1. INVESTMENT EVALUATION OF A SUBURBAN COASTAL TRANSPORT SYSTEM SAMBRACOS Evangelos Professor Dept. of Economics University of Piraeus e-mail: sambra@unipi.gr

2. 10th IFORS SPECIAL CONFERENCE 2 Objective  Investigate the viability and economic possibility of a suburban coastal shipping system in the area of Athens  Estimation of the best viable solution

3. 10th IFORS SPECIAL CONFERENCE 3 Development of Suburban coastal transportation system Characteristics of Athens urban center  expansion of residences towards the suburbs  road transport system for citizen mobility & goods transit  private costs for its users  high society cost, “externalities” - negative secuences on the environment (pollution, noise, etc.) - the cost of accidents - the cost of traffic congestion, etc.

4. 10th IFORS SPECIAL CONFERENCE 4 Development of Suburban coastal transportation system The establishment of a suburban coastal transport system - movement of cargo and passengers by sea between ports situated in a geographical area, that is the area of Athens - connection between Piraeus and South Athens (Moschato, Kalithea, P.Faliro, Alimos, Elliniko, Glyfada, Voula, Vouliagmeni, etc.)

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6. 6 Economic features of a suburban coastal shipping operation  Cost of the System - investment cost, - operating cost (fixed and running cost) - the depreciation cost - the financial cost  Scenarios A. one stop between the ports of origin and destination, using two vessels on pick hours B. two stops between the ports of origin and destination, using three vessels on pick hours

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8. 8 Investment Cost and Operating cost for the two scenarios (000drh)

9. 10th IFORS SPECIAL CONFERENCE 9 Viability of the suburban coastal transport system  Case Α: Scenario 1 (1 mid-stop), price of the ticket 700drh.  Case Β: Scenario 2 (2 mid-stops), price of the ticket 700drh.  Case C: Scenario 1(1 mid-stop), price of the ticket 500drh.  Case D Scenario 2 (2 mid-stops), price of the ticket 500drhRevenues Case Α: 913 mil.drh. Case Β : 961 mil.drh. Case C: 828 mil.drh. Case D: 875 mil.drh.

10. 10th IFORS SPECIAL CONFERENCE 10 Financial analysis of the suburban coastal transport system  Financial viability of the system for its operator, the entrepreneurial cost and benefit from such an undertaking  Variables: u number of stops/vessels u price of the ticket u % of loan and own capital u loan interest  Indicators: NPV,IRR

11. 10th IFORS SPECIAL CONFERENCE 11 Relation: % of Loan and NPV

12. 10th IFORS SPECIAL CONFERENCE 12 Financial analysis of the suburban coastal transport system

13. 10th IFORS SPECIAL CONFERENCE 13 Financial analysis of the suburban coastal transport system

14. 10th IFORS SPECIAL CONFERENCE 14 Loan Interest and % of Loan

15. 10th IFORS SPECIAL CONFERENCE 15 Sensitivity analysis for Case A

16. 10th IFORS SPECIAL CONFERENCE 16 Conclusions The above quantitative analysis proves the following:  There is a reverse analogy between NPV and the % of Loan for the investment cost  Case A shows the higher NPV (and IRR) and therefore is the most efficient financial solution  The % of Loan that makes NPV=0 is higher for Case A, in every level loan interest  The sencitivity analysis for Case A, shows that the higher the level of uncertainty in the total revenues (reduction in demand) the lower the % of Loan