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Questions and Answers
The world economy is not a significant factor influencing the demand for sea transport.
The world economy is not a significant factor influencing the demand for sea transport.
False
Seasonality has no impact on the volatility of seaborne commodity trades.
Seasonality has no impact on the volatility of seaborne commodity trades.
False
Grain exports from the US Gulf peak during the summer months.
Grain exports from the US Gulf peak during the summer months.
False
Shippers of seasonal agricultural commodities heavily rely on long-term contracts rather than the spot charter market.
Shippers of seasonal agricultural commodities heavily rely on long-term contracts rather than the spot charter market.
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The trade development cycle is not one of the aspects of the world economy that can affect the demand for sea transport.
The trade development cycle is not one of the aspects of the world economy that can affect the demand for sea transport.
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Fluctuations in the grain market have more influence on the charter market than iron ore trades due to tonnage requirements.
Fluctuations in the grain market have more influence on the charter market than iron ore trades due to tonnage requirements.
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Changes in commodity trade trends can best be identified by studying the geographical location of processing plants.
Changes in commodity trade trends can best be identified by studying the geographical location of processing plants.
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The demand for sea transport is directly proportional to the distance over which the cargo is shipped.
The demand for sea transport is directly proportional to the distance over which the cargo is shipped.
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The 'average haul' of sea transport refers to the total weight of cargo shipped multiplied by the number of ships used.
The 'average haul' of sea transport refers to the total weight of cargo shipped multiplied by the number of ships used.
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Political disturbances directly impact ship demand rather than their indirect consequences.
Political disturbances directly impact ship demand rather than their indirect consequences.
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Study Notes
The World Economy and Sea Transport
- The world economy is the most important influence on ship demand, generating demand through the import of raw materials and the trade of manufactured products.
- Three aspects of the world economy that can impact sea transport demand are the business cycle, trade elasticity, and trade development cycle.
Seaborne Commodity Trades
- Seasonality of certain trades, such as agricultural commodities, causes short-term volatility in sea transport demand.
- Examples of seasonal commodities include grain, sugar, and citrus fruits, which have peak demand during harvest seasons.
- The oil business also has a seasonal cycle, with increased demand during autumn and early winter.
- Shippers of seasonal commodities rely heavily on the spot charter market to meet their tonnage requirements.
- Long-term trends in commodity trade can be identified by studying the economic characteristics of industries that produce and consume the traded commodities.
Average Haul and Sea Transport Demand
- The demand for sea transport is influenced by the distance over which cargo is shipped, known as the 'average haul' of the trade.
- Average haul is typically measured in 'ton miles', which is the tonnage of cargo shipped multiplied by the average distance it is transported.
- Changes in the average haul can significantly impact ship demand, as seen in the closure of the Suez Canal and the Dortyol pipeline.
Political Disturbances and Sea Transport
- Political events, such as localized wars, revolutions, and nationalization of foreign assets, can impact sea transport demand indirectly.
- Since 1945, there have been at least seven political incidents that have significantly influenced ship demand.
Transport Costs and Sea Trade
- Transport costs are a significant factor in the development of sea trade, as raw materials will only be transported from distant sources if the cost of shipping is reduced to an acceptable level.
- The economics of shipping operations can impact the demand for sea transport, particularly if there are significant benefits to the quality of the product.
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Description
Explore the relationship between the world economy and the demand for sea transport in this quiz. Learn how the world economy influences the need for sea transport through the import and export of raw materials and manufactured products.
