Modelling the investment decision of the entrepreneur in the tanker sector: choosing between a second-hand vessel and a newly built one

It is often the case that the investor in the shipping sector faces the dilemma of investing in a second-hand vessel or building a new one. This happens because an active second-hand market for almost all kinds of vessels exists. We argue that one of the prime considerations for the investment decision should not be the price of the vessel per se, second-hand (SH) or newly built (NP) but

• ?(a)?the relative price ratio (SH/NP) second-hand price over the new building price and

• ?(b)?the movement of this ratio.

We investigate the determinants of this ratio across different vessel sizes in the tanker sector and show that it can be used as an effective tool in investment decision as well as in asset appraisal.

We employ monthly data between 1995 and 2006 for four different ship sizes–VLCC, Suezmax, Aframax and Handysize–and implement an error correction model.

The investment decision depends on a number of risk and return variables as well as the perceived speed of adjustment of the price ratio to its equilibrium level.

Overall we claim that the cyclicality of the shipping sector together with expectations formed by the agents operating in it (the entrepreneur, the ship-owner and the broker), determine the movement of the ratio and hence the decision of the entrepreneur.     

Northern Abalone: Using an Invertebrate to Focus Marine Conservation Ideas and Values

Marine invertebrate species have usually been overlooked in favor of high-profile vertebrate species for facilitating dialogue towards area conservation. The northern abalone (Haliotis kamtschatkana) is proposed as a focal ("flagship") species whose protection and recovery could concentrate public concern for abalone and its associated kelp forest ecosystems in Haida Gwaii (Queen Charlotte Islands), British Columbia. I explain how issues of culture, commerce, and conservation unite to create a strong role for northern abalone in preparations for creating a large marine conservation area within Haida Gwaii. Culture is relevant, as local indigenous people (the Haida) are currently denied access to constitutionally established subsistence fishing rights for northern abalone. Commerce is involved as ongoing kelp forest-associated fisheries co-occur with northern abalone. Finally, this is a challenging precedent in Canadian marine conservation, as restoring two "listed" species- at risk (northern abalone and their predator, the sea otter (Enhydra lutris)) is potentially mutually exclusive. As part of the forthcoming public consultations towards establishing a marine conservation area, the opportunity provided by northern abalone to focus ideas and values should be seized.     

Synergies between Adjacent Beach-Nourishing Communities in a Morpho-Economic Coupled Coastline Model

Beach “nourishment” consists of placing sand on an eroding beach. The widened beach provides increased storm protection to adjacent structures and improved recreational benefits, but is most often transient, requiring on-going, repeated nourishment episodes. Numerical models of beach nourishment typically address such questions as how long a widened beach will last; economic models compare the benefits and costs of preserving a stretch of beach without regard to its geomorphic evolution. Neither have addressed the physical nor economic interactions between adjacent nourishing communities. Here, we couple a numerical model of coastline evolution and a cost-benefit model of beach nourishment, allowing adjacent communities to make dynamic nourishment decisions. Beach nourishment benefits adjacent communities both “updrift” and “downdrift.” The total amount of money spent on nourishment activities can decrease by as much as 25% when adjacent communities both conduct on-going nourishment projects, as opposed to the case where each community nourishes in isolation.     

Attitudes toward Participation in Cooperative Coastal Management: Four European Case Studies

Findings are reported of the VALCOAST project that had as one of its research objectives to ascertain: (a) stakeholder willingness to participate and cooperate in coastal management (CM), given local and national CM practices; and (b) stakeholder assessment of the "accessibility" and "friendliness" of current CM processes. The project involved case studies and stakeholder interviews in Belgium, Greece, Spain, and the UK. Major findings include: (1) most stakeholders are willing to cooperate in three out of the four case areas, but not to the same extent; (2) the participating "officials" in the case studies are expecting the stakeholders to be less willing to cooperate than the latter indicate; (3) stakeholders in all case studies do not expect to be heard by those responsible for CM, find it difficult to learn about the relevant institutional arrangements, and consider the communication of the objectives and anticipated impacts of CM policies to be inadequate. It is concluded that the strong evidence of stakeholders' potential willingness to cooperate in local initiatives is very encouraging for a devolved, regional approach to European Union coastal management policies, provided that this potential is capitalized upon in such policy processes.     

Transport infrastructure provision and operations: Why should governments choose private–public partnership?

Recent transport sector liberalisation, as well as global economic crisis, is favouring the implementation of transport infrastructure projects through Public–Private Partnerships (PPP). However, there is a debate as to whether PPP schemes are a better option than conventional procurement. To this end, an evaluation framework is proposed, to assess which of these two alternative schemes for transport projects financing is preferable for the public. The proposed framework is complimentary to the Value for Money (VfM) approach and is based on a Multi Criteria Analysis (MCA). The first step is the estimation of the Public Sector Comparator (PSC) for the case of conventional procurement, dealing with construction, maintenance and operation costs revenues, as well as any costs associated with risks undertaken by the public. As for the PPP case, it includes any payments by the public sector and related risks costs. The MCA is then applied only if the PPP is found preferable for the public sector. The latter considers additional impacts, including among others the social attributes of a particular scheme, job creation, environmental impacts and safety and security aspects. The proposed framework was applied to a pilot Bus Rapid Transit (BRT) corridor infrastructure project in the city of Indore, India, in order to demonstrate its validity. The framework and its application could provide useful guidance when considering PPP for a transport project, since it demonstrates in a transparent way the society's attitude towards this project, something that is critical to its acceptance.     

Regulation,trust and contractual incentives around transport contracts – Is there anything bus operators can learn from public air service contracts?

This paper compares recent experiences in contract negotiation and subsequent commitment in public air services with the bus industry. The heart of the paper is a survey of European and Australian regional airlines, which we mirror with revealed experiences of bus operators. We aim to identify a number of elements in the contracting regimes that have exposed ambiguity and significant gaps in what the principal (e.g., transport department) expected, and what the agent (airline or bus operator) believed they were obliged to deliver. Ultimately airline and bus services are similar in that public authorities procure transport services that are desirable for the society but would be unprofitable without government involvement. In both sectors (theoretically fairly similar) public transport contracts are used, and those usually include obligations and performance measurements. In terms of similarities, one of the surveyed contract details that had a perceived high clarity in both industries was “payment procedures” and amongst those with rather poor clarity was also in both industries “incentives to improve performance and grow patronage”. We also show differences between regional air services and bus operations with regard to performance measurement and pre-specified obligations. Because of the strong safety culture around air services we find that regulation and trusting partnerships are even more important to aviation than to the bus sector. Because of the high level of trust but also because of simpler and more complete contracts in aviation, there is much less (re-)negotiation going on compared to the bus operations.     

Towards a simplified performance-linked value for money model as a reference point for bus contract payments

The burgeoning commitment to contracting the delivery of bus services through competitive tendering or negotiated performance-based contracts has been accompanied by as many contract payments schemes as there are contracts. We are now well placed to design a simplified performance-linked payment (SPLP) model that can be used as a reference point to ensure value for money, given the accumulation of experiences throughout the world which have revealed substantive common elements in contracts. Whether the payment to the operator is framed as a payment per passenger or as a payment per service kilometre, the SPLP identifies efficient subsidy outcomes that are linked to a proxy indicator of net social benefit per dollar of subsidy. We illustrate how the SPLP model can be applied to obtain the gross (subsidy) cost per passenger (or per passenger km) from measures of gross cost efficiency and network effectiveness. This model can then be used as part of a benchmarking activity to identify reference value of money prospects in respect of passengers per $ subsidy outlay by adjusting for influences not under the control of the service provider. A single framework to identify contract payments to operators, and to assess (i.e., benchmark) operator performance on critical KPIs, is provided by internalising critical key performance indicators (KPIs) in the design of the SPLP. The proposed SPLP model is sufficiently general to be independent of the procurement method (competitive tendered or negotiated, for example) and of the treatment of revenue allocation (net or gross based contracts), with the additional advantage of being able to assess value for money for government.     

Choosing Public Transport—Incorporating Richer Behavioural Elements in Modal Choice Models

The development of behaviourally richer representations of the role of well-established and increasingly important influences on modal choice, such as trip time reliability and accounting for risk attitude and process rules, has moved forward at a fast pace in the context of automobile travel. In the public transport setting, such contributions have, with rare exception, not been considered. In this paper, we discuss and empirically illustrate the merits of advanced modelling developments aimed at improving our understanding of public transport choice, namely the inclusion of reliability in extended expected utility theoretic forms, to recognize risk attitude and perceptual conditioning, the consideration of passenger crowding and its inclusion in linear additive models, and the role of multiple heuristics in representing attribute processing as a way of conditioning modal choice. We illustrate the mechanics of introducing these behaviourally appealing extensions using a modal choice data set collected in Sydney.     

Are Longer and Heavier Vehicles (LHVs) Beneficial for Society? A Cost Benefit Analysis to Evaluate their Potential Implementation in Spain

Abstract

In this paper we carry out a thorough review of the current research related to the benefits and costs arising from the implementation of longer and heavier vehicles (LHVs). From this review we concluded that despite the many studies available, little has been said about the sensitivity of the benefits and costs to the ultimate performance of the key variables related to the evolution of the economy, road transport performance, safety, and so on. In order to fill this gap, we have designed a sensitivity approach based on a cost benefit analysis tool to determine which variables demonstrate the greatest influence on the benefits and costs stemming from the implementation of LHVs. In order to test the methodology, we have used it in an analysis of the Spanish trunk network. The results show that the benefits of LHVs for society are significant. Even in the least favorable scenario, the economic benefits are greater than €3500 million over 15 years, and the environment enhanced as well, for CO₂ emissions are reduced by 2 Million tonnes. Overall we noted how the results are not very sensitive to the evolution of key variables in determining the final outcome. However, we found that the variables that have the greatest affect on the final benefit, such as traffic growth and social discount rate, depend basically on the performance of the overall economy. Moreover, the private cost for haulers seems to be more important in determining the final benefit than externality costs.     

Private Provision of Highways: Economic Issues

Abstract

This paper reviews issues raised by the use of private firms to finance, build, and/or operate highways—issues including cost of capital, level and structure of tolls, and adaptability to unforeseen changes. The public sector’s apparent advantage in cost of capital is at least partly illusory due to differences in tax liability and constraints on the supply of public capital. The evidence for lower costs of construction or operation by private firms is slim. Private firms are likely to promote more efficient pricing. Effective private road provision depends on well‐structured franchise agreements that allow pricing flexibility, restrain market power, enforce a sound debt structure, promote transparency, and foster other social goals.