EFFICIENCY CHALLENGES IN MARITIME LOGISTICS
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1 EFFICIENCY CHALLENGES IN MARITIME LOGISTICS Prof. Kevin Cullinane Professor of Logistics and Transport Economics University of Gothenburg
2 Efficiency vs. Effectiveness
3 Efficiency vs. Effectiveness EFFICIENT DOING THE THING RIGHT EFFECTIVE DOING THE RIGHT THING EFFICIENT + EFFECTIVE DOING THE RIGHT THING RIGHT
4 Observations on Efficiency vs. Effectiveness 1. Both concepts relate to an objective and are measured by reference to its achievement 2. Objectives differ between actors 3. Over time, objectives change or are changed 4. Both concepts are measured relatively against an ideal (benchmark), reference group or over time 5. Efficiency and effectiveness may be in conflict and a trade-off may have to be made
5 The Shipping Industry Context
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10 International seaborne trade by cargo type (millions of tons loaded) These Growth volumes has been dwarf virtually other constant modes -(averaging even more 4% so if p.a.) ton-kilometres container are considered especially trades Source: UNCTAD (2012)
11 Corollary An efficient and effective shipping industry is vital for global economic welfare and development
12 The European Context
13 Maritime Activities and Employment 1. Important origin and destination for shipping movements 2. 18% of all goods loaded and 23% of all goods unloaded. 3. Shipowners control almost 40% of the world fleet tonnage 4. A highly specialised shipbuilding sector is a world leader in terms of turnover and innovation 5. Dredging companies have 80% share of the global market 6. European companies dominate the emerging market for both sustainable technologies and offshore renewable energy 7. Approximately 4.78 million people (i.e. 2.25% of total European employment) are directly employed
14 Employment in all maritime sectors in the EU and Norway and percentage of the total workforce in 2009 Source: European Commission (2009)
15 Added Value 1. Direct production value in 2009 was 450 billion, consisting of 58% intermediate purchases and 42% added value 2. The direct added value amounts to approximately billion, equating to a 1.65% share of the total European GDP 3. This implies an average added value per person employed of 39, Indirect and induced effects through an economic multiplier yields a further added value of 110 million
16 Added value in all maritime sectors in the EU and Norway in = million euros of added value Source: European Commission (2009)
17 Corollary An efficient and effective shipping industry is vital for the economic prosperity of Europe
18 Efficiency (and Effectiveness) Challenges in Maritime Logistics What are they? Where do they arise?
19 A Functional Perspective
20 At Sea 1. Capacity Utilisation
21 DNV (2014)
22 At Sea 1. Capacity Utilisation 2. Energy Efficiency 3. Environmental considerations
23 World GDP and CO 2 Emissions from International Marine Bunker Fuel Source: IEA (2012)
24 Marginal Abatement Cost Curves Source: DNV (2010)
25 Closing the Energy Efficiency Gap in Shipping 1. Significant scope for greater energy efficiency, but the transactions costs are heavy 2. Monitoring, verification and certification needed to provide baseline 3. Financial and institutional support for R&D is needed 4. Overcome the fragmentation of responsibilities and actions relating to energy use within shipping organisations 5. Greater innovation in shipping contracts needed to avoid split incentives 6. SEEMP is limited to ship-specific measures. Introduce ISO or ISO for broader-based environmental management 7. The role of MBMs
26 Estimates of Polluting Emissions from Shipping Source: derived from data contained in Buhaug et al (2009)
27 On Land 1. Port Efficiency Continually increasing throughput Required investment Availability of land 2. Logistics integration Road, rail and water connectivity Timing and storage of flows Seamlessness of intermodal transport Overcoming bottlenecks Intermodal liability 3. Environmental strategy Road to rail and water Blue Lane, Blue Belt, TEN-T, Green Corridors etc Cold ironing and other port-based measures
28 Conclusions: Meeting the Challenges 1. Maritime logistics has pivotal role in economic growth and environmental sustainability 2. Trade-offs and compensation are key: Efficiency vs effectiveness Functionalism versus a broader value chain view Consumer-driven changes 3. Availability of finance for investment 4. Continued R&D 5. Appropriate regulation is critical to providing a level playing field and ensuring a consistent approach
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