Four Shipping Markets Analysis - Essay Example

Basically, I do not very clear about the last paragraph of the main body; namely, The Basel Convention, which calls for.........the four markets competitive. Especially, what's the putting pressure on the new builders to build ships that are easy and safe to dismantle by the demolition markets? what the 'scrapyards will benefit because ease of demolition means more ships can be demolished with the same number of workers'? What're the 'prices change fast'? Can you use a more simple sentence structure to explain this problem?

This means that Greenpeace (and other environmental movements) are pressuring or telling very strongly the new builders to build clean ships that are easy (to dismantle) and safe (without health and environmental risks).

I analyzed this statement as follows: if a ship is easy to dismantle or demolish, then what used to take (for example) one month to demolish will take only 3 weeks.  This means that when before I can demolish 12 dirty ships in one year (at 1 month per ship), then if ships are easy to demolish and clean, they will take only 3 weeks to demolish. 

This means that  I can demolish 1 ship every 3 weeks so in 12 weeks (3 months or 1 quarter) I can demolish 4 ships and in 1 year (12 months or 4 quarters) I can demolish 16 ships (4 ships/quarter x 4 quarters/year).  That is 4 more ships per year.  If I have the same number of workers, and I can demolish 4 more ships extra every year because it is easy to demolish 1 ship, then that means I can have more profits, right?

“Price changes fast”

Again, this is an analysis of the effect of faster demolition of ships.  Assume that today, we can demolish 12 ships a year.  If there are 20 ships in the whole shipping industry that has to be demolished, then at the end of 1 year, we can demolish 12 and there will be only 8 ships left.  The sales and purchase market will have 8 ships to sell or to buy.  The freight market can also use these 8 ships.  The demand in the newbuilding market will be only 12 ships (to replace the 12 we demolished).

ALL THESE ARE HAPPENING IN ONE YEAR because clean ships are easy to demolish.  The fast price changes are also called volatility in economics (all who have studied economics know that volatility refers to how fast is the change of prices in the market).

I have used in the paper the most simple words I can use to describe this analysis.  This is how you can explain it to your professor when he asks you what you mean.  He will see that you have analyzed the markets and make future predictions of what can happen.

In the introduction, one sentence "The industry earns $445 billion in freight revenues each year (UNCTAD, 2004)". Unfortunately, I couldn't find this datum information ($445 billion freight revenuse) according to your reference! Can you tell me where it is？ which page?

Sorry, there was confusion there.  On page x (or the number ten in roman numerals) of the Summary of the UNCTAD report is the following data:

that means total goods loaded increased 3.7% in 2003 and will most likely continue to grow in 2004.  I analyze this to mean that the revenues or inflows in freight costs to be paid to the industry will be increasing more than 3.7% even in 2004.  How much will the shipping industry, therefore, earn in freight revenues?

On page 71, Table 41: the total freight costs for imports in world trade is estimated at 411,855 million US dollars in 2002.  I will analyze this as follows: companies who ship their goods pay this amount in freight costs to shipping companies.  This is the figure for 2002.  If the total goods shipped increased by 3.7% in 2003, then this amount will increase to $412bn x 1.037 = $428bn.  In 2004, this will be $412bn x 1.037 = $443.8bn that I can round off to $445 billion which is the nearest $5bn.

These are just freight revenues and do not include revenues from the new buildings, sales and purchases, and demolition, of course.

You can change the reference from UNCTAD, 2004, p. 10 to UNCTAD, 2004, p. x

I would like to apologize for the delay, because my computer network was hit by the Sober virus and your message just reached me today.\

Thanks and good luck with your course!