Demand In Shipping Industry

he assignment is about the derived demand and supply of tonnage in container liner market

1.1Introduction

The best world to describe the shipping industry is the world “Dynamic”. When the economist talk about a dynamic market they mean a market when the price signals is the result of continual changing in both demand and supply of any particular product or group of products(Investopedia,N.D). Similarly in shipping market this price is called fright rate and comes from the changing of supply and demand for world merchant fleet and the volume of goods traded by sea. Stopford (2009) notes that the shipping industry characterized by Shipping Market Cycles and that the supply and demand are the economic mechanisms to control them. If the people

2.1Key Influence on Supply and Demand

As Stopford (2009) notes there are five important factors that affect Supply and five that affect the Demand for the shipping Industry. Regarding the container market the five factors that affect the demand are World Economy, Political Factors, Seaborne trade, Average Hull and Transport Costs. Moreover the world fleet, fleet productivity, shipbuilding production, scraping and losses and the freight revenue are the key factors that influence the Supply for ships. Therefore those factors play the important role for the determination of fright rates in the industry.

2.2 The Demand For Sea Transport and Container Market

2.1.1 The world

Carrying cargo is just one of small part of what merchant ships do, the other are discharging, loading, repairs, incident laid up ,long and short storage and other. The productivity of ships depends upon four main factors: speed, port time, deadweight utilization and loaded days at sea. First when there is high fright rate ships increase their speed to carry more cargo. As a result of increasing speed they increase they incomes and became more productive. Second the port time play important role in the productivity. The introduction of containerization dramatically reduced port time for liners. Third deadweight utilization refers to the cargo capacity lost owing to bunkers, stores etc. The figure shows the loss of capacity in TEU due to increased bunkers. If we apply an average of 14 mtons gross deadweight for full laden TEU, the 1500 TEU represent 21000 mtons. Consequently, carrying only heavy cargo may lead to a decrease in intake basis deadweight limitations. As an example, and assuming maximum deadweight intake is 21000 mtons, average container weight of 18 mtons gross per TEU, will result in maximum acceptance of 1,166 TEU or a filling degree of 78 percent (Notteboom,2011).Finally a vessels time is divided loaded days at sea and unproductive