EFFICIENCY CHALLENGES IN MARITIME LOGISTICS Prof. Kevin Cullinane Professor of Logistics and Transport Economics University of Gothenburg
[email protected]
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Efficiency vs. Effectiveness Transporteffektivitetsdagen 2014
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Efficiency vs. Effectiveness
EFFICIENT DOING THE THING RIGHT
EFFECTIVE DOING THE RIGHT THING
EFFICIENT + EFFECTIVE DOING THE RIGHT THING RIGHT Transporteffektivitetsdagen 2014
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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
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The Shipping Industry Context
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International seaborne trade by cargo type (millions of tons loaded) These volumes dwarf other Growth has been virtually modes - (averaging even more 4% so ifp.a.) ton-constant kilometrescontainer are considered especially trades
Source: UNCTAD (2012)
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Corollary An efficient and effective shipping industry is vital for global economic welfare and development
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The European Context
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Maritime Activities and Employment 1. 2. 3. 4.
Important origin and destination for shipping movements 18% of all goods loaded and 23% of all goods unloaded. Shipowners control almost 40% of the world fleet tonnage 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
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Employment in all maritime sectors in the EU and Norway and percentage of the total workforce in 2009
Source: European Commission (2009)
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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 €186.8 billion, equating to a 1.65% share of the total European GDP 3. This implies an average added value per person employed of € 39,000 4. Indirect and induced effects through an economic multiplier yields a further added value of €110 million
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Added value in all maritime sectors in the EU and Norway in 2009 15 000
= 15 000 million euros of added value
3 200 15 100
3 800
1 000 1 000
8 700 2 100
500
28 400
11 500
4 000
3 400 17 200
100 100 50 25 400
300 300 200 1 200
500 2 800
23 000
24 300
6 400
500
Source: European Commission (2009)
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Corollary An efficient and effective shipping industry is vital for the economic prosperity of Europe
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Efficiency (and Effectiveness) Challenges in Maritime Logistics What are they? Where do they arise?
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A Functional Perspective
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At Sea 1.
Capacity Utilisation
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DNV (2014) Transporteffektivitetsdagen 2014
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At Sea 1. 2. 3.
Capacity Utilisation Energy Efficiency Environmental considerations
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World GDP and CO2 Emissions from International Marine Bunker Fuel
Source: IEA (2012)
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Marginal Abatement Cost Curves
Source: DNV (2010)
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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 50001 or ISO 14000 for broader-based environmental management 7. The role of MBMs Transporteffektivitetsdagen 2014
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Estimates of Polluting Emissions from Shipping
Source: derived from data contained in Buhaug et al (2009)
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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 Transporteffektivitetsdagen 2014
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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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