Konstantinos Panagopoulos

Maritime Economics

Can you describe the substance of the course you are teaching? What are those points that a student should pay special attention to?   

At BCA I deliver lectures in Maritime Economics, which is one module of the MSc in Shipping Business, MSc in Shipping, MSc in Shipping (HRM in Shipping), and MSc in Shipping (Maritime Technology) postgraduate courses. The module has the following aims:

a. To equip students with understanding of the economics of the shipping market, its organization, its function, and its relationship to the international trade.

b. To analyse the distinctive characteristics of the liner shipping industry and its organization.

c. To analyse the distinctive characteristics of the tramp shipping industry and its organisation.

d. To describe the problems and opportunities of the businesses involved in these industries that comprise distinctive segments of the shipping market.

e. To address how the vessel prices and the freight rates are established, taking into consideration the shipping market cycles, the factors that exert an influence on supply and demand, the theory of competition, the normal and the super-normal profit, and the cost structure.

f. To enhance the ability of the students to apply economic theory on the various segments of the shipping market sector, in order to be able to evaluate the market equilibrium shifts.

g. To provide the tools for the critical evaluation of the short-term supply and demand equilibrium and the establishment of the relevant freight rates.

h. To provide the tools for the evaluation of market conditions, in order to make rational decisions with regard to chartering and managing the vessels.

During this module, the students will learn the factors affecting the supply of vessels in the market, and the distinction between effective and prospective supply. They will evaluate the fleet productivity and the factors that affect it. The students will find out the factors that affect the demand for vessels in the three major markets of the dry bulk, tanker, and liner shipping with particular focus on market structure, economic development, trade routes, average haul, natural events and political shocks. Furthermore, they will appreciate supply and demand elasticity and define their connection with freight rate changes, shipping operating costs, and economies of scale. The students will examine the interrelation between freight rates, ship values, and chartering options, and they will learn the shipping cycles theories and proposed investment decisions.

The students should pay particular attention on how we can segment and study the shipping markets through the systematic analysis of the basic four interrelated shipping markets (the freight rate, the second hand, the newbuildings, and the scrap market), of their interrelation, and of their connection with international trade.

Moreover, the students should develop an understanding of the distinctive characteristics, the freight structure and the organization of the major shipping industries such as the tramp, the liner, the tanker, the liquified gas, and the cruise industry.

Furthermore, students should pay attention to the factors that affect the demand and the supply in each of the basic four shipping related markets, which are the freight rate market, the second-hand market, the newbuildings market, and the scrap market, and assess the equilibrium and the market shift in each one of them.

Finally, students should learn how to identify shipping market cycles, assess the phase in which currently the shipping market is on the basis of certain observable shipping market characteristics, and make sound judgements in relation to ordering, purchasing, chartering, managing, and scrapping vessels.

In what sectors of the labour market and specializations can the graduates of the program work at large?

The graduates of the programme can be employed in shipping firms as members of the ashore personnel, and in any firm related to the Shipping cluster (agent firms, broker firms, insurance firms, shipping firms involved in any shipping market segment (in all functions and departments), ship-management firms, bunkering firms, crew-management firms, victualling firms, logistics firms, ports (in all economics, administrative, and operational functions), freight forwarding firms, etc.

Apart from their academic credentials, one of the students’ main competitive advantage that they develop during their studies, is that they can operate in an international environment, since their studies are done in English and thus, they have exercised their listening, speaking and writing competence in English.

Moreover, apart from the chances to be employed with shipping and shipping related firms, the students can also find employment in the cargo zone of airports, and in companies supplying and maintaining vessel equipment, spare parts, ropes, life support equipment, life protection equipment, etc.

What advice would you give to your graduate students regarding their professional future?

A master’s graduate should pursue a career within a shipping firm, or any firm in the ports’ cluster, and/ or an academic career delivering his/ her accumulated knowledge and experience to private sector academic institutions that operate in partnership with foreign universities, and as a specialist to public shipping-related universities delivering guest lectures. They can also pursue a doctorate degree with any university abroad, and even apply for employment in international shipping-related organisations in the United Nations (UNCTAD, IMO), the European Union, the OECD, the Clarksons, the Lloyds List, etc.

Both Undergraduate and Post Graduate students can also obtain a Greek state recognition of their degree professional-wise from the Hellenic Ministry of Education from the Independent Department of Implementation of the European Union Legislation [in Greek Αυτοτελές Τμήμα Εφαρμογής Ευρωπαικής Νομοθεσίας (A.T.E.E.N.), according to the provisions of the Hellenic Republic Presidential Decree 38 of 2010 and the Hellenic Republic Laws 4093 of 2012 and 411 of 2013], if they want to pursue a public servants’ career, that they had obtained on the basis of their other qualifications, in which career they want to be treated on the same terms as the graduates of public universities.

Which the most outstanding piece of news in your industry in the last two years?

The world of shipping is a fast-paced international market that is heavily impacted by the changes that happen in the international trade, and the various political shocks that happen around the world. The industry takes steps towards de-carbonisation, takes steps to deal with the increase in the size of the vessels and the consequences of it, takes steps to abide to new environmental regulations, takes steps to deal with the lack of employees and crew members, takes steps to deal with the increasing piracy incidents and with new emerging threats and vulnerabilities, takes steps to deal with the increasing cost of fuel, and finally, to deal with the impact of COVID 19, its implications and its new variations. If I had to select one as the most important, I would say that COVID 19 has been the biggest challenge the shipping industry had to cope with the last two years.

How did the pandemic affect your industry;

The shipping industry was hit hard by the COVID19 pandemic in 2020 and this impact still persists in 2021 due to the development of certain variations of it, despite the discovery of vaccines in world-record time. The World GDP, which is the combined value of the international production of all the countries in the world, showed a year-to-year decline of 3.1% in 2020 based on the annual Clarksons data. As Maritime Economics theory suggests, whenever the World GDP shows a change, there is going to be a similar change in the demand for sea transport services within the next six-month period at the latest (Stopford, 2009). Therefore, the expected decline in the demand for sea-transport services, as measured by the Total World Seaborne Trade in million tonnes, showed a fall in 2020 year-to-year by 1.6%, and in billion tonne-miles, it showed a fall in 2020 year-to-year by 3.42%.

The cruise industry stopped completely in 2020 for a six-month period with the vessels laid up having on-board only a partial amount of the crew members to run the machinery and equipment and keep the vessels on a “ready to activate” state. The dry-bulk sector was also hit hard, but it rapidly returned to the pre-COVID19 level. As a result, based on annual Clarksons data, we observed a fall in the Total World Seaborne Dry Bulk Trade measured in million tonnes in 2020 on a year-to-year basis by 1.6%, while in billion tonne-miles in 2020 on a year-to-year basis there was an increase by 0.79%.

The container trade measured in million tonnes on a year-to-year basis showed a fall by 1.39%, and the same happened in 2020 when measured in billion tonne-miles on a year-to-year basis, a fall being equal to 1.19%. The crew exchanges became problematic due to frequent changes in the policy the various countries implemented to contain the further spreading of the COVID19, and seafarers, even today (2021), have to serve for additional months than their originally planned term on the vessels, a situation which still prevails, because not all seafarers are mandatorily vaccinated. Even an assassination incident of the Master of the container vessel “MV Spirit of Hamburg” onboard the vessel berthed in Cartagena, Colombia on April 16, 2020 (https://fullavantenews.com/colombia-captain-container-ship-killed-cartagena/ ) was observed. The incident that attracted momentarily the international spotlight was soon forgotten amidst confusion on the issue of which authority was responsible to investigate the incidence, but it was highly suspected the involvement of crew members that were beyond their contractual relief date, who could not be repatriated due to COVID19 restrictions. It is in my opinion highly improbable that this mystery will ever be resolved.

Finally, the way the education is delivered has changed because of COVID19. From March 2020, the lectures were exclusively done on-line via the Microsoft TEAMS software until the end of the academic year 2019-2020. In the academic year 2020-2021, the lectures are delivered as normally in classes, while at the same time, live streaming is offered in the context of blended learning to cover the needs of the students that are found positive to COVID19 and need to stay quarantined at home. BCA expanded its on-line programmes to offer a greater spectrum of distance learning opportunities at the Masters’ and the TOP UP post-graduate studies. The good part with COVID19 as regards the education is that BCA capitalized on its experience in distance learning to gain a competitive advantage in the market serving nationally and internationally an increasing demand from students who prefer better to attend the on-line programmes versus the on-site ones.