resulting trading patterns as result of changes in the
transportation cost structure and in any other artificial trade barrier.
      Most studies reviewed incorporate in the modeling process changes in
transportation cost structure from the opposite focus of this study; that is from an
increasing rather than decreasing transportation cost structure. In addition, none of these
studies focused in transportation cost reduction due to technological advances in
transportation. This may be one of the first attempts to study the effect of transportation
cost reduction due to technological advance, and the reduction in import tariff rates on
international trade, using a spatial equilibrium approach.




Excess Capacity and Entry Deterrence: The Case of
Ocean Liner Shipping Markets

Fusillo, Mike
     PIERS, Maritime Research, USA
     MFusillo@joc.com

      This paper attempts to shed light on the proposal that firms in concentrated
industries may keep excess capacity to forestall entry and/or expansion by rivals. Excess
capacity can deter entry by forming expectations on the part of potential entrants that
incumbents are capable of responding aggressively to threats. It is closely related to the
theory of limit pricing in that excess capacity enables firms to forestall entry by
immediately increasing output when potential entrants threaten. But in order to make a
convincing case for excess capacity as a strategic entry deterrent, all potential sources of
excess capacity must be considered simultaneously. These may include industry-specific
structural factors, such as the divisibility of demand relative to supply, economies of scale
or wide swings in demand.




                                            20
      Ocean liner shipping exhibits structural factors that have led excess capacity for
much of its history. It is a concentrated industry that until the late 1990s was dominated
by price fixing industry groups known as liner shipping conferences. In spite of limited
antitrust immunity granted by most governments to liner shipping conferences, excess
capacity is and has been a persistent problem that could be a major cause of operational
inefficiencies. As such, ocean liner shipping presents an ideal forum in which to
distinguish between excess capacity that is an artifact of structural conditions of supply
and demand and excess capacity that may be employed as a strategic defense against
opportunistic rivals. The results of a random effects model with instrumental variables
show some limited support for the entry deterrence element of excess capacity in liner
shipping.




Foreign Direct Investment in China: The Case of
Shipping and Logistics Corporations

Panayides, Photis M.
    Department of Shipping and Transport Logistics, The Hong Kong Polytechnic
    University, Hung Hom, Kowloon, Hong Kong
    stlpp@polyu.edu.hk

Song, Dong-Wook
    Department of Shipping and Transport Logistics, The Hong Kong Polytechnic
    University, Hung Hom, Kowloon, Hong Kong
    stlpp@polyu.edu.hk

Nielsen, Detlef
     Department of Shipping & Transport Logistics, The Hong Kong Polytechnic
     University
     stlkdn@polyu.edu.hk

      The growth of foreign direct investment (FDI) in China and the potential for
achieving the stakeholders‘ objectives renders the area of great interest to policy-makers
and current and potential investors. Previous studies considered a number of approaches
and industrial sectors. This paper focuses on the logistics industry. Given the direct
benefits that investment in logistics can bring to trade and economic development, the
specific industrial sector seems worthy of scholarly consideration and analysis.




                                          21
       The case study approach is adopted to explore and investigate theoretical aspects of
FDI such as motives for market entry, ownership, and location and entry barriers in the
context of multinational logistics corporations in China. Market size, and geographical
distance between production and consumption centres are found to be main motivations
for investment. The preferred entry modes are wholly owned subsidiaries located in
coastal cities and population concentrations. A paradox is identified between the
provision of FDI incentives on one hand and the presence of various barriers to entry and
hindrances to foreign investors on the other. The results provide opportunity for
justification-oriented research hypotheses for further empirical analysis as well as
recommendations for policy.




Freight Transportation Selection Criteria: An
Empirical Investigation of Turkish Liner Shipping

Tuna, Okan
    Dokuz Eylul University, School of Maritime Business and Management, Turkey
    otuna@deu.edu.tr

Silan, Mustafa
     Dokuz Eylul University, School of Maritime Business and Management, Turkey

      Freight transportation selection is of critical importance to the shippers in terms of
achieving high customer service level, cost savings and efficiency in the overall supply
chain. On the other hand, providers of freight transportation services have been interested
in finding out the salient freight transport selection factors of shippers in order to be
competitive within freight transport market. These facts have directed the attention of
transport and logistics researchers towards the problem of freight transportation selection
since the beginning of 1970 and as a result of this many empirical researches and reviews
have been realised.
      When such evidences as Turkey‘s land bridge position both in East-West and
South-North axes, economic developments in CIS, Central Asia and Caucasian,
productivity increase in Turkey in parallel with Southeastern Anatolia Project (GAP) and
acceleration in the relations with the EU are considered, Turkey has a great potential
within the freight transport and logistics activities. The volume of the logistics market in
Turkey was estimated to be 1, 5 billion USD in 2000.
        Although the importance of freight transport and logistics services has been
increasing among companies in Turkey due to the accelerating international trade, the
number of the comprehensive studies within the freight transportation selection is
negligible. This paper attempts to investigate the liner transportation selection criteria of
Turkish Shippers.




                                            22
       A field research was conducted within the framework of the study. After
reviewing the attributes used in mode and carrier selection criteria researches, a 24 item
importance scale was developed in order to measure the perception of the Turkish liner
transport shippers. Questionnaires were mailed with a cover letter to the shippers.
        In addition to the descriptive statistics, factor analysis was applied to define the
salient liner transportation selection criteria. Reliability and competence was found as the
most important factor.




From EDI to ebXML – Rocking the Boat

Carrasco, José G.
    Autoridad del Canal de Panamá, Panama
    jgcarrasco@pancanal.com

      The maritime industry today faces a great challenge. Current events and a cooling
economy indicate that it should scale back investments and focus more tightly on cost
and efficiency metrics. If it does, sometimes, it can loose ground as a result. On the other
hand, today‘s market oriented economy dictates that it is more important than ever to be
aggressive during hard times. In the business world, the great companies take advantage
of a challenging economic environment. This is often done by increasing customer
service levels, product quality, and offering the services that add value or reduce overall
costs to the businesses conducted.
      Twenty years ago this situation was faced with the aid of a new technology called
EDI (Electronic Data Interchange) that was designed for big companies with huge
volumes of data. The very considerable costs linked to an EDI initiative were offset by
the efficiencies acquired through the direct exchange of information between business
partners. Thus business partners seldom handled great amounts of costly paper based
transactions.
      Today, that technology is joined by the development of the Internet and various
communications protocols. The last and most versatile being XML (Extensible Markup
Language), used to give birth to a new way of conducting business, e-business. The
maritime sector — shipping lines, ports, service providers at ports, and connecting
surface or air transportation providers — believe that e-business will be critical in their
success. Nevertheless, the actual adoption of e-business systems is slow and mostly
concentrated around highly developed markets and countries. To date, the main use by
maritime carriers is in tracking and tracing of cargo, information display and freight
quotations, although electronic document exchange with clients, ports and customs is
increasing.




                                           23
Governance in Seaport Clusters

De Langen, Peter
    Erasmus University, Rotterdam, Netherlands
    delangen@few.eur.nl

       Apart from well-known physical factors such as the location, maritime accessibility
and hinterland infrastructure, the governance of seaports is an important determinant of
their performance (see De Langen, 2001).An analysis of the governance of seaports has
mostly been limited to the role of the port authority. Notwithstanding the central role of
port authorities in ports, we argue that an analysis of governance in seaports requires
attention for the role of (private) firms. Institutional economic literature offers a useful
framework for analysing advantages and disadvantages of alternative governance
mechanisms and provides a basis for analysing the roles of port authorities.
      In this paper we deal with the issue of cluster governance in seaports and illustrate
our approach with an analysis of the port of Rotterdam. First, we briefly discuss the
theoretical foundations of the cluster governance concept. Second, we discuss the role of
port authorities in the governance of seaports. Third, we present empirical results of a
survey among 43 cluster experts in Rotterdam on the governance of Rotterdam‘s port
cluster. We finalise the paper with conclusions.




Green „Port‟ Portfolio: A Basis for Sustainable
Strategic Decisions in Port Policy and Management

Haezendonck, Elvira
    Antwerp, Belgium
    elvira.haezendonck@ua.ac.be

Coeck , Chris
    Antwerp, Belgium
    Chris.Coeck@haven.Antwerpen.be

Verbeke, Alain
    Antwerp, Belgium
    averbeke@vub.ac.be




                                           24
       Stakeholder preferences and government regulation favoring the reduction of
negative externalities increasingly provide powerful incentives to firms to pay more
attention to environment-friendly strategic decisions and actions (Rugman and Verbeke,
1998; Hart, 1995 and Porter and Van der Linde, 1995). This is also critical for ports,
given their considerable environmental impact, sometimes on an entire region (Button,
1993b). When failing to consider this environmental impact, strategic port decisions and
actions could potentially, negatively affect the ability of the port to compete relative to
others in the range, at least if ‗environmental performance‘ really counts. In that case, the
attractiveness of port activities and new investment projects in the port area need to be
assessed, not merely in terms of economic potential as measured by impact on market
share and growth rate, but also in terms of environmental impact (Verbeke, 1998 and
European Commission, 1998a).
       This paper adds an environmental dimension to the conventional port portfolio
analysis, as developed by Verbeke (1992), Winkelmans and Coeck (1993) and Verbeke,
Peeters and Declercq (1995a). Traditional portfolio analysis only considers the micro-
economic aspects of business activities, i.e. the average market share and the average
growth rate of strategic business units which are used as key indicators of competitive
positioning. In this paper, a ‗green‘ port portfolio analysis is developed, building upon
Ilinitch and Schaltegger (1995) and Burke and Lodgson (1996), that takes into account a
number of environmental parameters. This approach is then applied to the Hamburg – Le
Havre seaport traffic portfolio structures and hinterland transport. The implications are
described of a possible shift from using highly polluting transport modes towards more
environment-friendly transport. Moreover, the impact of decisions by port authorities and
port operators to use specific hinterland transport modes when traffic expands, can be
identified and the possible effects (in terms of reduction of external costs) of using less
polluting transport modes can be computed. The framework also allows to assess the
relative performance of a port vis-à-vis its competitors in terms of ‗environment-friendly‘
growth and market share by including the environmental dimension in the analysis.




Harbour Towage: Perfect or Imperfect Competition in
the Global Market?

Rowlinson, Mervyn
   London Metropolitan University, London, United Kingdom
   mervyn@rowlinson9000.fsnet.co.uk




                                            25
      The harbour tug sector is rapidly making the transition from a localised port service
industry to a highly flexible, globalised, industry. Global influences in ownership,
investment, management and crewing are already at work in the towage sector. The long
term trend has been one of market concentration. However, this trend is intermittently
interrupted by outbreaks of competition which are normally welcomed by the customers
of the tugboat companies. As the industry oscillates between the two extremes of
concentration and competition it is pertinent to examine how the tugboat market fits with
the theory of perfect competition. The intention is to assess how the industry
approximates towards the two positions. This paper explores the balance between the
forces for competition and those for concentration and, furthermore, the implications for
the future of the industry.
      The emphasis will be on the recent take-overs in global harbour towage which
appear to be heralding a new era of consolidation and market stability, particularly in
Northern Europe. Attention will be given to the dramatic situation that occurred in the
Port of Hamburg, which witnessed the excesses of the 1990s ―Tugwars‖. Such
confrontations appear now to be diminishing, mostly as a result of fleet rationalisations
and market concentration. In the UK ports that were attacked by new entrant tug
companies (during the same time period), the level of competition has now given way to
monopoly. In the Port of Rotterdam the once fierce rivals, Hamburg based, Fairplay, and
the home-port operator, Smit, have joined forces in a service accord (Lloyd‘s List
14.3.01). Following the period of 1990s ―Tugwars‖, concentration now appears to be the
direction of change. The buy out of the Wijsmuller fleet by the Danish world fleet leader
and A.P.Mller‘s subsidiary, Svitzer Towage, as well as the Australian Adsteam
Marine‘s A$500m take-over of Howard Smith‘s fleet, provides vivid evidence of
concentration. Both companies can claim significant maritime heritage and a world-wide
reputation for direct, hands on business dealings. In the Mississippi there have been
controversial moves towards limiting competition between tug companies. It is pertinent
to discuss the impact of moves towards concentration in major world ports.
      Such developments will be analysed as part of the larger trend towards globalised
operations and practices. True world standards of service quality are now emerging. The
industry is now entering into a new era with significant challenges. The recent downturn
in shipping markets places renewed pressure on all port expenditures; continued pressure
on towage tariffs is likely to result.




Impact of El Niño Southern Oscillation Phenomenon
on the Panama Canal and its Markets

Marucci, Silvia
   Corporate Planning and Marketing Department, Panama Canal Authority, Panama
   smarucci@pancanal.com




                                           26
      The Panama Canal is basically a man made water bridge that elevates vessels from
sea level over mountainous terrain and lowers them back down to sea level using a
lockage system. The key ingredient in the entire process is tropical fresh water that
comes from rainwater, springs and runoff from rivers and streams harnessed in a primary
and secondary reservoir. The site for the Canal and the lockage system were chosen
because of the constant and reliable tropical downpours in the Canal‘s watershed region,
which provide the necessary water inflows to operate the Canal.
      Any sustained reduction of the inflows to the watershed can adversely affect the
Canal‘s ability to provide optimal transit service for vessels at maximum draft.
Meteorological events such as El Niño have been directly linked to extended periods of
dryness in the Canal‘s watershed, and an acceleration of the evaporation process in the
region. As the Canal continues to provide transit service to customers during dry
periods, the hydraulic resources in the reservoirs are steadily consumed without adequate
restoration of the resources, leading to rapid declines in lake levels.
       When reservoir levels reach a critical low the Canal implements several strict
measures in an effort to continue providing transit service to its customers. The measure
of last resort is to implement vessel draft restrictions, which causes an immediate adverse
impact on cargo laden transiting vessels, which may have to discharge cargo in order to
meet the temporary draft limit. This condition negatively affects the profitability of that
voyage and increases the operational costs for the owners or operators of the vessel.
Additionally, it creates a tenuous situation for the vessel, which may not be able to
deliver the full cargo to its destination as originally planned and promised.
      Through experience, the Canal has been well aware of the impact of a severe El
Niño event. To minimize the adverse effects of these events the Canal has invested
millions of dollars in deepening programs to increase the storage capacity of the
reservoirs and provide a deeper navigable depth along the sailing lines of the Canal.
      Although the Canal plans to embark on another deepening program in the near
future, a long-term solution to draft restrictions is to create additional reservoirs within
the watershed. These reservoirs will also ensure the availability of potable water and
hydroelectric resources over the long term.
      Since the effects of an El Niño event are broader and more global in nature, adverse
changes in weather patterns can have a negative effect on food production, agricultural
infrastructure, and the transportation network leading to ports or inland waterways.




Integrated and Intermodal Freight Systems: A
Conceptual Framework

Robinson, Ross
    Victoria University, Melbourne, Australia
    Ross.Robinson@vu.edu.au




                                           27
      Rapidly globalising markets, production and distribution systems operating within
complex and fluid capital markets have triggered exceptional economic and competitive
pressures in national economies. Consequent microeconomic reforms, deregulation and
the corporatisation and privatization of national market places have been no less
significant and have further impacted on nation-wide, as well as international, freight
transport systems so that change is now pervasive, urgent and transforming.
       For buyers of freight services – whether manufacturers, rural and primary producers
or retail giants – the pressing need to control costs in supply chains has spawned
numerous strategies within a broader supply chain management framework that seeks
sophisticated levels of operational as well as corporate integration – and ideally, fully
integrated corporate and intercorporate business processes. For sellers of freight services
– traditional ‗transport‘ providers now best described as third party service providers
(3PSPs) intervening between buyer or shipper and customer – the focus on value delivery
in competitive markets is underlying urgent attempts to expand control over freight
movements and to capture an increased share of value over the entire movement chain. It
is resulting in rapidly restructuring corporate and chain frameworks.
       In Australia there has emerged, in a post-deregulation environment, exceptional
instability in patterns of corporate control in export grain chains as well as in land-based
containerized export and import chains; in issues of governance in major capital city ports
as port authorities question their new role in restructured logistics environments; in the
two major stevedoring companies as they seek new competitive space as a consequence
of the commoditisation of stevedoring operations; in rail authorities, previously operating
as statutory authorities and now operating as corporatised or privatized entities struggling
to shed a price-taking, welfare-encumbered role and meet new competitors as well as the
rigorous demands of the bottom line; and in trucking firms, airport corporations, freight
forwarders and Australian flag shipping as national and international pressures impact on
business success.
      All of these pressures are translating not simply into faster, more efficient linehaul
operations; but much more importantly, into an exceptional need to integrate modal
systems across intermodal networks and in intermodal services. The efficiency spinoffs
are no longer in segmented freight systems; but in fully integrated, value-driven, end-to-
end freight movements between shipper and customer on a sustainable basis – in effect, in
integrated, intermodal freight systems. The old models of freight systems, so obviously
dominated by the reality of segmented, atomistic, cost-additive and linear freight systems
no longer offer adequate insights into public policy formulation, into strategic planning or
into business success for third party service providers.
       This paper argues that if we are to properly understand and to manage and to plan
for this new efficiency in freight movement systems there is need, in Kuhnian terms, for a
more adequate ‗conceptual box‘, or conceptual framework – indeed, for a new paradigm
within which to view freight systems.




                                           28
Integrated Maritime-Coastal and Port Environmental
Developments: New Forms of Cooperation from
International Funding Organizations – the Uruguayan
Case

Sagrera, Carlos
    Port Consultant, Montevideo, Uruguay
    csagrera@adinet.com.uy

      The opening of the IAME Conference (November, 2002) in Panama, coincides
with the successful completion of the first IBRD project in Latin America aimed to the
modernization of the maritime and port environmental management through the
integration of all the concerned State parties in one given country (July, 2002). In this
case, such country was Uruguay, which was selected by the pilot project due to its high
economic and environmental priority in Latin America, allocated to the marine and
coastal-port environmental management.
    In essence, the Marine and Coastal-Port Environmental Management Project
(MCMP) included three major areas:
          Maritime Traffic Management
          Port Environmental Improvement
          Institutional Matters
      The ―Maritime Traffic Management‖ approaches the need to enhance information
systems, including hydrographic, cartographic and maritime signaling issues. It also
encompasses all issues related to contingencies resulting from the spill of oil and harmful
and hazardous substances. Under the title ―Port Environmental Improvement‖, the need
was identified to address both the overall environmental management problem in the
main ports in the country, and discharges, either caused by nature or by human activities.
As far as ―Institutional Matters‖ are concerned, and taking into account the number of
governmental agencies involved, the need was assessed to join efforts for the benefit of a
properly coordinated maritime environmental management. One of the most interesting
approaches consists of identifying the possible environmental damage in each area, as
well as the eventual reduction that should suit the economic value of such damage.




                                           29
       This presentation does not intend to describe the referred Project (MCMP), which is
rather extensive and complex from a technical standpoint, but just to emphasize the
applied methodology and subsequent results. It‘s a first experience so there‘s not
hypothesis yet: it‘s so early. This Paper assigns a priority to economic components, and
to a lesser degree, to institutional and environmental components (GEF), leaving aside on
purpose the technical aspects of the maritime and port components that were an essential
part of it. This allows, eventually, to justify the need and suitability of this type of
integrated and multidisciplinary surveys, while indicating possible methodologies and
obstacles encountered throughout this new process undertaken within the framework of a
strategic assistance agreement between this country and the World Bank itself. The
successful development of this method would enable to validate the efforts of the World
Bank and would make possible its application in other Latin American countries and
developing countries in general.




International Waterway in Crisis: The Case of the
River Danube

Martin, Edgar
    Transport Research Institute, Napier University, United Kingdom
    edgar@danube-research.com

      Since the collapse of the Eastern Bloc, Danube shipping has had to rapidly adapt to
a new economic and political landscape. Civil war, UN sanctions and NATO
bombardment against Yugoslavia in the ensuing decade have further dented an already
seriously maimed industry.
      This paper analyses how international policy has affected the Danube shipping
industry during the dramatic events and changes of the past ten years. The purpose of the
paper is to set out policy options for riparian states, the European Union and other
international bodies with regard to increasing traffic on the River Danube. Strengths and
weaknesses of current policy are detailed and proposals for future policy direction put
forward.
       Reference is made to the privatisation process of Danube shipping companies and
port operators, the attraction of new higher value cargoes to the river and the utilisation of
new river vessel technology to this end. The role of dedicated inland navigation
promotion agencies and conflicts between other organisations involved in this promotion
is also addressed.




                                            30
     The paper stems from a series of semi-structured interviews with key players in
Danube shipping and policy over the past three years, from managers of shipping
companies, port administrations and waterway authorities to riparian state Ministers of
Transport and heads of intergovernmental and non-governmental organisations involved
with Danube navigation. A cautious review of official statistics and other secondary
sources is also incorporated.
      The results present a picture of a shipping industry suffering from conflicting
international policy and provide policy options that may help to turn the situation around.
The revitalisation of the Danube as Central Europe‘s main trade artery should be of prime
importance for the development of the region and its accession into the European Union.




Japanese Choice of a Logistics Hub in Europe: Dutch
Experience and a Suggestion on the Human Resource
Aspect

Shinohara, Masato
    Faculty of Economics, Erasmus University Rotterdam, P.O. Box 1738, NL-3000
    DR, Rotterdam, The Netherlands
    shinohara@few.eur.nl

Roos, Hugo B.
    Faculty of Economics, Erasmus University Rotterdam, P.O. Box 1738, NL-3000
    DR, Rotterdam, The Netherlands
Joop A. Stam
    Faculty of Economics, Erasmus University Rotterdam, P.O. Box 1738, NL-3000
    DR, Rotterdam, The Netherlands
      Since late 1980s, Japanese companies have made a large amount of direct
investment in Europe. Their intension was to be insiders in Europe, rather than to remain
as outsiders, in order to keep competitiveness when the single market starts operating in
the region. Many companies established manufacturing plants and logistics centres to
better serve the European market. Among the member countries of the European Union,
the Netherlands gained a fairly good score as the destination of those investments, for its
small geographical size and population. It is well represented by the fact that Rotterdam
is by far the largest hub port in Europe. So far, in general, the Netherlands seems to have
made a good start in the face of globalisation of logistics and supply chain management.




                                           31
      However, the result of a survey reveals that the Japanese companies in Europe are
struggling with the problems that arise in various points in the supply chains. Those
problems are not limited to those which can easily be disentangled by investing huge
capital in port facilities, implementing sophisticated IT or management systems. The
issue is more social and human oriented. How are those Dutch logistics hubs evaluated
now, after fifteen years of successful attraction of investment from abroad? Will the
Netherlands continue to be a preferred place for logistics hub in Europe? What will be a
key factor for a success as a logistics hub in the future? There has been a lot of
competition among ports. It has been a competition of expansion and technical
innovation. Ports have looked at shipping lines as customers. However, shipping lines are
also subordinate to industries. Thus the competitive advantage of ports is relevant to the
geographical positioning of industries. In other words, the competition of ports should be
looked at in the context of total supply chains.
      This paper first explains the status of the Netherlands as the logistics hub by
analysing the Japanese investment behaviours, focusing on the factors that gave
influences on the choice of a country for setting up their new manufacturing plants and
hubs, and then shows the gap between the initial assumption and the reality. The authors
emphasise the importance of policy focus on human resource management for a logistics
hub to keep its competitive advantage.




Maritime and Overland Transport Costs and
Infrastructure: Do they Influence Exports?

Martínez-Zarzoso, Inmaculada
    Institute of International Economics, University Jaume I, Spain
    martinei@eco.uji.es

García Menéndez, Leandro
    Institute of International Economics. University of Valencia. Spain
    leandro.garcia@uv.es

Suárez Burguet, Celestino
    Institute of International Economics, University Jaume I, Spain
    celestino.suarez@uv.es




                                          32
       This paper aims to investigate the determinants of maritime and overland transport
costs and the role they play in deterring trade across countries. We estimate a transport
cost function using data on maritime and overland transport of the ceramics sector (tiles)
obtained from interviews held with Spanish logistics operators. We also study the
relationship between transport costs and trade and estimate an import demand model for
ceramic products. Additionally, we present a discussion on the sensitivity of trade flows
and transportation costs to the existence of backhauling, special conditions for transport
and number of reloads. The study of modal transport (overland versus maritime) and its
differential characteristics are of relevant interest for maritime economists and should be
taken into account in economic policy making. Furthermore, the proven impact of
infrastructure on transport costs and trade points towards the importance of investing in
new port infrastructures as a way of fostering trade and income.
      Our results from the transport cost estimation show that higher distance and poor
partner infrastructure lead to a notable increase in transport costs. Inclusion of
infrastructure measures improves the fit of the regression, thus corroborating the
importance of infrastructure in determining transport costs. The distance coefficient
remains significant and with similar magnitude when we add infrastructure variables. Our
results from the trade equation estimation show that importer income, as expected, has a
positive influence in bilateral trade flows. Higher transport costs significantly deter trade,
and distance does not appear to be a good proxy for transport costs in the ceramics sector.




Maritime Clusters – The Panamanian Case

Maucci, Gerardo
   Autoridad del Canal de Panamá, Panama
   gmaucci@pan canal.com

Lugo, Eduardo E.
    Autoridad del Canal de Panamá, Panama
    elugo@pancanal.com

       The Republic of Panama is well known within the maritime community mainly as a
result of the Panama Canal, the Panamanian Flag Registry, and the recent flourishing and
improvements to state-of-the-art container terminals. The Panama Canal is one of the
world‘s most important waterways, and an essential path for sea borne trade to many
nations. Each year, approximately 14 thousand vessels transit the canal carrying some
200 million metric tons of cargo. The Panamanian Flag Registry is the largest in the
world; it encompasses 10,142 vessels and about 21 percent of the total share, in dead
weight tonnage (dwt), of the merchant fleet. The Panamanian container terminals on both
sides of the isthmus (three in the Atlantic side and one in the Pacific side) are managed by
three of the world‘s top port terminal operators, and together they handle around 1.5
million TEU‘s, mainly for regional transshipment.




                                            33
       Although only three important maritime sectors have been mentioned, Panama still
has a lot more to offer to the world maritime community. This paper will analyze the
importance of the maritime clusters in Panama, and identify those areas where we can
develop competitive advantage to consolidate our nation as a world-class service provider
to the global maritime community. The paper will analyze the main clusters downstream,
upstream, and laterally, and will also assess their relationships across industries and
institutions that are important to enhance our future competitive edge.




Maritime Professional Safety: Prevention and
Legislation on Personal Injuries on Board Ships

Li, Kevin X.
     Department of Shipping and Transport Logistics Hong Kong Polytechnic
     University, Hung Hom Kowloon, Hong Kong
     k.x.li@polyu.edu.hk

Shiping Dalian, Zhang
    Maritime University, Linghai Road, Dalian 116026 China
    intexc@dlmu.edu.cn

      Data of fatality and injury to British and to worldwide seafarers have been collected
from various sources. The paper finds that British seafarers are subject to 200 mortality
annually, of which 43% are work-related, 49% from diseases and 8% from suicide and
homicide, giving a mean annual mortality rate of 2.81‰. To worldwide seafarer, about
6,471 died at work annually, giving an annual mortality rate of 7.6‰, among which 2,816
cases are due to accidents, giving an accidental rate of 3.30‰ per annual. It concludes
that seafaring is still one of the most dangerous occupations. ―Slips and falls‖ is the main
cause to seafarer injury. It is concluded there is no lack of international regulations on
preventing accidents on board, but lack of proper implementation of existing conventions
worldwide.




Maritime Transport Liberalization and the Challenges
to Further its Implementation in Chile

Acosta, María José
    International Trade and Integration Division, UN-ECLAC, Santiago de Chile
    macosta@eclac.cl




                                           34
Mattos, José Carlos S.
    International Trade and Integration Division, UN-ECLAC, Santiago de Chile
    jmattos@eclac.cl

       The present paper will review the modifications implemented in the Chilean
maritime legislation and the difficulties that remain for a more efficient management of
the sector. Taking into consideration the transformations that happened on a global scale,
it discusses some aspects of the maritime transport sector.
      The paper has been split in three sections; the first introduces the main issues in the
current discussion about liberalization of the maritime transport sector. The second part
describes the Chilean legislation of the sector, in order to illustrate the changes that have
happened, as well as the remaining barriers in the Chilean regulation, with a view to
increase flexibility in the future. Finally, in the third section the paper suggests areas of
policy action that may assist the construction of a common regional maritime integration
regime.




Market Interactions in Returns and Volatilities
Between Spot and Forward Shipping Markets

Kavussanos, Manolis G.
    Department of Accounting and Finance, Athens University of Economics and
    Business, 76 Patission St, 10434, Athens, Greece
    mkavus@aueb.gr

Visvikis, Ilias D.
    Faculty of Finance, City University Business School, Frobisher Crescent, Barbican
    Centre, London EC2Y 8HB, UK
    i.visvikis@city.ac.uk

      The lead-lag relationship in returns and volatilities between spot and futures
markets has been investigated extensively in the financial economics literature. No such
studies have appeared on forward markets, primarily due to lack of easy access to
empirical data. This paper uses a unique database in over-the-counter Forward Freight
Agreements (FFA) to investigate the issue. The underlying commodity is non-storable,
being that of a shipping service, with the additional feature of transactions costs being
higher in the spot market in comparison to the forward market. These features have
interesting implications for the markets. At the practical level, the better understanding of
the mean and variance dynamics can improve risk management and budget planning
decisions.




                                            35
Measuring Lean Ports Performance

Marlow, Peter B.
    Logistics and Operations Management Section, Transport and Shipping Research
    Group, Cardiff Business School, Aberconway Building, Cardiff University, Colum
    Drive, Cardiff CF10 3EU, Wales, United Kingdom
    Marlow@cardiff.ac.uk

Paixao, Ana Cristina
    Transport and Shipping Research Group, Logistics and Operations Management
    Section, Cardiff Business School, Aberconway Building, Cardiff University,
    Colum Drive, Cardiff CF10 3EU, Wales, United Kingdom
    PaixaoAC@cardiff.ac.uk

      Ports have traditionally made use of quantitative measures to assess their
performance. While contributing towards ranking a port in the worldwide context or even
classifying ports according to their size, these provide little information about the quality
of the services being offered. The trends in contemporary logistics and the emerging of
the new economy mean that successful ports can no longer sustain this approach. The
development of agile ports or ports of the fourth generation requires that a new approach
to measuring port performance is developed.
      Since the development of agile ports requires the implementation of a two-stage
integration process, the internal and the external one, it is therefore proposed that a two-
tier measurement of port performance indicators is also developed. These new port
measurement indicators, besides considering quantitative aspects, will focus mainly on
qualitative issues and will bring increasing visibility within the port and along the
transport chain which will lead to a better integration of these logistics elements within
the supply chain. Qualitative performance indicators are at the heart of lean ports and
consequently of port networking. Additionally, they support the implementation of a total
quality port management system thereby encouraging continuous improvements. The
objective of this paper is to suggest a set of new port performance indicators that measure
lean ports performance and sustain the subsequent development of agile ports.




Measuring the Economic and Transportation Impacts
of Maritime-Related Trade

Boske, Leigh
    University of Texas, USA
    Leigh.boske@mail.utexas.edu




                                            36
Cuttino, John
    University of Texas, USA
    jcuttino@mail.utexas.edu

       International trade brings widespread economic impacts to local, regional, and
national economies. Identifying what economic impacts are and how they take place
helps guide policymakers in making decisions that can promote welfare by enhancing or
facilitating the transportation of goods and services along a trade corridor. However, the
state of the art in economic and transportation impact measurement has been unable to
capture the impacts of international trade.
       It is the purpose of this paper to analyze the cumulative economic and
transportation impact of international trade between the United States and Latin America
by adopting a case study methodology that delineates trade across a supply chain. To
accomplish this task, it is necessary to apply methodological aspects from three different
literatures related to transportation and trade, those of economic impact studies
(especially port impact studies), supply chain logistics, and transportation corridors.
Using our proposed methodology, we provide estimates of cumulative economic and
transportation impacts, relying on the direct expenditures of individual shipments of
regionally significant commodities from their origins to their destinations.




Mediterranean Versus Northern Range Ports. Why do
Italian containers Still Prefer Routing Via the
Northern Range Ports? Advice for a New Policy

Cazzaniga Francesetti, Dionisia
    Department of Computer Science, University of Pisa, Italy
    dcf@di.unipi.it

Foschi, Alga D.
    Department of Economics, University of Pisa, Italy
    alga.foschi@ec.unipi.it

      The Mediterranean ports, and Italian ports in particular, both the hub and
commercial ports, have experienced pronounced growth favored by: 1) world growth in
volume of containers; 2) greater inflow/outflow of containers pertaining to the area
extending from Bavaria to Hungary; 3) time savings achieved by mother ships that dock
in the Mediterranean, in particular in the hub port of Gioia Tauro, as compared to travel
times to reach the Northern Range ports; 4) privatization of Italian ports and use of
intermodal rail-based transportation, although rail travel is still inadequate to handle
container growth in Europe and the Mediterranean, a growth which also involves the
North African countries.




                                          37
      Given this framework, it is surprising that a non marginal share of containers in
northern Italy does not sail from/to Italian ports, but is routed via the Northern European
ports instead, especially for traffic from/to Asia. We will therefore examine:
      a) transoceanic traffic pertaining to European countries and countries bordering on
the Mediterranean, highlighting the growth of Italian container traffic;
      b) European intermodal transport via port rail links;
      c) the number of TEU from/to Italy that uses the Northern European ports.
       The volumes of TEU confirm that this abnormality is due to the superiority of the
Northern Range ports as regards time, costs and rail-based intermodal services in
comparison to the Italian situation, despite the modernization that has been undertaken in
Italy.
      We wish to emphasize that this is the first published study reporting data on the
quantity of Italian containers handled by the Northern Range ports.




Monitoring for Port Antitrust Behavior: An
Operational Model and Future Challenges

Kent, Paul
    Nathan Associates Inc., 2101 Wilson Boulevard, Suite 1200, Arlington, Virginia
    22201; USA
    PKent@nathaninc.com

      This article shows that antitrust behavior is likely to become a more prominent
issue in the post-privatization environment. Post-privatization environments are typically
characterized as having highly concentrated markets. Even so, there are operational
remedies for inducing competition, even in light of scale economy considerations.
Governments can avoid the ―messiness‖ of strict tariff regulation if they had a tool that
assessed the competitiveness of the terminal operators. In this way, governments can
allow port operators to compete, while at the same time monitor their behavior based on
certain criteria that together are indicative of the extent of competitiveness that exists in
the port sector.




                                            38
      Governments should not assume that monopolistic practices exist by virtue of fewer
players in the markets; instead, they can allow market forces to work by monitoring the
behavior of terminal operators rather than run the risk of distorting the markets by the
inefficient process of tariff setting. A model for determining if firms may be engaged in
anticompetitive behavior is presented here as a tool to assist the competition regulator.
Such models do not exist in any port sector today, with regulators instead relying on a
number of ―tests‖ that address market shares, but not market behavior. A test application
of the model is demonstrated that can facilitate the regulator‘s need to monitor for
anticompetitive behavior. The article then addresses the future antitrust challenges given
the possibility of vertical integration of global terminal operators and carriers.




Optimal Investment Management in a Port Project

Casasus, Trinidad
    Avda. de los Naranjos s/n. 46022 Valencia, Facultad de Economía, Universitat de
    València, España
    Trinidad.casasus@uv.es

Juan, C.
    Avda. de los Naranjos s/n. 46022 Valencia, Facultad de Economía, Universitat de
    València, España
Olmos, F.
   Avda. de los Naranjos s/n. 46022 Valencia, Facultad de Economía, Universitat de
   València, España
Perez, J.C.
      This paper proposes a new method for valuing a major public investment project,
the construction of new seaport quays. The method allows also the study and
determination of the optimal time to begin the investment. The methodology is being
applied to the particular case of Sagunto Port (Valencia).
        Such a project needs long-term investment, and its valuation must consider many
factors. The valuation of a port project requires tools of analysis able to collect and
systematize the future uncertainty involved in the project, which is present in the
evolution of the problem variables. Valuation is difficult and must take into account the
large number of state variables (traffic variables), the cash flows function characteristics,
and the implicit real options in the investment decisions.
      To solve the problem of valuation and choice of the optimal time to invest we
propose a new method based on an algorithm, which adds stochastic processes simulation
and discrete scenario space generation. This method takes into account inherent
uncertainty on the future and the resulting options, and offers results more precise.




                                            39
      The algorithm not only allows us to approach the given problem but also it can be
applied to another problems with similar characteristics.




Port Choice Determinants in a Competitive
Environment

Tongzon, Jose
    Department of Economics, National University of Singapore, Kent Ridge Crescent,
    Singapore 119260
    ecsjt@nus.edu.sg

       In a competitive port environment port operators and policy makers need to
understand the key factors influencing port users‘ port choice and their decision-making
process to stay ahead. In this light, this paper aims to identify and assess the key
determinants of port choice and performance. Only few studies have been carried out on
this issue, but focusing on port users based in North America and Europe. There are also
numerous studies on freight transport choice by shippers but centering on modal choice
and carrier selection. Based on a survey of selected freight forwarders located in one of
the centers of port competition in Asia, supplemented by an econometric method, this
paper investigates the port choice and performance factors. The findings point to port
efficiency as the most important factor in port choice and performance and a certain
mode of decision-making, with significant implications for ports and policy makers in
general.




Port Construction Subsidies in Japan and the Way
they Discourage Private Sector Investment in Port
Development

Terada, Hideko
    Faculty Of International Studies, Hiroshima City University, 3-4-1, Ozuka-Higashi,
    Asa-Minami-Ku, Hiroshima City, Hiroshima, 731-     3194, Japan
    narita@intl.hiroshima -cu.ac.




                                          40
      This paper will discuss the reason why the common user container port option is
very attractive to the local governments in Japan. Since the government‘s port subsidy is
major incentive for port construction, private investments tend to be quite limited by the
government‘s rules and regulations. From the viewpoint of local governments, who
control the drawing up of port plans of Important Ports, port construction is financially
very attractive. Nevertheless, local governments are under the strict control of the central
government, which uses the subsidy program as a way of balancing out public investment
across the country.
      Following an overview of the port management system in Japan, this paper
discusses the options for port construction opened up for the local governments including
the Japanese-style Private Finance Initiative (PFI) started in 2000. This paper is
concerned with the institutional aspects of the existing port subsidy program, which does
not fit in with the rapid changes in demand for container terminal services and private
sector‘s profit motive. Two findings will be pointed out;
      1) If a local government with a Important Port is located in Tokyo Bay, Ise Bay or
Osaka Bay, there are two ways of constructing container terminals: the Port Development
System or a Japanese-style PFI. A comparative study of these schemes shows that the
conventional idea of ―public interest‖ by the public sector restricts private sector
investment in container terminals.
      2) If a local government with a Important Port is NOT located in Tokyo Bay, Ise
Bay or Osaka Bay, there are two ways of constructing container terminals: the public port
system or the Japanese-style PFI. One argues that a local government will definitely
prefer Japanese-style PFI to the public port system. This is due to the central
government‘s subsidy for superstructure. The case study shows that self-financing
rationale will not be a condition for justifying public projects.




Port Efficiency and International Trade: Port
Efficiency as a Determinant of Maritime Transport
Cost

Sanchez, Ricardo
    Austral University, Argentina
    Ricardo.sanchez@lycos.com

Hoffmann, Jan
    United Nations ECLAC, Chile
    jhoffmann@eclac.cl

Micco, Alejandro
    Interamerican Development Bank, USA
    alejandromi@iadb.org



                                           41
Pizzolitto, Georgina
    Austral University, Argentina
    gpizzolitto@uaufce.edu.ar

Sgut, Martin
    Austral University, Argentina
    Martin.sgut@attglobal.net

Wilmsmeier, Gordon
    United Nations ECLAC, Chile
    gwilmsmeier@e clac.cl

       This paper examines the determinants of waterborne transport cost, with particular
emphasis on the efficiency at port level. Its main contribution is (1) to generate
statistically quantifiable measures of port efficiency from an extensive survey of Latin
American common user ports, and (2) to estimate a model of waterborne transport cost,
including the previously generated port efficiency measures as an explanatory variables.
In order to incorporate different port efficiency measures from the survey, we use
Principal Component Analysis (PCA).
       The empirical work is built on a maritime transport cost model, applying
international trade information of exports through 22 port terminals in 9 Latin American
countries to the continental United States, during 1999. Our estimations show that the
specified variables in the model explain – in a great proportion – the variance in
waterborne transport cost. With regard to port efficiency, the result is especially
important for one of the port efficiency measures obtained through PCA, with estimated
elasticity equivalent to that of distance. Other explanatory variables which show to be
statistically significant and with the expected sign are the monthly liner service
availability, distance and the goods‘ value per ton. The containerization rate and the
existence of liner companies agreements, show not to be significant.
       The conclusions are relevant for policy makers as they show and quantify that port
efficiency is a relevant determinant of a country‘s competitiveness. Unlike most other
relevant variables, such as distance, port efficiency can be influenced by public policies,
and big differences still exist between Latin American ports.
      The paper is organized as follows: Chapter 1 contains a general introduction that
looks at the relation between transport costs and international trade. In the Chapter 2,
principal components are computed from a Latin American Port survey. Chapter 3
describes the model and the estimation results. The Annex includes the Port Activity
Survey designed and carried out as part of the present research and some data definitions.




                                           42
Port Infrastructure: An Access Model for the Essential
Facility

Flor, Lincoln
     OSITRAN, Lima, Peru
     lflor@ositran.gob.pe

Defilippi, Enzo
     OSITRAN, Lima, Peru
     edefilippi@ositran.gob.pe

      This paper analyzes the main consequences on the seaport efficiency under the
access regimen introduced by the regulator body (OSITRAN) of Perú for the public
transportation infrastructure.
      The access model has been in force since January 2002. Its objective is to make
competition viable for services, which use ―essential transport infrastructure‖ as an input.
It is based in two theoretical contributions: the ―Coase theorem and the Demsetz
approach‖, minimizing the government intervention risk.
      In the port case, the first consequences of applying it suggests an improvement in
the competitive and institutional environment for the supply of services that use port
infrastructure. The port operators and the providers of port services have incentives to
negotiate conditions of access when competition permits, or to compete for an exclusivity
right when this is desirable. If the parties do not reach agreement within a reasonable
time, the regulator can enact an access mandate that may punish any of the parties,
creating incentives for them to reach a Nash Equilibrium.
      The model seems to be generating productive and allocative efficiencies in the port
services, thus contributing to a potential reduction in Peru‘s maritime transport costs.




Port Privatisation: Commerce and Recreation

Ircha, Michael C.
    The Transportation Group, University of New Brunswick, Fredericton, NB, E3B
    5A3, Canada
    ircha@unb.ca




                                           43
       The spatial and functional separation of commercial ports and urban activities has
become a controversial issue in many of the world‘s major ports. Hoyle suggested ports
typically evolve through a five stage cycle: (i) primitive cityport, (ii) expanding cityport,
(iii) modern industrial cityport, (iv) retreat of the city from the waterfront, and (v)
redevelopment of the waterfront. Around the world, many commercial ports are either in
or moving towards the fifth stage in Hoyle‘s port evolution model. As such, they face
many pressures to redevelop their central city waterfront lands. As port operations move
downstream in search for deeper water and landside storage, under-used or abandoned
central city port areas are being redeveloped for water-related urban activities, including
retail, residential and recreational pursuits. Increasing public demand for access to
waterfront amenities coupled with heightened environmental concerns create new
challenges in shaping tomorrow‘s waterfronts.




Ports and Community Effects: Analysis of the Impact
of Marketing Public Relations

Cerit, A. Guldem
    Dokuz Eylul University School of Maritime Business and Management, Tinaztepe
    Campus 35160 Izmir, Turkey
    gcerit@turk.net

      Port development effects have a positive impact on trade and industry and regional
development is influenced accordingly. The port is developed using the public goods and
resources of the local community and in turn the port generates wider economic and
social benefits to the community by creating jobs and providing logistics infrastructure
for the region's economic activities. Therefore, the port as a whole needs to be managed
in the interest of the local community. In order to fulfil and share the outcomes of these
aims, marketing public relations appear as an effective tool.
      This paper analyzes the impact of marketing public relations variables on the local
community within the case of a port. The objective of the study was to determine how the
people living in a port city and belonging to different demographic groupings realize the
importance of the port in the development of the region, their degree of awareness of the
port operations and the extent of the marketing public relations functions covered by the
port.
       The target area for the study was selected as the city of Izmir, the oldest port town
of Anatolia the history of which goes back to the 16th century, a city where the regional
development around the port has reached a remarkable potential. The sample was
composed of the citizens of the port city who are involved in the outcomes of the port
activities. A questionnaire was developed to receive the approaches of the respondents.
The questionnaire consists of the statements that were obtained through focus group
discussions. The statements were handled with different statistical techniques.




                                            44
      Ports and the economies generated around the ports make use of the public goods
and resources of the local community and in turn they produce economic and social
benefits to the community and in this manner the port needs to build stronger relations
with the local community. The study has proved that marketing public relations and its
main functions such as raising awareness, informing, educating, communicating etc. do
not only target port users but also aim to reach all parties of interest and the total
community in general. In this manner the economic public services created by the port
may establish peace with the social and cultural public services.




Ports Restructuring, Policy and Regulation: The South
African Case

van Niekerk, Henriëtte C.
    Unit for Maritime Studies, Department of Logistics, University of Stellenbosch,
    Private Bag X1, 7602 MATIELAND, South Africa
    hcvn@akad.sun.ac.za

      The change in the traditional role of ports to nodes integrated into global logistics
supply chains has necessitated restructuring in many ports worldwide. In South Africa, it
has also been necessary to adapt to those changes and separate port operations from port
authority functions in accordance with the so-called landlord management model. The
process was complicated by the historic development of Portnet, the comprehensive
owner, operator and regulator of South Africa‘s ports, which is a division of Transnet (a
transport conglomerate), resulting in some impediments to the commercialisation of the
South African ports within the national port system in order to comply with the requisite
changes.
      One of the complexities is that the existing legislation, which governs ownership
and operation of the ports, does not make provision for all the public obligations of a
public port authority, while Transnet itself is a public company with 100% shareholding
by the government. With the commercialisation of port operations in which there will be
private participation, the question arises whether anti-competitive behaviour could ensue
and whether an independent regulator is necessary. Alternatively, can the government
through a sound ports policy and reliance on existing legislation appertaining to
competition regulate such behaviour?
      This paper deals with the complexities of restructuring the operations of the South
African ports system, as well as, the manner of ensuring competition and regulation, and
concludes with recommendations on regulation.




                                           45
Principal Agent Problems in Shipping: An
Investigation into the Formation of Charter Contracts

Bergantino, Angela S.
    University of Bari, Department of Economics, Via Camillo Rosalba, 53, 70100
    Bari, Italy
    abergan@tin.it

Veenstra, Albert W.
    Erasmus University Rotterdam, PO Box 1738, 3000 DR Rotterdam, The
    Netherlands
    veenstra@few.eur.nl

      Contracting in the shipping industry is as common as in any industry. Economic
theory has several programmes that deal with contracting. Transaction cost theory deals
with the economic effects of the process of contracting, while price theory deals with the
determination of the price in different market environments. Principle-agent theory is
another area that seems particularly interesting for the maritime economist. It allows the
analysis of situations where there is asymmetry of information among contracting
partners. In shipping, where a charterer (referred to as the principal) allows a shipowners
(the agent) to carry away her cargo with a supposedly seaworthy ship, the asymmetry of
information is relevant: will the shipowner display due diligence, is the ship really
seaworthy, is the crew competent, and so on.
      The paper starts with an exposition of the voyage charter contracting process. This
process is fitted to one of various principal agent models, the adverse selection model.
The theory predicts that in a standard situation, adverse selection models lead to less and
low quality contracting. Several solutions to problems resulting from adverse selection
are discussed. The paper discusses in some detail the possibility for the charterer to
screen the shipowner‘s quality by a vetting procedure.
       The paper concludes that the analyse of voyage charter contracting relationships
through principal agent models leads to new and interesting insights and opens up several
avenues for further research. One main conclusion is that the voyage charter party, by
itself, does not do much for quality improvement in shipping.




                                           46
Private Participation System on Port Development
Projects

Lim, Chin Soo
    Shipping, Logistics and Port Research Center, Korea Maritime Institute, Seoul,
    Korea
    cslim@kmi.re.kr
       Korea is located at the center of the Northeast Asia, the fastest growing economy in
the world. According to the National Master Plan for Korean Port Development, total
cargo volume and container throughput in 2011 are expected to be 1.5 billion tons and 30
million TEUs respectively, while they were 886 million tons and 10 million TEUs in
2001. To meet the cargo demand in 2011, US$ 29 billion are required to develop facilities
(MOMAF 2001-1). As government budget was insufficient to develop all required
facilities, Korean government took a bold initiative in 1998 to introduce ―the Private
Participation System‖ to the infrastructure market as a leading measure of the public
sector reform thereby ensuring the more efficient and transparent infrastructure provision
system using the private sector‘s creativity and efficiency. This new initiative also aimed
to mobilize foreign investment to the infrastructure sector as much as possible to
overcome foreign exchange crisis.
      In this paper, scheme and procedure of the Private Participation System of Korea
will be introduced. Difficulties and problems in implementing PPI system are discussed
and new scheme conducting PPI project is recommended.




Public Goods in Seaports: A Necessity or Market
Distortion?

Baird, Alfred
    TRI Maritime Research Group, Napier University, Edinburgh, Scotland, UK
    a.baird@napier.ac.uk

       Seaports are recognised for their vital importance in facilitating trade growth and
associated economic development. These attributes give rise to the notion that seaports
are public goods. Public goods are regarded as goods or services which a market acting in
isolation might have difficulty in providing, or at least providing in sufficient quantity
and/or at a competitive price. An important element of a public good relates to its non-
rival consumption, the implication being that it is impossible to exclude anyone, whether
they pay or not.
     Key questions this paper seeks to address are:
     What constitutes public goods in seaports?



                                           47
      To what extent is it necessary for the public sector to provide these goods?
      Can such intervention lead to market distortion in respect of competing ports?
      Taking each question in turn, the paper begins by describing the more common
examples of public goods in seaports. This is followed by analysis of public and private
sector investment at a number of major north European seaports. Finally, the paper
considers the potential for market distortion due to such public sector investment in so-
called public goods, and proposes that a single policy for major ports, particularly those
ports serving a common regional hinterland, is necessary in order to deliver a more
sustainable transport system.




Setting Foundations for Coastal Shipping Policy: The
Case of Greece

Lekakou, Maria
    Department of Shipping, Trade and Transport, University of the Aegean,
    Supervision Committee of the DSTMS Project, Greece
    mlek@stt.aegean.gr

Papandreou, Nicholas
    Advisor to the Minister of the Aegean, Supervision Committee of the DSTMS
    Project, Greece
Stergiopoulos, George
    Consultant in shipping, shipbuilding as well as various regulatory issues,
    Supervision Committee of the DSTMS Project, Greece


       Maritime transport policy is undergoing major changes in Greece, especially in the
coastal sector. There is ―concerted action‖ undertaken by the Greek Government to
develop a sustainable maritime transport network for the insular regions. This action is
based on a new systems approach, which takes into account the forthcoming
liberalization of the coastal services. Previous practice viewed the actual ship as the main
point of regulation and control. A crucial element of this new action plan is the project
titled ―The Development of the Domestic Sea Transport System‖ (DSTMS). The main
aim of this project is the democratic modernization of the Greek coastal system and the
achievement of national cohesion, quality, and renewal of the coastal fleet, employment,
and compliance with EU policies and rationalization of the Administration.




                                           48
       The realization of these objectives is related to the formation and evaluation of
proposals, measures and policies, aiming at: (i) The improvement of the service currently
offered, (ii) the improvement of the management of the Coastal transport system and
finally, (iii) to ensure a smooth transition towards free competition, while ensuring that
the basic demands of public service are met. It is of great importance to underline the
support of the Development of Domestic Sea Transport System‖ (DSTMS) in
governmental strategic planning. In November 2002, when the coastal shipping is fully
liberalized, the state will have to supervise and dynamically regulate its operation. The
future maritime transport system, based on the principles and knowledge gained through
the DSTMS project, are intended to meet the expressed needs of the Greek people into
the 21st century.




Six Sigma Implementation for Ship Maintenance and
Safety Management

Inozu, Bahadir
    School of Naval Architecture and Marine Engineering, Reliability, Operation and
    Maintenance Division, Gulf Coast Region Maritime Technology Center, 911
    Engineering Building, University of New Orleans, New Orleans, USA
    BInozu@uno.edu

Radovic, Ivan
    School of Naval Architecture and Marine Engineering, Reliability, Operation and
    Maintenance Division, Gulf Coast Region Maritime Technology Center, 911
    Engineering Building, University of New Orleans, New Orleans, USA
      Ship maintenance usually entails very complex dynamic processes that ship
operators face continuously to ensure ship operational safety and comply with regulatory
statues. Extensive research indicated that these processes are quite inefficient, thus
creating a safety risk in ship operations. In this paper we will discuss utilization of Six
Sigma management strategies in ship maintenance and safety, in addition to its
applicability and benefits.
      Six Sigma management strategies have a proven record in many industries. Savings
through conducting Six Sigma projects have a direct impact on company profits
measured through acquisition and analysis of hard data.
      We will also present the results of three Six Sigma pilot studies conducted as a part
of the Continuous Improvement of Drydocking Management project. We will introduce a
Six Sigma roadmap that a ship operator can use on ship maintenance projects and discuss
unplanned work causes and their implications on ship safety. We will further discuss the
significance of machinery performance data collection and sigma level equipment
availability calculations.




                                           49
Stakeholder Relations Management in ports: Dealing
with the Interplay of Forces among Stakeholders in a
Changing Competitive Environment

Notteboom, Theo E.
    ITMMA – University of Antwerp, Belgium
    theo.notteboom@ua.ac.be

Winkelmans, Willy
   ITMMA – University of Antwerp and Chairman of the Flemish Ports Commission,
   Belgium
   willy.winkelmans@ua.ac.be

      A whole series of changes in the field of world economics such as the globalisation
of production and consumption and the structural changes in inter-port relations, port-
hinterland relationships and logistics, have strengthened the role of ports as nodes in the
global transport system. These tendencies and the expansion of the role of the private
sector in port activities have forced ports to become more market-oriented and to cope
with a lot of risks and uncertainties. At the same time, one can observe a growing
awareness for external effects of port activity and the related risks and harms for
community groups. As a result, port authorities have to cope and to interact with a large
number of internal and external groups, each with their own interests and objectives.
      This paper deals with the interplay of forces among different stakeholders directly
and indirectly involved in port activity and port development. The stakeholders approach
is applied to the port sector, in particular to landlord ports. Furthermore, it demonstrates
how different stakeholders are repositioning themselves in the interplay of forces and
how landlord port authorities can cope with the new port environment using Stakeholder
Relations Management (SRM).




Strategic Alliances in Liner Shipping: An An alysis of
“Operational Synergies”

Cariou, Pierre
    Laboratoire d‘Economie de Nantes – CORRAIL, University of Nantes, Faculté des
    Sciences Economiques et de Gestion, Chemin de la Censive du Tertre, France
    pierre.cariou@sc -eco.univ-nantes.fr




                                           50
      If market structure in liner shipping is a subject that enjoyed the highest level of
scholarly attention compared to any other area of research in maritime economics, the
analysis of strategic alliances started to be a key issue about five years ago. Strategic
alliances among liner shipping companies started in the mid-1994. It implies that
members of an alliance are not involved in price-setting (as this is done within the
conferences they belong to) but in the rationalisation of capacity through such schemes as
vessel, terminal and equipment sharing, joint-scheduling, slot-chartering, etc.
      One main argument for strategic alliances is the ability to undertake ―operational
synergies‖ for shipping lines. The aim of this paper is to discuss this concept considering
that operational synergies can be analysed so as to limit the constraint on the available
number and size of vessels for each individual shipping line. Alliances are thus a way to
increase the set of possible allocation of vessels for ship-owners (section 1). However,
they heavily rely on the responsiveness of ports (vertical dimension, section 2).
       The originality of the paper is to present an empirical estimation of horizontal effect
using an allocation model for 517 vessels operated by 13 shipping lines involved in
strategic alliances in 1997. The main finding is to explain how the composition of
strategic alliances is not neutral on the overall effect of alliances and to show that limits
still exist considering potential losses in port.




Strategic Planning Using Scenarios

Byl, Raymond
     Trainmar, Guadeloupe
     bylmail@aol.com

      Strategic planning has been largely treated in the management literature. However,
very little has been written on the fruitful marriage of prospective and strategic planning.
However, this marriage was bound to happen if the definition of planning put forward by
Ackoff more than 30 years ago is accepted:
      ―to conceive a desired future as well as the practical way to achieve it‖.
      Prospective is about to identify the possible futures and strategy is about to select
the desired ones and make them happen. Although it may seem hard to believe, the
uncertainty of the future can be appraised through a usually very limited number of
scenarios within the field of probables. Experience shows that a third or less of the total
possible scenarios represents 80% of the field of probables.




                                            51
      The difficulty is to identify the probable scenarios of the future. Then designing a
strategy is not the most difficult part of the job.This paper is about how to identify the
likely futures and make the preferred ones happen. Most studies in port and maritime
depend heavily on the traffic forecast, which almost always consists of projecting the past
towards the future. Some adjustments are made so as to account for specific traffic on
which more accurate information is available. Least square regression is certainly today
the most common planning tool. Other most sophisticated techniques such as smoothing
are also available.
      None of them changes the problem: the past is not going to repeat. Most planners
are today in distress because of the lack of a sound and defendable method to foresee the
future. There is one: the scenario planning. It is just that the method is still not very
popular and the necessary toolbox to implement it not always available. A case study on a
Latin American port shows how the method can be implemented.




Sustainability and National Policy in UK Port
Development

Gilman, Sidney
    Oakdene, Utkinton Road, Tarporley Cheshire, CW6 0HS, UK
    gilman@dircon.co.uk

      Given the private sector character of the UK port system it might well be thought
that, so far as port development is concerned, the market ruled. There are of course
permissions to be obtained, including planning consent under the Town and Country
Planning Acts; but this process has not so far been thought to interfere too much with
market function. Ports are already well used to the process of obtaining approval, to
extensive negotiations with objectors and environmental interests, and to mitigating the
effects of development when defining projects and seeking approval.
      However, as ports policy is being brought into line with transport policy generally,
and in particular with government policy for sustainability and integration between
modes, ports are being faced with a changing regulatory framework. The search for
sustainable transport is leading government towards a broader based approach to the
approval of development applications in which market need and commercial viability are
simply two of a number of considerations which ports must take into account in
designing projects which also meet environmental concerns.




                                           52
       There has been a long standing requirement for developers of major projects to
carry out Environmental Impact Assessments. In addition government policy is set out in
a number of publications, applying sustainability and the associated ―New Approach to
Transport Assessment‖ (NATA) to the ports sector. Currently government is carrying out
a consultation process prior to codifying a set of approved project appraisal procedures
for the ports sector. In a separate and broader initiative it is also considering a radical
reform of the planning system which could, in certain sectors, lead to the establishment of
national priorities for infrastructure combined with a simplification of the Public Inquiry
process. This is also the subject of extensive consultation. Meanwhile, environmental
bodies, and particularly English Nature and the Royal Society for the Protection of Birds,
are deeply concerned with construction in the coastal environment, and are also
advocating the development of a strategic framework for port development which takes
full account of environmental concerns.
      The aim of this paper is to explore the emerging theoretical and practical issues
arising within the development approval process and to review the way in which the
process itself is evolving. These issues are of most concern in the development of major
projects for cargoes which have broad hinterlands, and where there are competing
locations for new facilities. A classic example of this would be the deep sea container
sector where there is a demand for new capacity and a choice of widely spaced locations
within the UK, and some comment will be made on this sector.




The Applicability of Data Envelopment Analysis to
Efficiency Measurement of Container Ports

Wang, Teng-Fei
   Department of Shipping and Transport Logistics, The Hong Kong Polytechnic
   University, Hung Hom Kowloon, Hong Kong
   stlrsch2@inet.polyu.edu.hk

Song, Dong-Wook
    Department of Shipping and Transport Logistics, The Hong Kong Polytechnic
    University, Hung Hom Kowloon, Hong Kong
    stldsong@polyu.edu.hk

Cullinane, Kevin
     Department of Shipping and Transport Logistics, The Hong Kong Polytechnic
     University, Hung Hom Kowloon, Hong Kong
     stlkcull@polyu.edu.hk




                                           53
       Production economics forms a very important part of an enormous range of
economic theory. Port production is no exception. This paper provides a critical review of
approaches to performance measurement and provides an examination of the applicability
of Data Envelopment Analysis (DEA) to container port efficiency measurement. Two
similar but different concepts - efficiency and productivity -- as well as their application
to the port industry, are studied within this paper. The conclusion drawn from the paper is
that, subject to some quite significant caveats, DEA is a potentially powerful approach to
the evaluation of overall port performance and comparing the efficiency of different ports
with the same production function.




The Challenge of Container Transshipment in the
Caribbean

Frankel, Ernst G.
    MIT, USA
    efrankel@mit.edu

      Increased use of mega containerships in transocean trades is forcing the
development and use of large transshipment hubs serving as container distribution and
collection centers for large trading areas. The economies of large-scale transshipment in
mega container hubs in the Caribbean are discussed, alternative feeder strategies are
advanced and investigated, and the competitive positions of alternative Caribbean
transshipment hubs are evaluated.
       Various feeder routing and scheduling strategies are investigated in terms of the
impact on feeder and hub port demands, import and export balances, mainline vessel size,
speed, and service frequency. Similarly, feeder vessel size and speed and the impact of
inter-feeder and hub port distances in determining feeder requirements are evaluated.
The models include consideration of transshipment hub port and feeder port container
transfer (or ship turnaround) investment and operating costs. An economic strategy tool
designed to permit evaluation of the benefits of transshipment in a mega transocean
containership operation, with particular reference to alternative transshipment hubs in the
Caribbean, is presented.




                                           54
The Chilean Maritime Highway

Baird, Alfred
    Napier University, UK
    a.baird@napier.ac.uk

Hoffmann, Jan
    United Nations Economic Commission for Latin America and the Caribbean, Chile
    JHoffmann@ECLAC.cl.

Wilmsmeier, Gordon
    United Nations Economic Commission for Latin America and the Caribbean, Chile
    Wilmsmeier@aol.com

      The aim of this paper is to investigate the potential for increased coastal traffic on
the Pacific Coast of South America, and more specifically in Chile. The paper consists of
five main parts.
       First, coastal shipping along the South American Pacific Coast is described and
analysed as part of today‘s global and regional Lift-on-Lift-off (LoLo) liner shipping
networks. Cargo reservation for feedering and cabotage services implies an inefficiency
for international lines that affects the competitiveness of a country‘s maritime foreign
trade.
      Second, the paper provides an overview of experiences with short sea Roll-on-Roll-
off (RoRo) ferry services in Europe and Asia. Positive experiences with such services in
these regions suggest that they could also be a viable option for South American coastal
shipping.
      Third, cargo flows within Chile are described. With 4300 km, the country is longer
than, for example, the distance between Copenhagen and Kuwait, and yet most of even
the long distance national transport is undertaken by truck. Traffic is dominated by
consumer goods being transported by truck from the centre region to the North and South
regions of the country. Return cargo tends to include commodities destined for
consumption and processing in the capital or export through central Chilean ports.
      In the fourth part, preliminary feasibility calculations for RoRo ferries for two
routes of 1100 km each are presented. First results indicate that the potential commercial
viability and environmental benefits of such coastal RoRo services in Chile are well
worth further consideration.




                                           55
      Finally, the fifth part makes specific policy recommendations and suggestions for
future research. It is concluded that some additional maritime cabotage traffic could be
generated by changes in the present cargo reservation regimes that affect the already
existing international LoLo services. However, to achieve a more significant modal shift
from the road to the sea, RoRo ferry services appear to be a more promising option,
although such services would still have to be established. The paper‘s preliminary
findings suggest that they could well be economically feasible, and some specific options
in regard to future research are highlighted in an effort to take matters forward.




The Development of a Network Analysis Tool
Analysing Container Flows in the Caribbean

Veenstra, Albert W.
    R. Alexander Sels, Erasmus University Rotterdam, PO Box 1738, 3000 DR,
    Rotterdam, The Netherlands
    veenstra@few.eur.nl

Mulder, Henry Martyn
    R. Alexander Sels, Erasmus University Rotterdam, PO Box 1738, 3000 DR,
    Rotterdam, The Netherlands
      This paper describes a network analysis tool that can be used to assess the potential
for developing logistics activities on Curacao. The tool enables a thorough analysis of the
transportation network around Curacao. For this analysis, extensive data collection and
data processing is necessary. With the help of some concepts from graph theory, two
network analysis models are developed: the sub-network model and the bypass model.
These models are presented and evaluated. The paper concludes that, under the present
circumstances, the potential for logistic hub activities on Curacao, which on the first
impression seems substantial, is substantially reduced when realistic parameter values are
entered into the models.




                                           56
The Economics and Politics of Taxation and Subsidies
for Ports and Airports

Heaver, Trevor D.
    University of British Columbia, Canada
    Trevor.heaver@commerce.ubc.ca

Tretheway, Michael
    InterVISTAS Consulting Inc., and University of British Columbia, Canada
    Mike_tretheway@intervistas.com

      The effects of public policies on competitive relationships among ports and airports
and on their efficient performance have become more important as competition among
alternative traffic routings has increased. This paper is intended to provide ideas relevant
to the discussion and evaluation of specific port or airport policy situations. It focuses on
specific issues rather than broad socio-economic matters. It deals only with the land-
based assets; it does not deal with the issues associated with access such as navigable
waterways and navigation aids and services.
      The paper considers general conditions influencing the position of governments in
the economic treatment of ports and airports. It is deals with local and senior
governments in general because of the important economic roles of ports and airports in
transport systems and in the economy. Local and senior levels of governments typically
have distinctive interests but the same economics affects those interests.
       Governments often do not follow policies to maximise global economic wealth, the
criterion used in this paper to judge appropriate policies. The criterion does not provide
justification for general charges or for subsidies except in the possible case of small ports
and airports. Government ownership of land aggravates the problems of land being
developed to its highest and best use. The reasons for restrictions on land uses need to be
assessed carefully. Where appropriate, framing restrictions to avoid unnecessary harm is
difficult. The problems of valuing port and airport lands and raising revenue from them
have features similar to transport uses of land in general.
      Port and airport performance would benefit if governments took a global
perspective for the long run. Unfortunately, this is rarely the scope of their
considerations.




                                            57
The Effects of Local Taxes and Subsidies on Port
Competition in the Pacific Northwest of North America

Fitzgerald, Rob H.
     Property Tax Administrator, are with the Vancouver Port Authority, 1900 – 200
     Granville Street, Vancouver, B.C., V6C 2P9, Canada
     rob.fitzgerald@portvancouver.com

Frounfelker, Terry
    Property Tax Administrator, are with the Vancouver Port Authority, 1900 – 200
    Granville Street, Vancouver, B.C., V6C 2P9, Canada
    terry.frounfelker@portvancouver.com

Heaver, Trevor D.
    Centre for Transportation Studies, Room 100 1924 West Mall, University of British
    Columbia, Vancouver, V6T 1Z2, Canada
    trevor.heaver@commerce.ubc.ca

      The paper is a case study of the causes and effects of differential tax practices by
communities within and among ports in British Columbia, Canada, and Washington
State, U.S.A. The paper describes briefly the geographical situations of the ports,
especially the taxing communities involved, and outlines the organisational structures of
the ports authorities. The levels and structures of taxes in the various communities are
outlined and implications for the efficiency of logistics systems and port competition
examined. Possible mechanisms and more efficient bases for the taxation of ports are
suggested, drawn from international experience.




The Impact of Hub and Spokes Networks in Th e
Mediterranean Peculiarity

Cazzaniga Francesetti, Dionisia
    Department of Computer Science, University of Pisa, Italy
    dcf@di.unipi.it

Foschi, Alga D.
    Department of Economics, University of Pisa, Italy
    alga.foschi@ec.unipi.it




                                          58
     The tendency towards consolidation of the liner shipping companies requires the
development of the ‗hub and spokes‘ model in the Mediterranean as well. In this
framework, we argue that the network model will be reinforced as compared to the ‗point
to point‘ model. However, only a few studies are available to confirm the
advantageousness of this choice.
      We therefore propose a methodological analysis of transport costs in a ‗hub and
spokes‘ system in comparison to a ‗point to point‘ system, both in general terms and in
the specific framework of the Mediterranean.
       The relative costs of the two alternatives were simulated utilizing the experience of
the Mediterranean hub port of Gioia Tauro and with reference to the most recent
literature on this subject.




The Interdependence Between Liner Shipping
Networks and Intermodal Networks

Notteboom, Theo E.
    Institute of Transport and Maritime Management Antwerp (ITMMA) – University
    of Antwerp
    theo.notteboom@ua.ac.be

      Shipping lines are well aware of the growing importance of landside operations.
While continuing to focus on improving the fundamentals, many shipping lines have
developed a keen interest in landside segments of the transportation market. At the same
time, cost reductions can be achieved by the reconfiguration and synchronization of liner
schedules and hinterland networks.
      This paper deals with the interdependency between liner shipping networks and
hinterland networks from a carrier perspective. The first part underlines the growing
importance of landside operations in total system costs of deepsea carriers and discusses
carriers‘ actions to reduce the cost burden of landside operations. A second part analyses
the interdependency between liner schedules and hinterland services. The cost efficiency
of different possible network configurations in the foreland-hinterland continuum are
discussed based on a cost model and on a qualitative analysis.
      It is demonstrated that the tendency towards cargo concentration in a limited
number of ports has led to the redesign of collection and distribution networks in the
hinterland. Further cargo bundling in the foreland-hinterland continuum towards even
fewer ports and inland centres is only interesting from a cost perspective if considerable
economies of scale and density can be realised in the associated hinterland networks. The
more cost efficient the network becomes, the less convenient that network could be for
the shippers‘ needs in terms of frequency and flexibility. As such, the future spatial
development of liner schedules and inland service networks will largely depend on the
balance of power between carriers and shippers.



                                           59
The Northern Adriatic Ports – Joint Approach to the
European Transport Market

Trupac, Igor
    Faculty of Maritime Studies and Transport, University of Ljubljana,
    Pot pomorščakov 4, 6320 Portorož, Slovenia
    igor.trupac@fpp.edu

Kolenc, Jurij
    Faculty of Maritime Studies and Transport, University of Ljubljana,
    Pot pomorščakov 4, 6320 Portorož, Slovenia
    jurij.kolenc@fpp.edu

      The fact that The Northern Adriatic Ports of Koper, Trieste and Rijeka share the
same profile - universal ports with specialized terminals, leaves way to two possible
scenarios: either an exhausting competitive struggle between them, or an agreement on
work sharing and specialization, which should gradually result in a single port system.
Such consideration will become even more topical after accession of Slovenia and later
of Croatia to the EU. In the long run it is therefore sensible to consider North Adriatic
Ports as a joint large continental system gravitating to the central part of the North
Adriatic.
      This paper sets out to help understand such a course by: (I) reviewing the current
state of the development of transportation in the Mediterranean and in Europe, (II)
assessing the potential benefits of such system, and (III) assessing the barriers and
opportunities for its implementation.




The Politics and Economics of Developing Coastal
Shipping

Rowlinson, Mervyn
   Business School, London Metropolitan University, Moorgate, London, UK
   rowlinsn@lgu.ac.uk

Wixey, Sarah
    Transport Studies Group, University of Westminster, 35 Marylebone Road,
    London, UK
    S.Wixey@westminster.ac.uk




                                          60
       This paper discusses the politics and economics of developing European coastal,
short sea and inland shipping, particularly within the context of the trades of the British
Isles. Essentially, the problem is one of balancing the economics of the open market for
coastal shipping with the interventions of transport policy. The contention here is that
shipping can play an increasing role in domestic and short-sea trades, as well as
contributing to the environmental objectives of sustained mobility, if the contradictions of
politics and economics can be resolved.
      The transport concerns of the new millennium continue to be shaped by road
gridlock and all its associated negative impacts – accidents, pollution, road surface
damage, road building and replacement costs, declining transport productivity, rising
transport costs. In addition, concerns over maritime safety, necessitate increased
regulations on maritime standard, particularly in the tanker sector. Catastrophic events
such as the Exxon Valdez and Erika oil spills have placed a major emphasis on safety in
the marine environment. Against the increased regulation is balanced the need to achieve
competitive advantage in these rigorously contested trades. In Europe, the recent EU
Transport White Paper offers significant opportunities for member states to actively
encourage a modal shift from road to more sustainable transport, namely rail and water.
The EU has realised that shipping can make a significant and positive contribution to the
transport problems by reducing the tonne-kilometre measurement of road haulage activity
on European roads. Policies conducive to coastal and inland shipping are beginning to
have an impact in Europe. The emphasis on large scale projects such as the Trans-
European Transport Networks (TEN-T), however, may not always prove compatible with
coastal and inland freight flows.
       Finally, this paper aims to demonstrate that conventional coastal and inland
shipping can achieve an enhanced role in the transport economy if the inherent economic
advantages of shipping can be matched by complementary transport policy. The rationale
for this is based upon the following:
      1) The imminent gridlock situation in Britain and Ireland demands serious
consideration of the shipping alternative;
     2) Britain and Ireland have both neglected and undervalued shipping in the national
agenda, particularly in contrast to Continental European trading partners;
     3) Shipping can achieve a greater participation in the British and Irish transport
networks;
      4) Shipping can make a much larger contribution to the environmental objective of
Sustainable Mobility in Britain and Ireland.




                                           61
The Potential For Regional Cabotage In Central
America

Breuillet G., Alfonso
    Executive Director, COCATRAM, Nicaragua
    dejecut@cocatram.org.ni

Harding, Alan
    Port Operations Consultants, UK
    heathway@aol.com

West, Robert
    DRI-WEFA, USA
    robert.west@dri-wefa.com

      Central America forms a natural corridor 1685 km long between the frontier with
Mexico and the Panama Canal, enjoying an easy access to two oceans, the Pacific and the
Atlantic and thence to world markets. Nevertheless, there are no regional coastal
shipping services and almost all the cargo movement of the five countries (Guatemala,
Honduras, El Salvador, Nicaragua and Costa Rica) of the Central American Common
Market (CACM) is done by road transport. The idea to install coastal shipping services
has existed for years and received a strong push with the experience of Hurricane Mitch,
when many of the road connections of the region were destroyed, obstructing the carriage
of essential goods.
      With financial support from The World Bank, the Central American Commission
for Maritime Transport (COCATRAM) has completed a study of the potential for
regional coastal shipping (cabotage) on each coast. In addition the study analyzed the
potential for new feeder services to provide improved access for regional products to the
world market, by means of transshipment (hub) ports. The paper summarizes the results
of the study and in particular the necessary conditions that were identified, if regional
coastal shipping is to become a reality.




The Price is Right! – Pricing Policy at the Panama
Canal

Lynch, Valentine D. Jr.
    Pricing and Tolls Unit, ACP, Panama
    vlynch@pancanal.com




                                          62
       This paper will provide a short, general presentation of the history of the Panama
Canal pricing policy from the construction days through to the present period, as well as
give direction as to where the current pricing policy will take us. The prices for services
are pivotal elements in both customer cost and Canal revenue. They have a direct impact
on the Canal‘s viability and growth potential. It is one of the most significant elements in
the customer‘s evaluation of our service. The paper‘s strategy is to outline some of the
critical factors in the pricing policy, with emphasis on tolls and other Marine Services.
      With the turn of the century, the Canal rang out the old owner/user and rang in a
new owner/non-user. The new owner inherited a sustainable and growing client base, but
also brought into the equation a series of new responsibilities, a growing need to satisfy
increasingly diverse client requirements, a shrinking excess in capacity and modification
of a legitimate need to provide the owner with a just return on the resources invested in
the operation. The paper will outline the strategy to accomplish these goals, including a
description of the new business model and a summary of how the Canal intends to use
market based pricing to deliver the right service at the right price.




The Price Volume Relationship in the Sale and
Purchase Market for Dry Bulk Vessels

Alizadeh, Amir H.
     Centre for Shipping, Trade and Finance, City University Business School,
     Frobisher Crescent, Barbican Centre, London EC2Y 8BH, United Kingdom
     a.alizadeh@city.ac.uk

Nomikos, Nikos K.
   Centre for Shipping, Trade and Finance, City University Business School,
   Frobisher Crescent, Barbican Centre, London EC2Y 8BH, United Kingdom
   n.nomikos@city.ac.uk

      This paper investigates, for the first time, the relationship between prices and
trading activity in the sale & purchase market for second-hand dry bulk vessels.
Investigation of this issue is of interest since the level of trading activity may contain
information about the sentiment and the future direction of the prices in the market.
Several important conclusions emerge from this analysis.




                                           63
      It is found that price changes are useful in predicting trading volume, which
suggests that higher capital gains encourage more transactions in the market.
Additionally, it seems that volume has a negative impact on the volatility of price
changes. More specifically, in contrast to what is reported for financial markets, we find
evidence that increases in trading activity lead to a reduction in market volatility. This
can be explained by the unique underlying characteristics of the market for ships,
including thin trading, which imply that increases in trading activity result in price
transparency and stability. These findings indicate that practitioners in the market may
use the information contained in the level of trading activity so as to guide their market
decisions in the sale & purchase market.




The Regulation of Privatised Ports: What are we
Trying to Achieve?

Farrell, Sheila
    Farrell Associates, UK
    S_p_Farrell@compuserve.com

      Many recently-privatised ports are subject to regulation of one form or another, but
this has often been put into place almost as an after thought, without serious discussion of
why such ports are being regulated and what the regulatory process is expected to
achieve. This paper looks at the purpose of regulation, the problems which have been
encountered in the three areas where regulation is strongest – tariffs, investment and
performance standards – and the areas where more regulation may be needed in future.
      Regulation is still in its infancy in the ports sector, and agreement on ―best
practice‖ is hard to find. In some areas, such as investment, private operators appear over-
regulated whilst in others, such as the creation of more competitive markets, the
regulators have been strangely silent, reluctant to involve themselves in areas which are
technically complex or require subjective judgements
      Because regulatory processes are fragmented and receive little publicity, the paper
is based solely on the author‘s own observations. It concludes that the use of simple,
contract-based procedures has allowed regulators to establish their credibility, but has
not necessarily led to the types of regulatory institution required to tackle complex
competition issues.




                                           64
The Restructuring of Mexican Ports and Modal
Integration of Transport in Mexico

Martner Peyrelongue, Carlos
    Instituto Mexicano del Transporte, Mexico
    Carlos.Martner@imt.mx

Moreno Martinez, Aurora
   Instituto Mexicano del Transporte, Mexico
   Aurora.Moreno@imt.mx

      In almost five decades of economic policy characterized by protectionism and
inward looking development, ports did not play a significant role in Mexico‘s commercial
and economic activity. The main concern of that period was import substitution and
production for the domestic market. Port activity was not a topic of great significance in
public policy. This situation led to inefficiency, inappropriate working practices, limited
development of technology and infrastructure (except in the oil ports) and bad habits that
resulted in low quality port services. However during the 1980s, with the change of
economic model, foreign trade was converted into the cornerstone of economic growth,
causing ports to reassess their role in providing infrastructure for cargo handling, transfer
and distribution.
      Within this new context there was a need for a transport and ports system that could
support both inter-continental and regional trade. To cope with these demands, a
restructuring process began in Mexican ports during the second half of the 1980s which
included improvements in operations, infrastructure and equipment. Even so, it was not
until the 1990s that a legal framework for the decentralization and privatization of
Mexican ports was established (Ley de Puertos, 1993).
      In the 1990s, port restructuring led to a major transformation of the sector. The
arrival of private participation brought with it investment in the modernization of
infrastructure and equipment at the country‘s main ports. There were also considerable
improvements in operational performance indicators. In some cases, such as containers,
cargo and ship handling reached international standards.
      However supply chains through national ports continued to present difficulties
when integration with land transport and the regions was involved, resulting in delays,
unnecessary dead time, and additional costs for operators and users. Ports that had
achieved high levels of efficiency in their internal operations after restructuring and
privatization found their competitiveness reduced by lack of coordination at the sea-land
interface
      This presentation has two objectives : evaluation of port restructuring in Mexico in
terms of infrastructure and operational performance, and analysis of modal integration
problems in view of their relevance to national port development. In an era of
globalization ports not only require high levels of operational efficiency to survive, but
must also become true nodes for modal integration within the transport network.



                                            65
      The argument presented here is that ports can no longer be considered as a single
nucleus of activities, so success cannot be achieved exclusively through port
restructuring. On the contrary, an integral vision of the sea-land interface is required
which contributes both to intermodal transport and to the design of logistics strategies for
handling the increased commercial flows generated by the globalization of production.




The Time-Varying Risk Premium in Bulk Shipping:
New Empirical Evidence from the Term Structure of
Freight Rates

Adland, Roar
    Massachusetts Institute of Technology and Agder University College, Norway
    roaaad@mit.edu

      This paper argues that the risk premium in the freight markets should be time
varying and depend on the state of the current spot freight market. The implied risk
premium in various dry-bulk shipping sectors is estimated based on a nonparametric spot
freight rate model. The empirical results suggest that the risk premium in the freight
markets varies around a near-zero mean and that it is a decreasing function of the spot
freight rate level.




The Traffic in Spanish ports: An Efficiency Analysis
with Tolerances

Bonilla, María
    Faculty of Economy. University of Valencia, Av. Tarongers s/n. 46071 Valencia -
    SPAIN
Medal, Amparo
   Faculty of Economy. University of Valencia, Av. Tarongers s/n. 46071 Valencia -
   SPAIN
Casasús, Trinidad
    Faculty of Economy. University of Valencia, Av. Tarongers s/n. 46071 Valencia -
    SPAIN
Sala, Ramon
     Faculty of Economy. University of Valencia, Av. Tarongers s/n. 46071 Valencia -
     SPAIN
     Ramon.Sala@uv.es



                                           66
      This paper studies the commodities‘ traffic efficiency in the Spanish port system.
The Spanish port system is made up of twenty-six Port Authorities, each port with
different size and equipment. Some of these ports are specialized in a particular type of
commodity. We have applied the DEA for analyzing the efficiency of the Spanish port
system, measuring the relationship between the available port equipment and the
commodities traffics (liquid bulks, solid bulks and general commodities).
      We have focused on the study of determinant units of analysis, either because they
are influent units, or they are outliers. The detection and elimination of influent units
and/or outliers allows us to avoid the distortion than these kind of units can cause in the
global analysis, and to refine one of the mistake source of this kind of analysis.
      Also, this paper presents the DEA model with tolerances for the inputs and the
outputs. This analysis will allow us to complete the conclusions achieved with the
previous analysis, estimating the variation intervals of the efficiency index for each port
when there are positive or negative variations of the inputs (incidence analysis).




The Unbiasedness Hypothesis in the Freight Forward
Market: Evidence from Cointegration Tests

Kavussanos, Manolis G.
    Department of Accounting and Finance, Athens University of Economics and
    Business, 76 Patission St, Athens, TK 104 34, Greece, and Faculty of Finance,
    City University Business School, Frobisher Crescent, Barbican Centre, London
    EC2Y 8HB, UK
    mkavus@aueb.gr

Menachof, David
   Faculty of Finance, City University Business School, Frobisher Crescent, Barbican
   Centre, London EC2Y 8HB, UK
   d.menachof@city.ac.uk

Visvikis, Ilias D.
    Faculty of Finance, City University Business School, Frobisher Crescent, Barbican
    Centre, London EC2Y 8HB, UK
    i.visvikis@city.ac.uk




                                           67
      The current paper investigates the unbiasedness hypothesis of Forward Freight
Agreement (FFA) prices in the freight over-the-counter forward market trades.
Cointegration techniques are employed to examine the hypothesis. The results indicate
that FFA prices one and two months before maturity are unbiased predictors of the
realised spot prices, for all investigated routes. On the other hand, the unbiasedness of the
market in the three months FFA prices depends on the specific route being investigated.
More specifically, three months FFA prices for routes 1 and 1A are found to be biased
predictors of spot prices, while FFA prices for routes 2 and 2A are unbiased predictors of
spot prices. This diverse evidence suggests that the unbiasedness hypothesis depends on
the specific characteristics of the market under investigation, the selected trading route
and on the time to maturity of the contract. The failure of FFA prices to maintain a long-
run cointegrating relationship with the expected spot prices is deemed to be the reason for
the existence of a bias in FFA prices for some routes.




Turkish Container Ports: An Analysis of Problems and
Potential Opportunities

Akarsu, Mahir
    Dokuz Eylul University, School of Maritime Business and Management, Turkey
    akarsum@deu.edu.tr

Kumar, Shashi
   Maine Maritime Academy, USA
   skumar@mma.edu

       The role of containerization in facilitating global commerce has been well
documented by various scholars. It has altered the structure of the liner shipping industry
besides altering the historical trade-flows from well-defined hinterland regions through
traditional seaports. The level of competition among container ports to maintain and/or
enhance their market share is also readily visible today. While the world‘s leading
container ports have the resources to invest in state-of-the-art technology and terminal
facilities that would help maintain their gateway port status, many smaller ports find
themselves relegated to a lower status in the global hierarchy of ports. The paper
examines the case of Turkish ports--by no means major players in the global container
port sector--in the containerized era.




                                            68
      Turkey has three major container ports, viz., Haydarpasa, Izmir, and Mersin. All
three ports are operated by a large, highly bureaucratic governmental agency namely
TCDD (Turkish State Railways). As a result, the revenues generated by these ports are
often diverted for non port-related activities rather than investing in port improvement
projects. This has negatively affected the efficiency of Turkish ports in relation to their
Mediterranean counterparts. There have been a few studies related to the problems faced
by Turkish ports the consensus of which appears to be advocating increased level of
private involvement in the sector. The paper will analyze the case of Turkish ports in
detail and their avenues for potential growth. Its conclusions will include public policy
recommendations that will enhance their operational efficiency.




Wage Differentials of U. S. Ports and Transportation
Industries: Deregulation Versus Regula tion

Talley, Wayne K.
     Department of Economics, Old Dominion University, Norfolk, Virginia 23529,
     USA
     wktalley@odu.edu

      This paper investigates the wage differentials of ports and for-hire transportation
carrier industries under regulation and deregulation. The estimation results suggest that
the union wages of truck drivers, rail engineers and port dockworkers were comparable in
the regulation period; in the deregulation period the union wages of truck drivers and rail
engineers declined relative to those of dockworkers. The wage differential estimates
indicate negative union hourly wage gaps for truck drivers and rail engineers of 22.7%
and 6.9%, respectively, versus dockworkers. These results reflect the increase (decrease)
in the relative bargaining power of dockworkers (truck drivers and rail engineers) in the
deregulation period.




                                           69
 Compiled by Jan Hoffmann, on behalf of the International Steering Committee, Santiago de Chile, October 2002.


                                                     NOTE:
   Modified end of November 2002 on the basis of the papers that were actually presented during the conference.
Six of the originally programmed 89 peer reviewed papers were not presented, and these are thus not included in the
                 conference proceedings. The complete conference proceedings are available under
                              www.eclac.cl/Transporte/perfil/iame_papers/papers.asp




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