Inland Shipping Waterways

Topics: Supply and demand, Transport, Shipping Pages: 6 (1769 words) Published: October 4, 2013


Question 1
Explain, in one sentence each, what supply- and demand functions are Supply function: The supply function is a mathematical expression of all the factors that affect the ability or willingness from a firm to produce goods for the market at a certain cost. Demand function: The demand function is the relationship between quantity consumed and a person's maximum willingness to pay for the product and the net profit and benefit he will receive from the transaction.

Question 2A

Which variables (in the dataset or not) do you expect to have a significant impact on the demand for shipping? Do you expect these variables to have a positive or negative effect? Do you expect a small or large effect?

Capacity - Carrying capacity of the inland ship in tones
This variable has a positive effect on the demand function. A larger capacity will for example increase the possibilities of different transports by ship. On the other hand, a more suitable capacity will for example decrease the total costs because of waste reduction (over & under capacity). Both examples will therefore increase demand. However, the effect of this variable is probably small because the carrying capacity itself is not directly a change in price.

Distance - Distance (in km) between origin and destination
This variable has a negative impact on the demand function. When the distance between origin and destination is too large it is not profitable and sometimes maybe not even possible to transport the shipment through the inland waterways. In these scenario’s shipments over sea or in air are more suitable. The effect of the distance is probably small because it is not directly influencing price or quantity.

Cargo - the cargo type transported
This variable has a positive effect on the demand function. There are some materials/goods which are generally transported by inland waterways, for example coal and sand. These materials are too heavy or too large in quantity that shipment by air and road is not profitable. The effect is probably small.

Priceton - The transport price per ton
This variable has a negative effect on the demand function. When the transport price per ton increases the demand automatically decreases (law of demand). An increasing price has a large effect on the demand function because it directly influences the amount of people who are willing to pay for the same good at a higher price.

Pricetrip - The transport price per trip
This variable has a negative effect on the demand function. When the transport price per trip increases the demand automatically decreases (law of demand). An increasing price has a large effect on the demand function because it directly influences the amount of people who are willing to pay for the same good at a higher price.

Question 2B

Which variables (in the dataset or not) do you expect to have a significant impact on the supply for shipping? Do you expect these variables to have a positive or negative effect? Do you expect a small or large effect?

Date- The date on wich the trip was reported
This variable has a large impact on the supply function. Because due to holidays, months, and seasonal activities, If the trip is reported in a highly demanded season that will impact positively the supply.

Waterlev- waterlevel (in cm) this means that water level restrictions are most severe This variable has a negative effect on the supply function. This variable can be consider only if the ship needs to travel by Germany that might mean a large impact, otherwise the impact its not perceived.

Capacity-carrying capacity of the inland ship in tonnes
This variable can be difficult to measure, if the supplier charges by ton that might have a large positive impact due to the capacity of charging a larger amount in less time and with less equipment. But if the freight is charged by trip, it might have a small positive impact as one trip equals one costumer....
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