1. 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

2. 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

3. 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

4. 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

5. 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

6. 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

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

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

9. 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

10. 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”

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

12. 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

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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 )

19. 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 1997 - [ T j 1997 * ( N i 1997 / N 1997 )]} * ( ΔT ij - ΔN i )

20. 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;

21. 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;

22. Shift-Share Model T ij 1997 1997 vessel category i deadweight tonnage in country/region j; T j 1997 1997 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;

23. Shift-Share Model N i 1997 1997 international maritime fleet’s deadweight tonnage in vessel category i; N 1997 1997 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)

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

25. Results Structure and Ownership Changes

26. 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) Total775.9202.6361.0149.824.426.0 Oil tankers272.083.9136.542.43.93.3 Bulk Carriers 281.052.9145.957.87.811.3 General Cargo Carriers 103.919.837.527.98.88.3 Container- ships 56.120.7 9.90.41.7 Other62.925.320.411.83.51.4

27. 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) Total844.2217.1398.4171.316.028.3 Oil tankers304.496.4147.852.73.04.6 Bulk Carriers 300.150.6163.862.33.412.1 General Cargo Carriers 97.219.833.128.36.58.2 Container- ships 82.820.036.814.90.42.2 Other59.722.316.913.12.71.2

28. 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) Total68.314.537.421.5-8.42.3 Oil tankers32.412.511.310.3-0.91.3 Bulk Carriers 19.1-2.317.94.5-4.40.8 General Cargo Carriers -6.70.0-4.40.4-2.3-0.1 Container- ships 26.77.316.15.00.00.5 Other-3.2-3.0-3.51.3-0.8-0.2

29. Table 2. Structure and Ownership of the Merchant Fleet by Main Country Groups, 1997 and 2003 % Chg 97- 03 WorldDMECMORCDCCCEESCA Total8.87.210.414.4-34.48.8 Oil tankers11.914.98.324.3-23.139.4 Bulk Carriers 6.8-4.312.37.8-56.47.1 General Cargo Carriers -6.40.0-11.71.4-26.1-1.2 Container- ships 47.635.377.850.50.029.4 Other-5.1-11.9-17.211.0-22.9-14.3

30. 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 7.412.03.70.3 23.7 Bulk Carriers 4.712.85.10.71.024.3 General Cargo Carriers 1.73.32.50.80.79 Contain erships 1.8 0.90.00.14.6 Other Ships 2.21.81.00.30.15.4 Total17.831.713.22.12.267

31. 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 2.64.21.30.1 8.3 Bulk Carriers -1.1-2.9-1.2-0.2 -5.6 General Cargo Carriers -3.0-5.7-4.3-1.3 -15.6 Contain erships 8.0 3.80.20.720.7 Other Ships -3.5-2.8-1.6-0.2 -8.3 Total3.00.8-2.0-1.4-0.9-0.5

32. 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 2.1-4.66.5-3.02.53.5 Bulk Carriers -8.22.70.2-0.90.0-6.2 General Cargo Carriers 1.7-2.61.6-0.60.20.3 Contain erships -1.87.90.3-0.8-0.35.3 Other Ships -1.1-3.52.0-0.4-0.2-3.2 Total-7.3-0.110.6-5.72.2-0.3

33. 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 0.4-0.4-1.31.6-1.6-1.3 Bulk Carriers 2.35.30.4-4.00.04.0 General Cargo Carriers -0.50.6 -1.10.3-0.1 Contain erships -0.7-1.60.00.60.0-1.7 Other Ships -0.61.1-0.1-0.30.10.2 Total0.95.0-0.4-3.2-1.21.1

34. Results Shipbuilding-Tonnage on Order Changes

35. 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 tankers36,6499,64220,3344,36435012 Bulk Carriers 22,4664,06214,1532,1764071,064 General Cargo Carriers 4,9351,8941,808570289262 Container- ships 9,2663,4393,9181,60769117 Other7,9112,9323,3687821846

36. 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) Total118,75540,04360,72113,9093983,684 Oil tankers60,71622,44528,9367,683971,555 Bulk Carriers 30,5227,16320,0322,58841698 General Cargo Carriers 4,4081,8001,547583223254 Container- ships 15,2664,5358,0091,905-817 Other7,8434,1002,1971,15037360

37. 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) Total37,52818,07417,1404,410-9012,223 Oil tankers24,06712,8038,6023,319-2531,543 Bulk Carriers 8,0563,1015,879412-366 General Cargo Carriers -527-94-26113-66-8 Container- ships 6,0001,0964,091298-69700 Other-681,168-1,171368-147354

38. Table 7. Shipbuilding-Tonnage on Order 1997 and 2003 % Chg 97- 03 WorldDMECMORCDCCCEESCA Total46.282.339.346.4-69.4152.2 Oil tankers65.7132.842.376.1-72.312,858.3 Bulk Carriers 35.976.341.518.9-89.9-34.4 General Cargo Carriers -10.7-5.0-14.42.3-22.8-3.1 Container- ships 64.831.9104.418.5-100.0598.3 Other0.939.8-34.847.1-79.95,900.0

39. 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 4,454.79,934.62,016.2161.75.516,572.7 Bulk Carriers 1,876.76,538.91,005.3188.0491.610,100.5 General Cargo Carriers 875.1835.3263.3133.5121.01,228.2 Contain erships 1,588.91,810.2742.531.954.14,227.6 Other Ships 1,354.61,556.1361.385.02.83,359.8 Total 10,150.020,675.14,388.6600.1675.036,488.8

40. 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 1,877.13,958.5849.668.12.36,755.6 Bulk Carriers -420.1-1,463.8-225.1-42.1-110.0-2,261.1 General Cargo Carriers -1,077.3-1,028.4-324.2-164.4-149.0-2,743.3 Contain erships 638.0726.8298.112.821.71,697.4 Other Ships -1,279.8-1,585.0-368.0-86.6-2.8-3,322.2 Total -262.1608.1230.4-212.2-237.8126.4

41. 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 6,652.6-4,594.4445.1-808.684,328.286,022.9 Bulk Carriers 2,459.9319.5-204.3-121.8-2.32,451.0 General Cargo Carriers 76.3-99.574.8-9.66.848.8 Contain erships -824.11,971.8-500.7-244.1889.21,292.1 Other Ships 870.7-1,439.3443.3-100.08,396.58,171.2 Total 9,235.4-3,841.9258.2-1,284.193,618.497,986.0

42. 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 -181.4-156.78.1325.7 -82,793.1-82,797.4 Bulk Carriers -815.4484.5-164.0-390.2-745.2-1,530.3 General Cargo Carriers 32.031.6-0.9-25.513.250.4 Contain erships -306.8-417.9-241.9130.5-265.0-1,101.1 Other Ships 322.5297.2-68.6-45.4-8,042.4-7,536.7 Total -949.1238.7-467.3-4.9 -91,832.5-93,015.1

43. Results Tonnage of Major Open Registry Fleets Changes

44. 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) Panama126,16137,15260,37211,32011.2726,045 Liberia90,91648,08828,0673,7034,0017,057 Cyprus32,7506,39017,8275,7471,969817 Malta33,71415,59812,7954,059625637 Bahamas36,26719,6247,2036,5039122,025 Bermuda7,3844,1421,943226548525 Total327,192130,994128,20731,55819,32717,106

45. 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 Cyprus32,0976,08019,4273,4862,739365 Malta36,64915,61317,1833,061539253 Bahamas44,12324,7788,3366,0512,1302,828 Bermuda6,2931,8643,598205401225 Total356,083134,278145,51427,79431,81616,681

46. Table 12. Changes in Tonnage of Major Open Registry Fleets between 1997 and 2003 Registry, Chg 97-03 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-22,503-13,812-12,305-255,513-1,874 Cyprus-653-3101,600-2,261770-452 Malta2,935154,388-998-86-384 Bahamas7,8565,1541,133-4521,218803 Bermuda-1,091-2,2781,655-21-147-300 Total28,8913,28417,307-3,76412,489-425

47. Table 12. Changes in Tonnage of Major Open Registry Fleets between 1997 and 2003 Registry, % Chg 97-03 TotalOil TankersBulk Carriers General Cargo Carriers Container- ships Other Ships Panama33.639.134.5-0.146.329.5 Liberia-24.8-28.7-43.8-0.7137.8-26.6 Cyprus-2.0-4.99.0-39.339.1-55.3 Malta8.70.134.3-24.613.8-60.3 Bahamas21.726.315.7-7.0133.639.7 Bermuda-14.8-55.085.2-9.3-26.8-57.1 Total8.82.513.5-11.964.6-2.5

48. 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) Panama3,2815,3311,00099553411,141 Liberia4,2462,4783273536238,027 Cyprus5641,574507174722,891 Malta1,3771,13035855562,976 Bahamas1,733636574811793,203 Bermuda365172204846651 Total11,56611,3212,7861,7061,51028,889

49. 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-2,3492,819-2,3506,289-6843,725 Liberia-3,0411,311-7692,232-798-1,065 Cyprus-404832-1,1931,098-92241 Malta-986597-843349-72-955 Bahamas-1,241336-1,350509-229-1,975 Bermuda-26291-47306-5929 Total-8,2835,986-6,55210,783-1.9340

50. 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-11,367-20,4279873,930-1,144-28,021 Cyprus-965-581-866-494-905-3,811 Malta-3252,747-412-1,561-1,019-570 Bahamas3,4493171741,4777996,216 Bermuda-1,7002,07419-399-211-217 Total7,559-5,4821,3461,589-3724,640

51. 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-4,8842,298-101-699-176-3,562 Liberia-3,6504,334-570-1,002-555-1,443 Cyprus495-226-710-947323 Malta-51-86-1021,0716511,483 Bahamas1,213-156150-84854413 Bermuda-682-681-13-102-76-1,554 Total-7,5595,483-1,346-1,589371-4,640

52. 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

53. 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

54. 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