EFFICIENCY CHALLENGES IN MARITIME

LOGISTICS

Prof. Kevin Cullinane

Professor of Logistics and Transport Economics

University of Gothenburg
kevin.cullinane@gu.se

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 Efficiency vs. Effectiveness
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 Efficiency vs. Effectiveness

EFFICIENT EFFECTIVE
DOING THE THING RIGHT DOING THE RIGHT THING

EFFICIENT + EFFECTIVE
DOING THE RIGHT THING RIGHT
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 Observations on
Efficiency vs. Effectiveness
1. Both concepts relate to an objective and are
measured by reference to its achievement
2. Objectives differ between actors
3. Over time, objectives change or are changed
4. Both concepts are measured relatively against an
ideal (benchmark), reference group or over time
5. Efficiency and effectiveness may be in conflict and
a trade-off may have to be made

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 The Shipping Industry Context

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 International seaborne trade by cargo type
(millions of tons loaded)
These volumes
Growth dwarf
has been other
virtually
modes - (averaging
constant even more 4%
so ifp.a.)
ton--
kilometrescontainer
especially are considered
trades

Source: UNCTAD (2012)

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 Corollary

An efficient and effective shipping industry is vital for

global economic welfare and development

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 The European Context

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 Maritime Activities and Employment
1. Important origin and destination for shipping movements
2. 18% of all goods loaded and 23% of all goods unloaded.
3. Shipowners control almost 40% of the world fleet tonnage
4. A highly specialised shipbuilding sector is a world leader in
terms of turnover and innovation
5. Dredging companies have 80% share of the global market
6. European companies dominate the emerging market for both
sustainable technologies and offshore renewable energy
7. Approximately 4.78 million people (i.e. 2.25% of total European
employment) are directly employed

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 Employment in all maritime sectors in the EU and Norway and percentage of the
total workforce in 2009

Source: European Commission (2009)

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 Added Value
1. Direct production value in 2009 was €450 billion, consisting of
58% intermediate purchases and 42% added value
2. The direct added value amounts to approximately €186.8
billion, equating to a 1.65% share of the total European GDP
3. This implies an average added value per person employed of €
39,000
4. Indirect and induced effects through an economic multiplier
yields a further added value of €110 million

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 Added value in all maritime sectors in the EU and Norway in 2009

15 000 = 15 000 million euros of added value

3 200
15 100

3 800 1 000

8 700 1 000

2 100 28 400 500

11 500
3 400

4 000 17 200

100
100
50
25 400 300
300
200
1 200

500
2 800 24 300
23 000

6 400

500

Source: European Commission (2009)

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 Corollary

An efficient and effective shipping industry is vital for

the economic prosperity of Europe

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 Efficiency (and Effectiveness)
Challenges in Maritime Logistics

What are they?

Where do they arise?

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 A Functional Perspective

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 At Sea

1. Capacity Utilisation

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 DNV (2014)
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 At Sea
1. Capacity Utilisation
2. Energy Efficiency
3. Environmental considerations

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 World GDP and CO2 Emissions from International Marine Bunker Fuel

Source: IEA (2012)

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 Marginal Abatement Cost Curves

Source: DNV (2010)

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 Closing the Energy Efficiency
Gap in Shipping
1. Significant scope for greater energy efficiency, but the
transactions costs are heavy
2. Monitoring, verification and certification needed to provide
baseline
3. Financial and institutional support for R&D is needed
4. Overcome the fragmentation of responsibilities and actions
relating to energy use within shipping organisations
5. Greater innovation in shipping contracts needed to avoid ’split
incentives’
6. SEEMP is limited to ship-specific measures. Introduce ISO
50001 or ISO 14000 for broader-based environmental
management
7. The role of MBMs
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 Estimates of Polluting Emissions from Shipping

Source: derived from data contained in Buhaug et al (2009)

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 On Land
1. Port Efficiency
• Continually increasing throughput
• Required investment
• Availability of land
2. Logistics integration
• Road, rail and water connectivity
• Timing and storage of flows
• Seamlessness of intermodal transport
• Overcoming bottlenecks
• Intermodal liability
3. Environmental strategy
• Road to rail and water – Blue Lane, Blue Belt, TEN-T,
Green Corridors etc
• Cold ironing and other port-based measures
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Conclusions: Meeting the Challenges
1. Maritime logistics has pivotal role in economic growth
and environmental sustainability
2. Trade-offs and compensation are key:
• Efficiency vs effectiveness
• Functionalism versus a broader value chain view
• Consumer-driven changes
3. Availability of finance for investment
4. Continued R&D
5. Appropriate regulation is critical to providing a level
playing field and ensuring a consistent approach

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