Docstoc

World Seaborne Trade

Document Sample
World Seaborne Trade Powered By Docstoc
					   Bulk Ocean Freight Situation:
Potential for Economic Analysis?
           Mitch Wensley, AAFC
International Seaborne Trade, 2002
5.9 Billion Tonnes
                          Million Tonnes
                                                                Bauxite
          Crude Oil                               Other         Phosphates
            28%                                   28%           Forest Prod
                                                                Sugar
                                                                Rice
                                                                Fertilizers
                                                                Steel




     Oil Products
                                                   Containers
          9%
                                                     11%
                    Gas
                    2%
                                           Coal
                              Ore                         UNCTAD
                                           9%
            Grain             8%
             5%

                                                                              2
International Seaborne Trade, 2002

                                                       Tanker Cargo
                                                     2.14 billion tonnes
                    Total Goods Loaded
                     5.88 billion tonnes
                                                         Dry Cargo
                                                     3.75 billion tonnes



                 Other                            Main Bulk Commodities
                  82                                1.35 billion tonnes
      Grain
       220
                                       Coal
                                       575




      Iron Ore                   million tonnes
         475


                                                                           3
The Baltic Dry Index (Jan 1985 – Jan 2003)




                                             4
Bulk shipping supply and demand
$/tonne


                      D4          S1   S2


                D3



           D2
      D1




                                            d.w.t.


                                                     5
Dry Bulk Fleet Capacity and Surplus

                     270                                       12%
                     260                                       10%
   Millions of DWT




                     250                                       8%
                     240                                       6%
                     230                                       4%
                     220                                       2%
                     210                                       0%
                         90
                         91
                         92
                         93
                         94
                         95
                         96
                         97
                         98
                         99
                         00
                         01
                         02
                      19
                      19
                      19
                      19
                      19
                      19
                      19
                      19
                      19
                      19
                      20
                      20
                      20
                           Supply of World Dry Bulk Fleet
                           Surplus Share of World Bulk Fleet


                                                                     6
The Baltic Dry Index (Jan 1985 – Mar 2004)




                                             7
China: A key demand factor influencing rates

                              Steel Consumption (million tonne)
                                                           Growth Rate:
                                       1995      2002       1995-2002
                      China             101       244           16%
                      NAFTA             136       156           2%
                      South America      23       28            3%
                      Source: Steel Statistical Yearbook, 2003




                                                China's Soybean Imports
                                         25



                         million tonne
                                         20
                                         15
                                         10
                                          5
                                          0
                                          1995 1996 1997 1998 1999 2000 2001 2002 2003

                                                   United States   Brazil   Argentina

                      Source: World Trade Atlas




                                                                                         8
The Baltic Dry Index (May 18th, 2004)




                                         3450

                                        18/05/04




                                             9
Potential for Analysis?
• Question: What are the implication of higher bulk freight
  rates on international markets and Canadian producers?

• Analytical tool that is readily available to AAFC: OECD
  Aglink Model (partial equilibrium, non-spatial, net trade
  model – just say no?)

• If we say maybe, what could we do?

• Possibly a price wedge analysis simply incorporating
  transportation wedges into price transmission equations
  (either on the importer or exporter side)

• With considerably higher transport costs the scope for
  many more internal market clearing prices is much higher

                                                              10
Potential for Analysis? (cont’d)
• Which commodities (WT, CG, OS, OM). All of these are
  effectively bulk commodities that would face these much
  higher transport costs (VL-Chemical Tanker…?)

• Where do we get the wedges? IGC publishes grain
  transport rates for a number of grain routes. Have to
  measure a change in the gap over the different routes over
  some period. Assume gap prior to this is already captured
  in price linkage functions.

• Big question: under much higher transport rates you would
  expect traders to minimize costs by limiting shipments on
  high cost routes – how do you approach this in the Aglink
  framework?


                                                            11
Methodology
• Divide world into regions - create a TC (transcost) matrix

• Pick a historical period and develop export/import shares
  by region of origin or destination in order to calculate a
  weighted average TC for the country.

• Assuming there would be no change in exports the average
  transport cost would be calculated using historical export
  shares by destination.
                    0.50                                  25
                                                                                                                    25
                                                               Change in transport charge ($/t)
                    0.45
                    0.40                                  20                                                        20




                                                                                                  Million Tonnes
                    0.35
                                                                                                                    15
     Export Share




                    0.30                                  15

                    0.25                                                                                            10
                    0.20                                  10
                                                                                                                     5
                    0.15
                    0.10                                  5
                                                                                                                     0
                    0.05
                                                                                                                     03


                                                                                                                            05


                                                                                                                                   07


                                                                                                                                          09


                                                                                                                                                 11


                                                                                                                                                        13
                                                                                                                   20


                                                                                                                          20


                                                                                                                                 20


                                                                                                                                        20


                                                                                                                                               20


                                                                                                                                                      20
                    0.00                                  0
                             A        B            C

                       Export share       Transport charge chg.                                                    EX_A_BASE     EX_B_BASE     EX_C_BASE


                                                                                                                                                             12
Methodology (cont’d)

Exporter absorbs cost example:

• Local Price (PP) = World Price (WP) - Transport Cost (TC)

• TCbase=(TCA*EXA_base+TCB*EXB_base+TCC*EXC_base)/EXbase

• Depending on the policy situation this will likely bring a
  lower domestic price which again depending on policies
  should lead to lower exports. If that is the case the weight
  of the destination with the higher transport cost needs to
  be reduced inside the simulation.

• How?


                                                              13
Methodology (cont’d)
• exports above baseline

• TC = if EX > EXbase then TCbase, else

• partial/full removal of highest cost importer
  TC = if EX< EXbase and >= (EXB_base+EXC_base) then
  (TCB*EXB_base+TCC*EXC_base+TCA*(EX-EXC_base-
  EXB_base))/EX, else

• partial/full removal of medium cost importer and continued
  exports to low cost importer
  TC = if EX < (EXB_base+EXC_base) but >= (EXB_base) then
  (TCB*EXB_base+TCC*(EX-EXB_base))/EX, else

• partial/full exports to low cost importer
  TC = if EX < EXB_base then TCB
                                                          14
Final Thoughts




                 15

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:23
posted:7/14/2012
language:English
pages:15