Panel O-36, Maritime Economics, is part of SNAME’s Operations, Safety & Economics Committee. The panel was originally constituted to consider issues of cost estimating for ship operators, shipbuilders, and ship repairers. Today, the panel addresses some of the most important economic issues on the cutting edge of the new maritime technologies. The panel has examined the markets for emerging technologies, assessed likely United States applications of proven foreign technologies and examined the interplay between commercial and military requirements.
Panel O-36 is constituted to address a wide range of topics related to maritime economics. This includes:
+ The markets for ships and craft;
+ The markets for waterborne transportation in the context of the intermodal carriage of passengers and freight; and
+ The markets for other new and emerging marine technologies.
Furthermore, the panel addresses issues that concern the interrelationship between the markets for vessels and those for transportation. The panel also examines the decision-making process incorporating economic constraints that limit monetary and non-monetary resources.
Broadly speaking, the panel undertakes three types of investigations:
+ Market studies
+ Cost estimation techniques
+ Optimization studies
Market Studies - Market studies address the behavior of the markets for ships and for the services that ships provide, e.g., transportation of goods and people. This includes topics such as the following:
+ Supply and demand mechanisms;
+ Projections of market behavior; and
+ Market imperfections and their impact, such as
- Regulation,
- Subsidies, and
- Discrimination/protectionism.
Market studies tend to be information driven, and when properly executed, to provide a macro-economic picture of market behavior and performance over time. Particularly in an era of increasingly commercial emphasis within the U.S. maritime industry, market studies are becoming increasing important.
Cost Estimation Techniques - Cost estimation techniques concern the processes by which the investment and operating costs of a system can be evaluated or predicted. These may include:
+ The structure and content of ship investment and operating costs;
+ Life Cycle Cost (“LCC”) studies and procedures for developing and applying LCC information; and
+ Shipyard cost estimating including the techniques for estimating the costs associated with future production activity.
The development and intelligent application of cost studies are necessary and central to the success of any industrial activity. This subject becomes particularly complex when ships and shipping activities are involved.
Optimization Studies - Optimization studies involve choices: the processes by which ship designs, projects, and other specific operations are measured against specific criteria. We also include in this category other methods and processes for making choices or decisions, such as:
+ Economic Modeling: development and applications of models that evaluate economic performance, using Required Freight Rate (“RFR”), Net Present Value (“NPV”) or similar measures.
+ Operations Analysis: optimization of maritime operations under a series of constraints, using Linear Programming (“LP”), and other related techniques.
+ Public Choice Models: methods for decision-making in the public sector, including Cost-Benefit analysis andrelated techniques.
These processes and techniques can be applied to a broad variety of maritime activities, including but not limited to vessel operations. This topic area tends to be micro-economic in scope, in that it is focused on a single unit, project, or enterprise.
Panel Functions
Panel O-36 performs three principal functions within the SNAME community:
First, Panel O-36 is the source and repository within the SNAME T&R structure for both historical and current information on economics related to the maritime industry. In this context, Panel O-36 serves as a contributor to any other Society or T&R activity that requires information or a contribution in this field. In addition, published reports on subjects within the area of maritime economics are an objective of this Panel.
Second, Panel O-36 is a forum for the exchange of information on maritime economics. Attendance at Panel O-36 meetings and workshops and participation in its discussion group provides opportunities for market analysts, system designers, and cost engineers to interact, exchange information on current activities and projects, and generally to support and encourage the practice of maritime economics within the maritime industry.
Finally, Panel O-36 actively cooperates or collaborates with other SNAME T&R entities and with other societies on joint projects. Establishing the bases for sound economic decision-making in particular markets can be beneficial as a catalyst for commercial investment in emerging maritime technologies.
Panel Activities
The activities of Panel O-36 are centered on exploring issues of interest and relevance to its members. The panel has undertaken inquiries into issues such as understanding demand and cost side economics of fast cargo ships; examining the markets for fast ferries in the United States; addressing the feasibility of militarily-useful sealift ships being deployed by private operators on commercial trade routes; and examining structural changes in the liner industry that will accompany the introduction of very large container carriers. Two panel members developed a case study in maritime economics to illustrate “economic hind casting” which has been used in an academic curriculum. For a full description of the panel’s activities, please visit our library, workshops, and current projects pages.