Analysis of Economies of Scale

Analysis of Economies of Scale GONZALO PARENTE QUESTION 1: ECONOMIES OF SCALE: Shipping is an immense industry requiring huge financial investments and continuous development. Therefore, it has become an ideal game field to find and implement economies of scale. Any minor achievement on this will mean an impressive extra benefit in terms of cost reduction and efficiency gains. However, when economies of scale are managed under wrong market perspectives it can generate catastrophic results affecting for example ports flexibility and their commercial feasibility (e.g. congestion at terminal, hinterland) (P. Rodrigue, 2014). It is important to highlight that different shipping segments require different strategies due to variations on operations and infrastructure. Therefore, it can be found different shipping niches where economies of scale can be applied: Bigger capacity leads to lower costs per unit: Benefits, in terms of costs per unit, increase with ships capacity. If a comparison, in terms of operating costs, is made between a TTT class and a New Panamax vessel, it can be seen that megaships would be 30% cheaper than medium size vessels ($100/TEU) (P. Rodrigue, 2014). Bigger ships carry less fuel consumption: It is known that fuel consumption counts around 45%-50% of operating costs. Modern ships have led to a reduction on fuel consumption turning the shipping industry into a more profitable business. Under normal conditions, megaships consume 164 tons of fuel per day, being 35% lower than a medium size vessel (P. Rodrigue, 2015). Low speed (Slow steaming) also reduces fuel consumption: During the crisis of 2008-9 a new sailing approach came up, Slow steaming, reducing the speed to 18-20 Knots aiming to lower the fuel consumption. It enabled the market to absorb the over-fleet capacity during periods of slack demand, without impact in port congestion thanks to keep the fleet port call frequency. While a Post Panamax consumes 230 tons per day sailing at 24 Knots/hour, at 21 Knots/hour it would burn 150 tons per day (33% less) (P. Rodrigue, 2015). New shipbuilding techniques mean vessels being built rapidly: It has let ship-owners increase their fleets in a much reduced time at very low prices, taking advantage of the market conditions at all times. It is economy of scale applied to ship design. For example the new ships price fall between 2008 and 2009 was due to the appearance of revolutionary techniques offering new ships at very low prices (Stopford, 2009). Vessel ´s specialization leads to market flexibility: Not only economies of scale but also economies of scope are encompassed by ship specialization. Case: In order to fight against the inefficiency generated by bulk carriers sailing in ballast, a new specialized vessel came up called Multi-purpose. In terms of economies of scale, a multi-purposes vessel was an innovated idea due to the wide range of goods that it can accommodate at the same time, adapting it to the market conditions at all the moments without concerning about the port features, season, trends etc (Stopford, 2009). New technology and handling equipment speed up port operations: Operating mega vessels under high levels of productivity/efficiency requires sophisticated handling equipment. TTT vessels can be operated by 7 cranes at once (251 TEU/hour); while NewPanamax vessels need 6 cranes to handle 140 TEU/hour (Stopford, 2009). As a conclusion, the application of economies of scale to the shipping industry has led to a positive impact on the global economy. QUESTION 2: COST ELEMENTS OF SHIPPING: When talking about shipping costs, two main types of costs must be always taken into account: voyage related costs and no-voyage related costs. However, a better way to understand how different costs work in the shipping industry is by classifying them into capital, operating and voyage costs (ICS 2012, 2103; Plymouth university -Mr Adkins, 2014). The capital costs are fixed costs directly related to the vessel ´s purchase. These costs are part of the owner ´s responsibility. Some of these costs are Pre-delivery costs: the cost of transporting the vessel from the shipyard (e.g. japan) to the delivery point (e.g. Rotterdam). Loan repayment: it involves all the money that the shipowner must pay back to the bank. Leasing charges refer to the cost that shipowners must pay to the lessor e.g. TC for capesize, 5 years = $10500 per day. Depreciation: it refers to the decline in value of the vessel or any other infrastructure. Depreciation depends on the cost of the asset, the expected salvage value of the asset, the estimated life of the asset. Vessels life aprox. 25 years. Operating costs can be divided into four groups: crew costs, repair and maintainace, insurance and administration. Crew costs include the seafarer`s wages (Not the same for Philippines, American or Greeks), the travel costs (Not the same from UK to Rotterdam than UK to Italy), crew training (Depends on flag state/ship registries), medical inspections, recruitment process, insurances for crew accidents. Repair and maintenance costs include the maintenance of engines and other equipment, replacement of vessel ´s parts. For old vessels, it counts even 14% of operating costs. Insurance costs: The two compulsory insurances that every vessel must have are the 2/3 hull and machinery and the 1/3 third party liability. Administration costs consists of communication costs agents in port, or shore based administration and management charges. The voyage costs are one of the most important costs that shipowners must take into account when planning voyages. It is usually known as voyage estimation. Fuel charges: include the fuel price, the engine power and efficiency, the design and state of hull and the ship ´s speed. Port charges include the port dues which is the general use of port facilities (depends on volume of cargo, weight of cargo, gross tonnage and net tonnage). Service charges which include the pilotage, towage and cargo handling. Canal charges refer to the price vessels have to pay to ship across these short cuts. Please see below a good example of voyage estimation: (Private data from Shipbroking firm) Vessel: 8.000 TEU Route: Shanghai-Rotterdam (12.000 miles and 100% load factor). Bunker price = $650 Ship cost = $100m Containers = $20m Operating costs = $8.500 Value of cargo = $60.000 per TEU Annual interest rate = 3% Emission cost = $30 per tonne of fuel consumed Freight rate = $800 per TEU A ship is considered profitable when after taking into account capital, operating and voyage costs, still generate profits for the shipowner. This profit directly depends in the market level and freight rates. It is not the same to fix a vessel for WS50 than for WS80.Sometimes, it happens that freight rates vary for the same vessel size. One of the main factors is the geography. Depending on the demand for vessels in those specific markets, some shipowners will be willing to accept higher or lower freight rates. . For example: A vessel operating in Cross-MED for WS50 and a vessel operating UKC-ARA for WS80. In order to make your vessel more profitable, some strategies can be applied to seek economies of scale. Nowadays, one of the most popular seems to be slow steaming. QUESTION 3. WORLD MERCHANT FLEET, STRUCTURE AND COMPOSITION: As seen, shipping is a global industry formed by a sum of different sub-markets. This question is focused on the bulk market and the main differences between three of the biggest segments: tanker, dry bulk and containers. When looking at different shipping segments, it is important to analyze not only the routes of each segment but also the type and vessel size used in each of the markets. For liquid bulk cargoes, the type of vessel used is known as tanker vessels. Tankers are divided in two main groups: crude oil tankers and product tankers (ICS, 2015). Crude oil tankers range from 80.000-120.000 dwt (Aframax), 120.000-200.000 (Suezmax), to 200.000-500.000 dwt (VLCCs-ULCCs). The main routes are AG-USG, AG-China, AG-Japan and AG-ARA-UKC (ICS, 2014). Product tankers range from 10.00-42.000 dwt (Handy), 42.000-60.000 dwt (MR), 60.000-120.000 dwt (LR1-LR2). The main routes are USA-UKC for Diesel, NE to USG-N. America for gasoline and AG-China/Japan/ARA for Naphtha. For the product industry it is important to take into account the refineries location (ICS, 2015). The main features of crude oil and chemical products are that must be stored into tanks, handled by pumping and in some cases can be corrosive and toxic. For dry bulk cargoes, the type of vessel used is known as dry bulk ships. Some of the main features of this cargoes are that are shipped in large quantities and handled with automated equipment like belts and conveyors. The size of the vessel usually varies with the commodity transported. These are the most important commodities in the dry bulk industry (ICS, 2013; E. Branch, 2012). Iron ore: Main routes: Brazil to China-W. Europe (Panamax)- Australia to Japan/China (Panamax). Raw material of steelmaking. Major importers, it changes with countries development. China, Japan and USA are considered the three bigger consumers. Major exporters, Australian, Brazil, India or South Africa. Key players: Vale, BHP Billiton, Rio Tinto, ArcelorMittal, Metalloinvest, Anglo American. Ports/Terminals: Itaqui, Tubarao, Sepetiba, Ponta do Uba, Dampier, Port Walcott. Coal: Main routes: Australia to Japan/W.EU S.Africa to EU (Handymax), Columbia to W.EU (Panamax). Raw material of steelmaking as well as fuel for generating power. There are two main types: Cocking coal and steam coal. Coking coal: Australia is the worlds largest exporter. Steam coal: Australia Indonesia larger exporters. Major coal importers are Europe and Japan (43% of the world ´s coal imports). Grain: Main routes: US to S.America/Japan/Asian countries (Panamax), Argentina to Brazil (Handysize). Wheat, maize, rice, barley, soya etc. They all seasonal and irregular in volume and route. Major importer: Japan, China, Russia, EU, N. Africa, Brazil, Middle East countries. Main exporters: Canada, N.S. America, Australia. The last group are the containerships. Containerships have been positively affected by technologic improvements such as containerization or automization. Vessels range from: -1000 TEU (Small feeder), 1.000-2.000 TEU (Feeder), 2.000-3.000 (Feedermax), 3.000-5.000 Panamax, 5.000-10.000 TEU (Post Panamax), 10.000-15.000 TEU (New Panamax), +14.000 (ULCV) (ICS, 2015). The main routes for containerships are from F.EAST to EU and US (Panamax, Post Panamax), USA to China (Panamax and Post Panamax) and from USA to EU (Post Panamax and smaller) (ICS, 2015). It is interesting to highlight that companies are struggling on the return voyage from West to East. It makes operators to find different ways to optimize the empty containers in order to avoid the loss of marginal profit. QUESTION 4. SUPPLY AND DEMAND AND ITS IMPACT ON FREIGHT RATES: (Based on my dissertation) The shipping industry is a global-scale industry ruled by a combination of factors in charge of determining market trends, market levels and cycles. The supply and demand for vessels will establish the shipping market balance. The mechanism used to link the supply and demand in this industry is known as freight rates. Freight rates reflects the balance of ships and cargoes available in the market at a certain time (Stopford, 2009). Too many ships usually mean low freight rates, and too few ships usually mean high freight rates. Once freight rates are established, charterers and shipowners adjust to them, bringing the supply and demand into balance (Stopford, 2009). The Baltic Exchange is the organization in charge of providing, in co-operation with top shipping companies, daily reports for different markets and vessels sizes (BDTI TD1, TD6à ¢Ã¢â€š ¬Ã‚ ¦). In terms of the shipping market model, 5 supply and 5 demand factors strongly influence the freight rates. On the demand side, one of the most important variables is the world economy and, especially, the global business cycles and local development trends (emerging economies-Nigeria). World economy plays an important role when determining the price of commodities and also when setting the freight rates that buyers and sellers are able to pay to transport them. Another two key factors to achieve economies of scale are the average haul distance and the amount of cargo shipped per voyage. Random economic shocks (2008 crisis) have also a great weight in shipping demand. As these shocks affect demand and people economic power, freight prices are reduced as the demand for these commodities is considerably reduced. And, last but not least, transport costs encompassing capital, voyage and operational costs (ICS, 2015; Stopford, 2009; Lectures given by Jonathan Challecombe: International Shipping and Maritime Management and Markets). On the supply side, the new buildings and scrapping activities are essential to adjust the market balance. New buildings increase the fleet supply, lowering freight rates. Scrapping reduces the fleet supply, increasing freight rates. Fleet productivity is another factor which is focused in vessel ´s efficiency. In a fast pace market, speed and waiting times are crucial for business profitability. The last variable is the freight revenue. For example in markets with strong trends, shipowners may extend their vessel ´s life or purchase second-hand vessels to take advantage of the market; while in markets ruled by weak trends, old ships are scrapped 10 or 15 years before their commercial life ends (ICS, 2015; Stopford, 2009; Lectures given by Jonathan Challecombe: International Shipping and Maritime Management and Markets). For example it is good to understand what is going with the current dry bulk and container markets. The very low freight rates experienced during the last few months are caused by the extreme difference in terms of fleet growth (+) and the fleet demand (-). This situation has led to overcapacity. As a conclusion and in order to become again a balanced industry, shipping companies should follow a new tool developed by BIMCO known as Zero supply growth. It mainly require shipowners to neutralize the delivery of new vessels every year by scrapping an equal amount of capacity from the existing fleet (BIMCO, 2016). Mergers and acquisitions are also great strategies although will lead to a more monopolized market. QUESTION 6. RELATIONSHIP BETWEEN GLOBAL ECONOMIC DEVELOPMENT AND SEABORNE TRADE: As a derived demand, maritime shipping is shaped by worldwide macroeconomic conditions. Although shipping market is very complex we can say that there are five major factors which rule the demand for shipping: transport costs, seaborne commodity trades, average haul, random shocks and world economy, which is the most important one (Stopford, 2009). World economy impacts on the demand for shipping mainly through the business cycle and the trade development cycle. Business cycle lays the foundation for shipping cycle, so that fluctuations in the rate of world economic growth cause a cyclical pattern of demand for shipping. There is a close relationship between the growth rate of shipping and the world GDP, what becomes clear if you see how both parameters have closely changed over the recent history. It is not surprising given that world economy generates the most of demand for shipping by importing raw materials for manufacturing or exporting manufactured products. Another side of the relationship between macroeconomics and shipping is the seaborne commodity trades, which can be divided into short-term and long term. Seasonality of some trades is an important cause of short-term volatility. For instance, many agricultural commodities are linked to seasonal reasons, caused by harvest. But in the oil business there also is a cycle that reflects the seasonal fluctuation in energy consumption in western countries. Seasonality has a great impact on spot market (Dry and wet bulk) (ICS, 2015). The flows of raw materials (mainly ores and crude oil) follow a shipping pattern from developing countries towards developed countries. Transports terminals in developing countries are specialized in loading raw materials while developed countries unload are focused on unloading. On the other hand, the flows of manufactured goods mainly concerned developed countries, but it is changing due to the effects of globalized manufacturing processes. We have a new geography of global trade, which can be depicted quite accurately by maritime shipping routes. Developing countries are no longer just the suppliers of high volume-low value raw materials, but instead now also import large volumes of oil, iron ore, and participate in global value chains and the globalized production of manufactured goods (Stopford, 2009). As a result, developing countries are emerging as major world exporters and importers. They have also become main players in globalized manufacturing processes. As an instance we can mention that the growing energy needs of developing countries and the expansion of South-South trade are contributing to recharging tanker shipping and trade maps, supported by the US strategy to get its energy independence. QUESTION 7. ESTIMATING AND FORECASTING It is said that information is the most important variable that make shipping companies win or lose. Currently, technology has enhanced companies to get information from the market, global economy and many other factors in order to make an accurate market estimation and take advantage of it (Stopford, 2009). However, it is said that not all information is reliable, creating uncertainty among shipping players. It is why not only shipowners but also charterers, traders, operators and even brokers must have a clear network to get daily outlooks of what is going on in the market at every stage. Some of the most common information sources are: Shipping institutions: BIMCO, IMO, ICS, BALTIC EXCHANGEà ¢Ã¢â€š ¬Ã‚ ¦ Broking companies: PLATEAU DAILY REPORTSà ¢Ã¢â€š ¬Ã‚ ¦ Newspapers, magazinesà ¢Ã¢â€š ¬Ã‚ ¦ QUESTION 9. RISK MANAGEMENT: A popular strategy used in the shipping industry to reduce the effects of volatile markets is known as bunker hedging. It consists in a fuel price analysis and it is used with the purpose of reducing the company ´s exposure to volatile bunker costs and eliminating the risk of companies ´ bunker budgets getting out of control (Mercatus, 2016). Swap is one of the most popular uses when bunker hedging (Mercatus, 2016). It allows the buyer to hedge his bunker exposure by fixing the price he pays for fuel at a predefined level, over a predefined period of time. Two different scenarios can be found: Scenario 1: It is when fuel prices move from below the swap execution price. As a financial compensation, the shipping company has to pay back the difference between the market price and the swap price to his trading counterparty in order to offset low prices in the market (C, Cheetham, 2013). Scenario 2: It is when fuel prices move above the swap execution price. As a financial compensation, the shipping line has to receive the difference between the market price and the swap price from his trading counterparty in order to offset high prices in the market (C, Cheetham, 2013). A great forecasting job must be done before entering into a bunker hedging agreement. Shipping companies need to be sure in terms of future bunker prices trends. Related factors such as new oil fields, global trade and international regulations must be always taken into account. When properly managed, bunker hedging can lead companies to generate bigger profits as the exposure to fuel prices fluctuations is removed. A freight derivate contract is defined as a financial contract between two different parties, where future prices for transporting goods by sea are agreed. Freight derivate contracts are usually divided into two main groups: Forward Freight Agreement (FFA) and Freight Swap Agreement (FSA) (Baltic Exchange, 2016). These derivate contracts are used by charterers and shipowners in order to hedge against fluctuations in freight rates. The main difference between the FFAs and FSAs is the assumption of risk. With FSA risk for both parties, with FFA risk assumed by the counterparty. FFAs cover the route, settlement date, contract size and contract rate. Lastly, the main difference between hedging and speculation is that speculation involves an activity to make profit and hedging only attempts to reduce economic business risk. QUESTION 10. OTHER SEGMENTS AND SPECIALIZED CARGOES: LNG stands for Liquefied Natural Gas and it is considered the third major energy source carried by sea, after oil and coal. It is one of the most environmentally friendly energy source which is mainly used for power generation and for the domestic use. LNG is considered a hazardous cargo which requires coated tanks and isolated facilities at port in order to safely handle its extremely low temperature (ICS, 2015; Stopford, 2009; Energy Annual Reports, 2016). LNG is usually transported by Very Large Gas Carriers for very long voyages. LNG can be also transported via pipelines, although for that liquefaction is needed. The transport of LNG includes four different activities: Transportation of LNG from gas fields to plants, via pipeline. Methane gas is separated from other substances and stored for sea transportation. LNG loaded into ships. Receive and store LNG at delivery terminals. The LNG costs are divided in the following proportions: 15% production, 40% liquefaction, 25% sea transport, 20% regasification. It is important to highlight that LNG trade is conducted with long-term contracts (Bareboat or Time Charters) with fixed prices. Main exporters: Iran, Qatar and Russia in less scale: Africa, Asia, North and South America and the EU. Main importers: USA, EU, Japan, S. Korea and China. QUESTION 11. PORT DEVELOPMENT: In order to better understand how ports and terminals develop, it is fundamental to focus in a specific port. In my case, the Port of Rotterdam has been chosen as it was one of my research topics at university. As shipowning companies, ports and terminals are in continuous development process where technology and efficiency improvement are always sought. Time reduction when loading and unloading, port accessibility, hinterland connections and the ability of create economies of scale in terms of cargo handling and cargo storage are some of the main reasons why ports have evolve from individual specialized terminals to huge multipurpose shipping hubs where not only shipping but also logistics activities are carried out(Notteboom and Rodrigue, 2004). It has led to improve the supply chain and the instalment of strategies such as JIT (Just in time). Spatial relationships between terminals are key points in port competition. In order to explore how terminals should interact with each other, two main concepts are highlighted: centrality intermediacy (Notteboom and Rodrigue, 2005). Centrality places terminals as a point of origin and destination traffic. It involves intermodal activities and gene rates economic activities in its vicinity. Intermediacy sees terminals as an intermediate point in the flow of freight. It could also be a good point to exploit transshipment (Notteboom and Rodrigue, 2005). The main reasons why some ports stop developing when they reach a certain stage are: lack of green fields to build new terminals (Eg, Southampton Port or the ICTT Terminal, Vallarpadam-India) and the strong competition from terminal global terminal operators such as Dubai Ports World and APM (Venugopal, 2014). For example, the Port of Rotterdam has been working for a long time in two main expansion projects. Firstly, Maasvlakte I which was completed few years ago, and Maasvlakte II which is still on-process. In terms of space, the Port of Rotterdam will gain a total of 20%-22% extra space to allocate the forecasted rising number of containers and enhance a more viable multimodal system. Economies of scale are achieved by the great number of containers that it is able to handle. Thanks to its dimensions, total costs are divided over more than 11.5 million TEU they handle every year. The provision of customer focused services as well as 24/7 cargo handling and storing activities enhance the port to provide a reduction on vessel ´s turnaround times what leads to better productivity. Last but not least, the proximity of the dry bulk and tanker terminals to key production and storing points give the port an important comparative advantage. It minimizes costs and increases safety and effi ciency in terms of time. The great connections with the hinterland and foreland makes this port a global shipping choke point (Notteboom and Rodrigue, 2004). In order to remain globally competitive, attract foreign trade and increase the total volume of exports and imports, countries have to encourage private operators to invest in national ports infrastructure including port configuration, handling equipment and port connectivity. QUESTION 12: THE CONTAINER SHIPPING MARKET: Over the years, container shipping lines have placed increasing amounts of hope in the notion that the trading growth being experienced in emerging markets would improve the demand of containerships. However, as a large number of Super-Post Panamax containerships (ULCV) of size between 13,000 19,000 TEUs being introduced to the market, increasing the current total capacity of world containership in service to 18.2 million TEUs; the overcapacity issue looks set to continue in 2015, although less severe than year 2009. Currently, the largest containership recorded in the industry are the sister vessel MSC Oscar and MSC Oliver with the size of 19,224 TEU (Lloyds List, 2016). The market is expecting to see more of such vessels magnitude being built and deliver in the near future. In terms of global trends ruling the container`s supply and demand, some facts can be highlighted: 1. Container ´s overcapacity: Timing is one of the main factors when referring to the shipping supply and demand. As great expectations were placed into the current market, many shipowners purchased bigger and more sophisticated vessels, which nowadays can ´t be employed. 2. Emerging economies power demand for shipments: Containerships owners can still find a glimpse of light for this market in emerging economies. For example, Nigeria will see its population grow by 275 million by 2050. It gives an idea of the shipping potential of this emerging economies/countries. 3.Cargo adaptation to the container shipping method: containerization. Cargo can be directly shipped from the mill to the consignee, or even to the customer, making the shipping industry more efficient and safer. 4.Sustainability and environmentally friend: New trends have come up concerning about environment issues. It has radically affected the cost for carriers and consequently the vessel ´s supply and demand (CSR). 5.Customer focus and new technology: Development in technology mainly seeks compliance with new regulations and cost-efficiencies. The current lack of transparency along the supply chain can affect either supply as demand due to wrong market forecast or unforeseen constraints. The East-West trade is mainly driven by the import demand of products from China and India to Europe. However, companies are struggling on the return voyage from West to East. It makes operators to find different ways to optimize the empty containers in order to avoid the loss of marginal profit. In order to remain competitive, operators will have to follow some tendencies which will shape the container industry (ICS, 2015) Cost reduction and vessel optimization can be achieved through forming shipping alliances between containership operators. The alliance agreements generally cover areas such as the type and size of vessel to be employed on each route; itineraries; port rotations, chartering of ships; feeder services and the coordination of inland services. 2M, O3, G6 alliance and the CKYHE. Slow steaming can be also applied (Lloyds List, 2016) Another way is the slot chartering: By leasing out part of the vessel ´s slot during the return voyage from Europe to Far-East, operators can obtain optimum efficiency of fleet operation and to maximize slot utilization (Lloyds List, 2016). And last but not least, cost-savings measure adopted by operators is through the use of longer routes in the East-West trade. For instance, instead of using the Suez Canal, ship operators may choose to travel by a longer sea route through the Cape of Good Hope enabling operators to accommodate additional ships with a similar frequency of port calls and reducing the overcapacity issue. Reference List: Alan Jugovic (2015 ) Scientific Journal of Maritime Research 29, 23-29 BIMCO (2016) BIMCO market analysis: 31 May 2016. Available: file:///C:/Users/gonzalo/Downloads/BIMCO_Road_to_Recovery_for_the_dry_bulk_market_FINAL%20(1).pdf Baltic Exchange (2016) FFAs. Available: https://www.balticexchange.com/ffa/ C. Cheetham (2013) Introduction to Bunker Hedging Tools: Swaps. Available: http://shipandbunker.com/news/features/risk-management/120043-introduction-to-bunker-hedging-tools-swaps E.Branch (2012) Elements of Shipping: Routledge: 7th edition ICS (2012) Dry Cargo Chartering. 2012 edn. Livingston : Witherby Shipping Business. ICS (2013) Shipping business. 2013 edn. London : Institute of Chartered Shipbrokers. ICS (2015) Tanker chartering. 2015 edn London. Institute of Chartered Shipbrokers IMO (2016) International shipping: carrier of world trade. Available: http://www.imo.org/en/KnowledgeCentre/ShipsAndShippingFactsAndFigures/TheRoleandImportanceofInternationalShipping/IMO_Brochures/Documents/Internatioinal%20Shipping%20-%20Carrier%20of%20world%20trade.pdf Lectures given by Jonathan Challecombe, Philip Rogers: International Shipping and Maritime Management and Markets (2014,2015,2016). M. Stopford (2009). Maritime Economics. 3rd ed. New York: Routledge. Mercatus Energy Advisors (2016) Bunker Fuel Hedging Price Risk Management Swaps. Available: https://www.mercatusenergy.com/blog/bid/74900/an-introduction-to-bunker-fuel-hedging-updated Notteboom, T.E. and Rodrigue, J. (2005) Port Regionalization: towards a new phase of development. Maritime Policy and Management. Vol: 32(3) 297-313. Notteboom, T. (2004). Container Shipping and Ports: An Overview. In: Review of Network Economics. Vol: 3(2) 86-106. Paul Rodrigue. (2014). Economies and Diseconomies of Scale in Container Shipping. Available: https://people.hofstra.edu/geotrans/eng/ch3en/conc3en/contchipecoscale.html Paul Rodrigue. (2015). Transport Costs and Spatial Inequalities. Availab

Hybrid Cars :: essays research papers

Hybrid Cars There are two configurations for hybrid cars. The first configuration uses gasoline engine to run a generator. The generator supplies electricity to the motor, which drives the wheels, which allows the gasoline engine to run constantly while achieving optimum fuel efficiency. This thereby minimizes emissions owing to incomplete combustion. A hybrid car with parallel configurations uses both an engine and a motor to drive the wheels depending on driving conditions. "A hybrid car is an automotive equipped with two or more sources of motive energy" (http://www.howstuffworks.com/hybrid-car1.htm). Hybrid cars use both gas and electric. The gasoline engine is the primary source of power, while the electric motor is used at low speeds. Emissions levels are reduced because the gasoline engine shuts off at low speeds. An additional benefit of the parallel configuration is that no outside source of electric power is required because the engine itself generates the required electricity. A Hybrid Electric Vehicle known as HEV have several advantages over traditional internal combustion engine (ICE) vehicles: Regenerative braking capability, which helps minimize the energy lost when driving. Engine is sized to average load, not peak load, which reduces the weight of the engine. Fuel efficiency is greatly increased, while emissions are greatly decreased. HEVs can be operated using alternative fuels; therefore they need not be depended on fossil fuels (http://www.ott.doe.gov/hev/what.html#hev). Another great thing about these machines is the mpg; on the average, a hybrid car gets anywhe re from 55-70mpg on the hwy. This is what makes the car all worth having. Now all this sounds good, but there are some issues that must be addressed. First of all the prices must come down. The prices for hybrid cars are naturally higher because there are no existing facilities for mass production and both engine and electric motor must be installed. Another downfall is the lack of infrastructure for repair and maintenance. Many of the mechanical problems occurring with the hybrid cars may not be repairable at existing service stations.

The Host Chapter 57: Completed

It was a small tribunal this time, not like the trial for Kyle's life. Ian brought only Jeb, Doc, and Jared. He knew without having to be told that Jamie must not be allowed anywhere near these proceedings. Melanie would have to give that goodbye for me. I couldn't face that, not with Jamie. I didn't care if it was cowardly of me. I wouldn't do it. Just one blue lamp, one dim circle of light on the stone floor. We sat on the edge of the ring of light; I was alone, the four men facing me. Jeb had even brought his gun-as if it were a gavel and would make this more official. The smell of sulfur brought back the painful days of my mourning; there were some memories that I would not regret losing when I was gone. â€Å"How is she?† I asked Doc urgently as they settled in, before they could get started. This tribunal was a waste of my small store of time. I was worried about more important things. â€Å"Which one?† he responded in a weary voice. I stared at him for a few seconds, and then my eyes grew wide. â€Å"Sunny's gone? Already?† â€Å"Kyle thought it was cruel to make her suffer longer. She was†¦ unhappy.† â€Å"I wish I could have said goodbye,† I murmured to myself. â€Å"And good luck. How is Jodi?† â€Å"No response yet.† â€Å"The Healer's body?† â€Å"Trudy took her away. I think they went to get her something to eat. They're working on finding a temporary name she likes, so we can call her something besides the body.† He smiled wryly. â€Å"She'll be fine. I'm sure she will,† I said, trying to believe the words. â€Å"And Jodi, too. It will all work out.† No one called me on my lies. They knew I was saying this for myself. Doc sighed. â€Å"I don't want to be away from Jodi long. She might need something.† â€Å"Right,† I agreed. â€Å"Let's get this over with.† The quicker the better. Because it didn't matter what was said here; Doc had agreed to my terms. And yet there was some stupid part of me that hoped†¦ hoped that there was a solution that would make everything perfect and let me stay with Ian and Mel with Jared in a way that absolutely no one would suffer for. Best to crush that impossible hope quickly. â€Å"Okay,† Jeb said. â€Å"Wanda, what's your side?† â€Å"I'm giving Melanie back.† Firm, short-no reasons to argue against. â€Å"Ian, what's yours?† â€Å"We need Wanda here.† Firm, short-he was copying me. Jeb nodded to himself. â€Å"That's a tricky one. Wanda, why should I agree with you?† â€Å"If it were you, you'd want your body back. You can't deny Melanie that.† â€Å"Ian?† Jeb asked. â€Å"We have to look at the greater good, Jeb. Wanda's already brought us more health and security than we've ever had. She's vital to the survival of our community-of the entire human race. One person can't stand in the way of that.† He's right. Nobody asked you. Jared spoke up. â€Å"Wanda, what does Mel say?† Ha, Mel said. I stared into Jared's eyes, and the strangest thing happened. All the melting and melding I had just been through was shoved aside, into the smallest part of my body, the little corner that I took up physically. The rest of me yearned toward Jared with the same desperate, half-crazed hunger I'd felt since the first time I'd seen him here. This body barely belonged to me or to Melanie-it belonged to him. There really wasn't room enough for the two of us in here. â€Å"Melanie wants her body back. She wants her life back.† Liar. Tell them the truth. No. â€Å"Liar,† Ian said. â€Å"I can see you arguing with her. I'll bet she agrees with me. She's a good person. She knows how much we need you.† â€Å"Mel knows everything I know. She'll be able to help you. And the Healer's host. She knows more than I ever did. You'll be fine. You were fine before I was here. You'll survive, just like before.† Jeb blew out a puff of air, frowning. â€Å"I don't know, Wanda. Ian's got a point.† I glared at the old man and saw that Jared was doing the same. I looked away from that standoff to level a grim glance at Doc. Doc met my eyes, and his face clenched with pain. He understood the reminder I was giving him. He'd promised. This tribunal didn't overrule that. Ian was watching Jared-he didn't see our silent exchange. â€Å"Jeb,† Jared protested. â€Å"There's only one decision here. You know that.† â€Å"Is there, kid? Seems to me there's a whole barrel of 'em.† â€Å"That's Melanie's body!† â€Å"And Wanda's, too.† Jared choked on his response and had to start over. â€Å"You can't leave Mel trapped in there-it's like murder, Jeb.† Ian leaned forward into the light, his face suddenly furious again. â€Å"And what is it that you're doing to Wanda, Jared? And the rest of us, if you take her away?† â€Å"You don't care about the rest of anybody! You just want to keep Wanda at Melanie's expense-nothing else matters to you.† â€Å"And you want to have Melanie at Wanda's expense-nothing else matters to you! So, with those things being equal, it comes down to what's best for everyone else.† â€Å"No! It comes down to what Melanie wants! That's her body!† They were both crouched halfway between sitting and standing now, their fists clenched and their faces twisted with rage. â€Å"Cool it, boys! Cool it right now,† Jeb ordered. â€Å"This is a tribunal, and we're going to stay calm and keep our heads. We've got to think about every side.† â€Å"Jeb -† Jared began. â€Å"Shut up.† Jeb chewed on his lip for a while. â€Å"Okay, here's how I see it. Wanda's right -â€Å" Ian lurched to his feet. â€Å"Hold it! Sit yourself back down. Let me finish.† Jeb waited until Ian, the tendons standing out in his taut neck, stiffly returned to a seated position. â€Å"Wanda is right,† Jeb said. â€Å"Mel needs her body back. But,† he added quickly when Ian tensed again, â€Å"but I don't agree with the rest, Wanda. I think we need you pretty bad, kid. We got Seekers out there lookin' for us, and you can talk right to 'em. The rest of us can't do that. You save lives. I got to think about the welfare of my household.† Jared spoke through his teeth. â€Å"So we get her another body. Obviously.† Doc's crumpled face lifted. Jeb's white caterpillar eyebrows touched his hairline. Ian's eyes widened and his lips pursed. He stared at me, considering†¦ â€Å"No! No!† I shook my head frantically. â€Å"Why not, Wanda?† Jeb asked. â€Å"Don't sound like a half-bad idea to me.† I swallowed and took a deep breath so my voice wouldn't turn hysterical. â€Å"Jeb. Listen to me carefully, Jeb. I am tired of being a parasite. Can you understand that? Do you think I want to go into another body and have this start all over again? Do I have to feel guilty forever for taking someone's life away from them? Do I have to have someone else hate me? I'm barely a soul anymore-I love you brutish humans too much. It's wrong for me to be here, and I hate feeling that.† I took another breath and spoke through the tears that were falling now. â€Å"And what if things change? What if you put me in some-one else, steal another life, and it goes wrong? What if that body pulls me after some other love, back to the souls? What if you can't trust me anymore? What if I betray you next time? I don't want to hurt you!† The first part was the pure and unadorned truth, but I was lying wildly through the second. I hoped they wouldn't hear that. It would help that the words were barely coherent, my tears turned to sobs. I would never hurt them. What had happened to me here was permanent, a part of the very atoms that made up my small body. But maybe, if I gave them a reason to fear me, they would more easily accept what had to be. And my lies worked, for once. I caught the worried glance Jared and Jeb exchanged. They hadn't thought of that-of my becoming untrustworthy, becoming a danger. Ian was already moving to put his arms around me. He dried my tears against his chest. â€Å"It's okay, honey. You don't have to be anyone else. Nothing's going to change.† â€Å"Hold on, Wanda,† Jeb said, his shrewd eyes suddenly sharper. â€Å"How does going to one of those other planets help you? You'll still be a parasite, kid.† Ian flinched around me at the harsh word. And I flinched also, because Jeb was too insightful, as always. They waited for my answer, all but Doc, who knew what the real answer was. The one I wouldn't give. I tried to say only true things. â€Å"It's different on other planets, Jeb. There isn't any resistance. And the hosts themselves are different. They aren't as individualized as humans, their emotions are so much milder. It doesn't feel like stealing a life. Not like it feels here. No one will hate me. And I'd be too far away to hurt you. You'd be safer†¦Ã¢â‚¬  The last part sounded too much like the lie it was, so I let my voice trail off. Jeb stared at me through narrowed eyes, and I looked away. I tried not to look at Doc, but I couldn't help one brief glance, to make sure he understood. His eyes locked on mine, clearly miserable, and I knew that he did. As I quickly lowered my gaze, I caught Jared staring at Doc. Had he seen the silent communication? Jeb sighed. â€Å"This is†¦ a pickle.† His face turned into a grimace as he concentrated on the dilemma. â€Å"Jeb -† Ian and Jared said together. They both stopped and scowled at each other. This was all just a waste of time, and I had only hours. Just a few more hours, I knew that for certain now. â€Å"Jeb,† I said softly, my voice barely audible over the spring's gushing murmur, and everyone turned to me. â€Å"You don't have to decide right now. Doc needs to check on Jodi, and I'd like to see her, too. Plus, I haven't eaten all day. Why don't you sleep on it? We can talk again tomorrow. We've got plenty of time to think about this.† Lies. Could they tell? â€Å"That's a good idea, Wanda. I think everyone here could use a breather. Go get some food, and we'll all sleep on it.† I was very careful not to look at Doc now, even when I spoke to him. â€Å"I'll be along to help with Jodi after I eat, Doc. See you later.† â€Å"Okay,† Doc said warily. Why couldn't he keep his tone casual? He was a human-he should have been a good liar. â€Å"Hungry?† Ian murmured, and I nodded. I let him help me up. He latched on to my hand, and I knew he would be keeping a tight hold on me now. That didn't worry me. He slept deeply, like Jamie. As we walked from the dark room, I could feel eyes on my back, but I wasn't sure whose. Just a few more things to do. Three, to be precise. Three last deeds to be completed. First, I ate. It wouldn't be nice to leave Mel with her body uncomfortable from hunger. Besides, the food was better since I'd been raiding. Something to look forward to rather than endure. I made Ian get the food and bring it to me while I hid in the field where half-grown sprouts of wheat replaced the corn. I told Ian the truth so that he would help me: I was avoiding Jamie. I didn't want Jamie frightened by this decision. It would be harder for him than for Jared or Ian-they each took one side. Jamie loved us both; he would be more evenly torn. Ian did not argue with me. We ate in silence, his arm tight around my waist. Second, I went to see Sunny and Jodi. I expected to see three glowing cryotanks on top of Doc's desk, and I was surprised that there were still just the two Healers, set in the center. Doc and Kyle hovered over the cot where Jodi lay inert. I walked quickly to them, about to demand to know where Sunny was, but when I got closer, I saw that Kyle had an occupied cryotank cradled in one arm. â€Å"You'll want to be gentle with that,† I murmured. Doc was touching Jodi's wrist, counting to himself. His lips pressed into a thin line when he heard my voice, and he had to begin over again. â€Å"Yeah, Doc told me that,† Kyle said, his gaze never leaving Jodi's face. A dark, matched set of bruises was forming under his eyes. Was his nose broken again? â€Å"I'm being careful. I just†¦ didn't want to leave her alone over there. She was so sad and so†¦ sweet.† â€Å"I'm sure she'd appreciate it, if she knew.† He nodded, still staring at Jodi. â€Å"Is there something I'm supposed to be doing here? Is there some way to help?† â€Å"Talk to her, say her name, talk about things she'll remember. Talk about Sunny, even. That helped with the Healer's host.† â€Å"Mandy,† Doc corrected. â€Å"She says it's not exactly right, but it's close.† â€Å"Mandy,† I repeated. Not that I would need to remember. â€Å"Where is she?† â€Å"With Trudy-that was a good call there. Trudy's exactly the right person. I think she's gotten her to sleep.† â€Å"That's good. Mandy will be okay.† â€Å"I hope so.† Doc smiled, but it didn't affect his gloomy expression much. â€Å"I've got lots of questions for her.† I looked at the small woman-it was still impossible to believe that she was older than the body I wore. Her face was slack and vacant. It frightened me a little-she'd been so vibrantly alive when Sunny was inside. Would Mel†¦? I'm still here. I know. You'll be fine. Like Lacey. She winced, and so did I. Never like Lacey. I touched Jodi's arm softly. She was much like Lacey in some ways. Olive skinned and black haired and tiny. They could almost be sisters, except that Jodi's sweet, wan face could never look so repellent. Kyle was tongue-tied, holding her hand. â€Å"Like this, Kyle,† I said. I brushed her arm again. â€Å"Jodi? Jodi, can you hear me? Kyle's waiting for you, Jodi. He got himself in a lot of trouble getting you here-everybody who knows him wants to beat him senseless.† I grinned wryly at the big man, and his lips curled up at the corners, though he didn't look up to see my smile. â€Å"Not that you're surprised to hear that,† Ian said beside me. â€Å"When hasn't that been the case, eh, Jodi? It's good to see you again, sweetheart. Though I wonder if you feel the same way. Must have been a nice break to get rid of this idiot for so long.† Kyle hadn't noticed his brother was there, attached like a vise to my hand, until Ian spoke. â€Å"You remember Ian, of course. Never has managed to catch up to me in anything, but he keeps trying. Hey, Ian,† Kyle added, never moving his eyes, â€Å"you got anything you want to say to me?† â€Å"Not really.† â€Å"I'm waiting for an apology.† â€Å"Keep waiting.† â€Å"Can you believe he kicked me in the face, Jodes? For no reason at all.† â€Å"Who needs an excuse, eh, Jodi?† It was oddly pleasant, the banter between the brothers. Jodi's presence kept it light and teasing. Gentle and funny. I would have woken up for this. If I were her, I would have been smiling already. â€Å"Keep it up, Kyle,† I murmured. â€Å"That's just right. She'll come around.† I wished I would get to meet her, to see what she was like. I could only picture Sunny's expressions. What would it be like for everyone here, meeting Melanie for the first time? Would it seem the same to them, as if there were no difference? Would they really grasp that I was gone, or would Melanie simply fill the role I had? Maybe they would find her entirely different. Maybe they would have to adjust to her all over again. Maybe she would fit in the way I never had. I pictured her, which was picturing me, the center of a crowd of friendly faces. Pictured us with Freedom in our arms and all the humans who had never trusted me smiling with welcome. Why did that bring tears to my eyes? Was I really so petty? No, Mel assured me. And they'll miss you-of course they will. All the best people here will feel your loss. She seemed to finally accept my decision. Not accept, she disagreed. I just can't see any way to stop you. And I can feel how close it is. I'm scared, too. Isn't that funny? I'm absolutely terrified. That makes two of us. â€Å"Wanda?† Kyle said. â€Å"Yes?† â€Å"I'm sorry.† â€Å"Um†¦ why?† â€Å"For trying to kill you,† he said casually. â€Å"Guess I was wrong.† Ian gasped. â€Å"Please tell me you have some kind of recording device available, Doc.† â€Å"Nope. Sorry, Ian.† Ian shook his head. â€Å"This moment should be preserved. I never thought I'd live to see the day that Kyle O'Shea would admit to being wrong. C'mon, Jodi. That ought to shock you awake.† â€Å"Jodi, baby, don't you want to defend me? Tell Ian I never have been wrong before.† He chuckled. That was nice. It was nice to know that I'd earned Kyle's acceptance before I left. I hadn't expected that much. There was no more I could do here. There was no point in lingering. Jodi would either come back or she would not, but neither outcome would change my path now. So I proceeded to my third and final deed: I lied. I stepped away from the cot, took a deep breath, and stretched my arms. â€Å"I'm tired, Ian,† I said. Was it really a lie? It didn't sound so false. It had been a long, long day, this, my last day. I'd been up all night, I realized. I hadn't slept since that last raid; I must have been exhausted. Ian nodded. â€Å"I'll bet you are. Did you stay up with the Heal-with Mandy all night?† â€Å"Yeah.† I yawned. â€Å"Have a nice night, Doc,† Ian said, pulling me toward the exit. â€Å"Good luck, Kyle. We'll be back in the morning.† â€Å"Night, Kyle,† I murmured. â€Å"See you, Doc.† Doc glowered at me, but Ian's back was to him, and Kyle was staring at Jodi. I returned Doc's glare with a steady gaze. Ian walked with me through the black tunnel, saying nothing. I was glad he wasn't in the mood for conversation. I wouldn't have been able to concentrate on it. My stomach was twisting and turning, wringing itself into strange contortions. I was done, all my tasks accomplished. I only had to wait a bit now and not fall asleep. Tired as I was, I didn't think that would be a problem. My heart was pounding like a fist hitting my ribs from the inside. No more stalling. It had to be tonight, and Mel knew that, too. What had happened today with Ian had shown me that. The longer I stayed, the more tears and arguments and fights I would cause. The better the chance that I or someone else would slip up and Jamie would find out the truth. Let Mel explain it after the fact. It would be better that way. Thanks so much, Mel thought; her words flowed fast, in a burst, her fear marring her sarcasm. Sorry. You don't mind too much? She sighed. How can I mind? I'd do anything you asked me to, Wanda. Take care of them for me. I would have done that anyway. Ian, too. If he'll let me. I've got a feeling he might not like me so much. Even if he won't let you. I'll do whatever I can for him, Wanda. I promise. Ian paused in the hall outside the red and gray doors to his room. He raised his eyebrows, and I nodded. Let him think I was still hiding from Jamie. That was true, too. Ian slid the red door aside, and I went straight to the mattress on the right. I balled up there, knotting my shaking hands in front of my hammering heart, trying to hide them behind my knees. Ian curled around me, holding me close to his chest. This would have been fine-I knew that he would end up sprawled out in all directions when he was really asleep-except that he could feel my trembling. â€Å"It's going to be fine, Wanda. I know we'll find a solution.† â€Å"I truly love you, Ian.† It was the only way I could tell him goodbye. The only way he would accept. I knew he would remember later and understand. â€Å"With my whole soul, I love you.† â€Å"I truly love you, too, my Wanderer.† He nuzzled his face against mine until he found my lips, then he kissed me, slow and gentle, the flow of molten rock swelling languidly in the dark at the center of the earth, until my shaking slowed. â€Å"Sleep, Wanda. Save it for tomorrow. It will keep for the night.† I nodded, moving my face against his, and sighed. Ian was tired, too. I didn't have to wait long. I stared at the ceiling-the stars had moved above the cracks here. I could see three of them now, where before there had been only two. I watched them wink and pulse across the blackness of space. They did not call to me. I had no desire to join them. One at a time, Ian's arms fell away from me. He flopped onto his back, muttering in his sleep. I didn't dare wait any longer; I wanted too badly to stay, to fall asleep with him and steal one more day. I moved cautiously, but he was in no danger of waking. His breathing was heavy and even. He wouldn't open his eyes till morning. I brushed his smooth forehead with my lips, then rose and slid out the door. It was not late, and the caves were not empty. I could hear voices bouncing around, strange echoes that might have been coming from anywhere. I didn't see anyone until I was in the big cave. Geoffrey, Heath, and Lily were on their way back from the kitchen. I kept my eyes down, though I was very glad to see Lily. In the brief glimpse I allowed myself, I could see that she was at least standing upright, her shoulders straight. Lily was tough. Like Mel. She'd make it, too. I hurried to the southern corridor, relieved when I was safe in the blackness there. Relieved and horrified. It was really over now. I'm so afraid, I whimpered. Before Mel could respond, a heavy hand dropped on my shoulder from the darkness. â€Å"Going somewhere?†

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