Microeconomics: we discuss the practical issues facing a firm. How are shipping costs and revenues structured? How are ships financed? How does the industry make a commercial return on investment?

Costs, Revenue and Financial Performance: This chapter discusses the costs and revenues of operating merchant ships. Costs are divided into voyage costs and operating costs. Capital costs are also discussed, though the main review of financing is contained in the next chapter. The final section focuses on company accounts, including the income statement, balance sheet and cashflow statement. We finish with a discussion of cashflow analysis.

Financing Ships and Shipping Companies: Finance is the most important item in the shipowner’s cashflow budget. The chapter starts with a review of the many ways ships have been financed in the past, followed by a brief explanation of the world capital markets, showing where the money comes from. Finally the chapter discusses the four main ways of financing ships: equity, debt, newbuilding finance, and leasing.

Risk, Return and Shipping Company Economics: Shipping has a history of offering very mediocre returns over long periods, interspersed by bursts of profitability. This chapter examines the shipping company investment model and applies the theory of the firm to shipping companies, to establish what determines return on investment in shipping and how the shipping industry prices risk.

In the course students will get acquainted with:

• understanding the costs and revenues of operating merchant ships
• International Maritime Trade
• Maritime Transport Services
• Freight Rates and Transport Costs
• Key Performance Indicators for Ports and the Shipping Fleet
• Maritime Trade Facilitation
• Consolidation and Competition in Container Shipping

Pre-course home assignment:

Maritime Transport Review Report 2022 –The material will be provided in advance.

Session 1: Services and International Trade

Lecture on “International Maritime Trade” and “ Maritime Transport Services”.

Exercise 1: Quiz at the end of the session

Pre-readings:

• Session ppt slides shared in advance
• Pre-readings provided on the platform

Session 2: Cost and Key Performance Indicators

Lecture on “Freight Rates and Transport Costs” and “Key Performance Indicators for Ports and the Shipping Fleet”

Exercise 2: essay “World Leading Ports”.

Pre-readings:

• Session ppt slides shared in advance
• Pre-readings provided on the platform

Session 3: Supply Chain Analytics and learnings from a real-life case study

Lecture on “Maritime Trade Facilitation” and “Consolidation and Competition in Container Shipping”

Case Study: Group should make presentation of different type of ships and their evaluation.

Essay:                                       15%   (individual assessment)

Class Participation:                  5%   (individual assessment based on response to faculty queries)

                                                 10%   (group assessment based on presentation of case study)

Quiz:                                        30%   (individual assessment based on questions)

Project:                                     40%   (group assessment based on case study)

Total                                      100%  (group assessment – 50%, individual assessment 50%)

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