Outline of WTO Conference Paper Title of Paper and Authors Introduction Methods and Data A. Shift-Share Model B. Components of the Shift-Share Model C. Data Source

Outline of WTO Conference Paper Results A. Structural and Ownership Changes B. Shipbuilding-Tonnage on Order Changes C. Tonnage of Major Open Registry Fleets Changes Summary and Conclusions

Title of Paper and Authors An Analysis of the Structural and Ownership Changes in the World Maritime Fleet By Albert J. Allen, Joselito K. Estrada, and Saleem Shaik

Introduction The world maritime fleet is changing to reflect the changes in worldwide economic activities Globalization has become the new phrase of the moment, but true globalization means that countries must have genuine international cooperation

Introduction Creating partnerships and examining methods to determine new ways to work with other nations throughout the world represents the best way to thrive in the global The world maritime fleet can be used as an indicator of international cooperation among countries

Introduction In 2002, the world maritime fleet accounted for the largest share of the value (38.4%) and weight (77.7%) of the U.S. international merchandise trade The size of these values not only reflects the importance of water transportation to the U.S. competitive position in international trade but also the international interdependence or international cooperation of this country with other nations on worldwide basis

Supply/Demand Influences in Shipping Market Demand: The World Economy Seaborne Commodity Trades Average Haul Transport Costs Political Events

Supply/Demand Influences Supply: World Fleet Shipbuilding Output Scrapping and Losses Fleet Performance: Mean Operating Speed; Deadweight utilization; Loaded Days at Sea Operating Environment

Objective The general purpose of this paper is to analyze the supply side of the world maritime fleet between 1997 and 2003 to measure global changes in the world maritime fleet. Specific objectives are to: Show changes in the structure and ownership, shipbuilding, and country of registration Measure the changes in the structure and ownership, shipbuilding and country of registration using the shift-share model

Methods and Data A. Esteban-Marquillas Shift-Share Model The shift-share model is used for accomplishing the main focus of this analysis The shift-share analysis is a method of separating a change into its components; in our case in the world’s maritime fleet This is done to identify and to better understand the components of the change; i.e. to determine each component’s “share of the shift”

Methods and Data B. Components of the Esteban- Marquillas Shift-Share Model: World Growth Effect Industry Mix Effect Competitive Effect Allocation Effect

Methods and Data World Growth Effect:Is the amount that a country’s (or region’s) maritime fleet would have increased (or decreased) had it grown at the same rate as the world maritime fleet did Industry Mix Effect:Is the amount of change attributable to differences in the initial industry makeup of the country or region relative to the world

Methods and Data A positive (negative) industry mix effect indicates that a country’s (region’s) fleet of ships was initially relatively more concentrated in the types of ships whose fleet expanded faster (slower) than the overall world maritime fleet average

Methods and Data Competitive Effect: The competitive effect measures a country’s economic changes not attributable to the world fleet growth or the industry mix effects Shows how a country deviates from what would be expected if a country’s ship growth was due solely to the world expansion of the fleet of ships and the country’s industry makeup of ships

Methods and Data Competitive Effect: In general the CE indicates the quantitative difference between a country’s fleet of ships and those of the world caused by the difference in the rate of that country’s ships compared with that of the world

Methods and Data Allocation Effect: Is interpreted as a measure of country’s degree of specialization in those ships in which it enjoys competitive advantage A positive value means that the country or region is specialized in the ships in which it has a competitive advantage, and not in the ships in which it has a competitive disadvantage

Table 1. Allocation effect Interpretations Sign of the Allocation Effect Sign of the Competitive Effect Interpretations ++Specialized, competitive advantage __Specialized, competitive disadvantage +_Not Specialized, competitive disadvantage __Not specialized, competitive advantage

Shift-Share Model Equation 1:CT ij = WG ij + IM ij + CE ij + AE ij Equation 2:WG ij = T ij 1997 * ΔN Equation 3:IM ij = T ij 1997 * ( ΔN i - ΔN )

Shift-Share Model Equation 4:CE ij = [ T j 1997 * ( N i 1997 / N 1997 )] * ( ΔT ij - ΔN i ) Equation 5:AE ij = { T ij [ T j 1997 * ( N i 1997 / N 1997 )]} * ( ΔT ij - ΔN i )

Shift-Share Model where: CT ij change in deadweight tonnage in vessel category i in country/region j; WG ij World Growth Effect of vessel category i in country/region j; IM ij Industry Mix Effect of vessel category i in country/region j;

Shift-Share Model where: CE ij Competitive Effect of vessel category i in country/region j; AE ij Allocation Effect of vessel category i in country/region j;

Shift-Share Model T ij vessel category i deadweight tonnage in country/region j; T j deadweight tonnage for all vessel categories in country/region j; ΔP ij change in deadweight tonnage in vessel category i in country/region j from 1997 to 2003; ΔN change in international maritime fleet’s overall deadweight tonnage from 1997 to 2003;

Shift-Share Model N i international maritime fleet’s deadweight tonnage in vessel category i; N international maritime fleet’s overall deadweight tonnage; i vessel categories (oil tankers, bulk carriers, general cargo carriers, containerships, others); and, jCountries (Major Open Registry Nations: Panama, Liberia, Cyprus, Malta, Bahamas, Bermuda) and Regions (developed market economy countries; major open registry countries; developing countries; countries of Central and Eastern Europe; and, socialist countries in Asia)

Results Structure and Ownership Changes Shipbuilding-Tonnage on Order Changes Tonnage of Major Open Registry Fleets Changes

Results Structure and Ownership Changes

Table 2. Structure and Ownership of the Merchant Fleet by Main Country Groups, 1997 and 2003 Fleet, 1997World (Million DWT) DMEC (Million DWT) MORC (Million DWT) DC (Million DWT) CCEE (Million DWT) SCA (Million DWT) Total Oil tankers Bulk Carriers General Cargo Carriers Container- ships Other

Table 2. Structure and Ownership of the Merchant Fleet by Main Country Groups, 1997 and 2003 Fleet, 2003World (Million DWT) DMEC (Million DWT) MORC (Million DWT) DC (Million DWT) CCEE (Million DWT) SCA (Million DWT) Total Oil tankers Bulk Carriers General Cargo Carriers Container- ships Other

Table 2. Structure and Ownership of the Merchant Fleet by Main Country Groups, 1997 and 2003 Chg 97-03World (Million DWT) DMEC (Million DWT) MORC (Million DWT) DC (Million DWT) CCEE (Million DWT) SCA (Million DWT) Total Oil tankers Bulk Carriers General Cargo Carriers Container- ships Other

Table 2. Structure and Ownership of the Merchant Fleet by Main Country Groups, 1997 and 2003 % Chg WorldDMECMORCDCCCEESCA Total Oil tankers Bulk Carriers General Cargo Carriers Container- ships Other

Table 3. World Growth Effect: Changes in Structure and Ownership of the World Maritime Fleet by country groups and by type of ships between 1997 and 2003 Type of Ships DMEC (Million DWT) MORC (Million DWT) DC (Million DWT) CCEE (Million DWT) SCA (Million DWT) Total (Million DWT) Oil Tankers Bulk Carriers General Cargo Carriers Contain erships Other Ships Total

Table 4. Industry Mix Effect: Changes in Structure and Ownership of the World Maritime Fleet by country groups and by type of ships between 1997 and 2003 Type of Ships DMEC (Million DWT) MORC (Million DWT) DC (Million DWT) CCEE (Million DWT) SCA (Million DWT) Total (Million DWT) Oil Tankers Bulk Carriers General Cargo Carriers Contain erships Other Ships Total

Table 5. Competitive Effect: Changes in Structure and Ownership of the World Maritime Fleet by country groups and by type of ships between 1997 and 2003 Type of Ships DMEC (Million DWT) MORC (Million DWT) DC (Million DWT) CCEE (Million DWT) SCA (Million DWT) Total (Million DWT) Oil Tankers Bulk Carriers General Cargo Carriers Contain erships Other Ships Total

Table 6. Allocation Effect: Changes in Structure and Ownership of the World Maritime Fleet by country groups and by type of ships between 1997 and 2003 Type of Ships DMEC (Million DWT) MORC (Million DWT) DC (Million DWT) CCEE (Million DWT) SCA (Million DWT) Total (Million DWT) Oil Tankers Bulk Carriers General Cargo Carriers Contain erships Other Ships Total

Results Shipbuilding-Tonnage on Order Changes

Table 7. Shipbuilding-Tonnage on Order 1997 and 2003 Fleet, 1997World (000 DWT) DMEC (000 DWT) MORC (000 DWT) DC (000 DWT) CCEE (000 DWT) SCA (000 DWT) Total81,22721,96943,5819,4991,2991,461 Oil tankers36,6499,64220,3344, Bulk Carriers 22,4664,06214,1532, ,064 General Cargo Carriers 4,9351,8941, Container- ships 9,2663,4393,9181, Other7,9112,9323,

Table 7. Shipbuilding-Tonnage on Order 1997 and 2003 Fleet, 2003World (000 DWT) DMEC (000 DWT) MORC (000 DWT) DC (000 DWT) CCEE (000 DWT) SCA (000 DWT) Total118,75540,04360,72113, ,684 Oil tankers60,71622,44528,9367,683971,555 Bulk Carriers 30,5227,16320,0322, General Cargo Carriers 4,4081,8001, Container- ships 15,2664,5358,0091, Other7,8434,1002,1971,

Table 7. Shipbuilding-Tonnage on Order 1997 and 2003 Chg 97-03World (000 DWT) DMEC (000 DWT) MORC (000 DWT) DC (000 DWT) CCEE (000 DWT) SCA (000 DWT) Total37,52818,07417,1404, ,223 Oil tankers24,06712,8038,6023, ,543 Bulk Carriers 8,0563,1015, General Cargo Carriers Container- ships 6,0001,0964, Other-681,168-1,

Table 7. Shipbuilding-Tonnage on Order 1997 and 2003 % Chg WorldDMECMORCDCCCEESCA Total Oil tankers ,858.3 Bulk Carriers General Cargo Carriers Container- ships Other ,900.0

Table 8. World Growth Effect: Changes in Shipbuilding-Tonnage on Order of the World Maritime Fleet by country groups and by type of ships between 1997 and 2003 Type of Ships DMEC (000 DWT) MORC (000 DWT) DC (000 DWT) CCEE (000 DWT) SCA (000 DWT) Total (000 DWT) Oil Tankers 4,454.79,934.62, ,572.7 Bulk Carriers 1,876.76,538.91, ,100.5 General Cargo Carriers ,228.2 Contain erships 1,588.91, ,227.6 Other Ships 1,354.61, ,359.8 Total 10, ,675.14, ,488.8

Table 9. Industry Mix Effect: Changes in Shipbuilding-Tonnage on Order of the World Maritime Fleet by country groups and by type of ships between 1997 and 2003 Type of Ships DMEC (000 DWT) MORC (000 DWT) DC (000 DWT) CCEE (000 DWT) SCA (000 DWT) Total (000 DWT) Oil Tankers 1,877.13, ,755.6 Bulk Carriers , ,261.1 General Cargo Carriers -1, , ,743.3 Contain erships ,697.4 Other Ships -1, , ,322.2 Total

Table 10. Competitive Effect: Changes in Shipbuilding-Tonnage on Order of the World Maritime Fleet by country groups and by type of ships between 1997 and 2003 Type of Ships DMEC (000 DWT) MORC (000 DWT) DC (000 DWT) CCEE (000 DWT) SCA (000 DWT) Total (000 DWT) Oil Tankers 6, , , ,022.9 Bulk Carriers 2, ,451.0 General Cargo Carriers Contain erships , ,292.1 Other Ships , ,396.58,171.2 Total 9, , , , ,986.0

Table 11. Allocation Effect: Changes in Shipbuilding-Tonnage on Order of the World Maritime Fleet by country groups and by type of ships between 1997 and 2003 Type of Ships DMEC (000 DWT) MORC (000 DWT) DC (000 DWT) CCEE (000 DWT) SCA (000 DWT) Total (000 DWT) Oil Tankers , ,797.4 Bulk Carriers ,530.3 General Cargo Carriers Contain erships ,101.1 Other Ships , ,536.7 Total , ,015.1

Results Tonnage of Major Open Registry Fleets Changes

Table 12. Changes in Tonnage of Major Open Registry Fleets between 1997 and 2003 Registry, 1997 Total (000 DWT) Oil Tankers (000 DWT) Bulk Carriers (000 DWT) General Cargo Carriers (000 DWT) Container- ships (000 DWT) Other Ships (000 DWT) Panama126,16137,15260,37211, ,045 Liberia90,91648,08828,0673,7034,0017,057 Cyprus32,7506,39017,8275,7471, Malta33,71415,59812,7954, Bahamas36,26719,6247,2036, ,025 Bermuda7,3844,1421, Total327,192130,994128,20731,55819,32717,106

Table 12. Changes in Tonnage of Major Open Registry Fleets between 1997 and 2003 Registry, 2003 Total (000 DWT) Oil Tankers (000 DWT) Bulk Carriers (000 DWT) General Cargo Carriers (000 DWT) Container- ships (000 DWT) Other Ships (000 DWT) Panama168,50851,66781,20811,31316,4937,827 Liberia68,41334,27615,7623,6789,5145,183 Cyprus32,0976,08019,4273,4862, Malta36,64915,61317,1833, Bahamas44,12324,7788,3366,0512,1302,828 Bermuda6,2931,8643, Total356,083134,278145,51427,79431,81616,681

Table 12. Changes in Tonnage of Major Open Registry Fleets between 1997 and 2003 Registry, Chg Total (000 DWT) Oil Tankers (000 DWT) Bulk Carriers (000 DWT) General Cargo Carriers (000 DWT) Container- ships (000 DWT) Other Ships (000 DWT) Panama42,34714,51520,836-75,2211,782 Liberia-22,503-13,812-12, ,513-1,874 Cyprus ,600-2, Malta2,935154, Bahamas7,8565,1541, , Bermuda-1,091-2,2781, Total28,8913,28417,307-3,76412,

Table 12. Changes in Tonnage of Major Open Registry Fleets between 1997 and 2003 Registry, % Chg TotalOil TankersBulk Carriers General Cargo Carriers Container- ships Other Ships Panama Liberia Cyprus Malta Bahamas Bermuda Total

Table 13. World Growth Effect: Changes in Tonnage of Major Open Registry Fleets between 1997 and 2003 CountryOil Tankers (000 DWT) Bulk Carriers (000 DWT) General Cargo Carriers (000 DWT) Container ships (000 DWT) Other Ships (000 DWT) Total (000 DWT) Panama3,2815,3311, ,141 Liberia4,2462, ,027 Cyprus5641, ,891 Malta1,3771, ,976 Bahamas1, ,203 Bermuda Total11,56611,3212,7861,7061,51028,889

Table 14. Industry Mix Effect: Changes in Tonnage of Major Open Registry Fleets between 1997 and 2003 CountryOil Tankers (000 DWT) Bulk Carriers (000 DWT) General Cargo Carriers (000 DWT) Container ships (000 DWT) Other Ships (000 DWT) Total (000 DWT) Panama-2,3492,819-2,3506, ,725 Liberia-3,0411, , ,065 Cyprus ,1931, Malta Bahamas-1, , ,975 Bermuda Total-8,2835,986-6,55210,

Table 15. Competitive Effect: Changes in Tonnage of Major Open Registry Fleets between 1997 and 2003 CountryOil Tankers (000 DWT) Bulk Carriers (000 DWT) General Cargo Carriers (000 DWT) Container ships (000 DWT) Other Ships (000 DWT) Total (000 DWT) Panama18,46710,3881,444-1,3642,10831,043 Liberia-11,367-20, ,930-1,144-28,021 Cyprus ,811 Malta-3252, ,561-1, Bahamas3, , ,216 Bermuda-1,7002, Total7,559-5,4821,3461, ,640

Table 16. Allocation Effect: Changes in Tonnage of Major Open Registry Fleets between 1997 and 2003 CountryOil Tankers (000 DWT) Bulk Carriers (000 DWT) General Cargo Carriers (000 DWT) Container ships (000 DWT) Other Ships (000 DWT) Total (000 DWT) Panama-4,8842, ,562 Liberia-3,6504, , ,443 Cyprus Malta , ,483 Bahamas1, Bermuda ,554 Total-7,5595,483-1,346-1, ,640

Summary and Conclusions Structure and Ownership: DMEC specialized in competitively advantaged oil tankers MORC and DC specialized in competitively advantaged bulk carriers DC and SCA specialized in competitively advantaged general cargo carriers DC specialized in competitively advantaged containerships

Summary and Conclusions Shipbuilding-Tonnage on Order: DC specialized in competitively advantaged oil tankers MORC specialized in competitively advantaged bulk carriers DMEC and SCA specialized in competitively advantaged general cargo carriers DMEC specialized in competitively advantaged other ships

Summary and Conclusions Tonnage of Major Open Registry Fleets: Bahamas specialized in competitively advantaged oil tankers Panama specialized in competitively advantaged bulk carriers Bahamas specialized in competitively advantaged general cargo carriers Bahamas specialized in competitively advantaged other ships