The Origin and Consistency of the Ton–Mile Metric in the Shipping Economics

Okan Duru

doi:10.3390/logistics1010003

Abstract

The aim of this paper is to investigate an underpinning of the conventional maritime economics, supply-demand framework, and measurement of shipping services in particular. The ton–mile metric is frequently employed as a measure of demand in both academia and professional readings. On the other hand, the ton–mile measurement approach has various drawbacks and inconsistencies that are thought to be negligible or simply ignored. The incompleteness of the ton–mile metric approach, which is usually taken as granted, is discussed in terms of its origin and historical presence in the literature. Assumptions behind the approach are investigated, and practical limitations are revisited.

Highlights

The history of conventional economics and maritime economics as a branch of applied economics coincide in many facets of theoretical interpretations as well as practical uses
Every aspect of our modern maritime economics theory is basically born in the conventional economic theory and its incubation nests
In the modern of maritime transport,metric shipping service is assumed be measured by the ton–mile metric.economics

Summary

Introduction

The history of conventional economics and maritime economics as a branch of applied economics coincide in many facets of theoretical interpretations as well as practical uses. [7,8]; Prices in the shipping business is mean-reverting (freight market memory) and stationary random walk series with no predictability (at least non-linear stationary [9]); Period freight rate is the expectation of future spot rate (i.e., term structure) ([10,11], among others) In contrast to their central role, these hypotheses are sometimes accepted and rejected interchangeably in different periods of the literature, based on the period of time or the method used for testing procedures (classical versus time-varying, or linear versus non-linear approach). (e.g., Adland and Cullinane [12] criticizes the traditional expectations theory assumed in previous studies and proposes an alternative approach) Among these theoretical underpinnings of the maritime economics, the supply-demand framework plays a central role that is in close connection with other theories, and they are proof of each other at some point. The ton–mile approach is revisited and critically reviewed with its historical backings and the basis on which the theory is built

Supply and Demand for Shipping Services

The History of “Ton–Mile” and Its Rationale

Woodlock wroteand a book titledthis “Ton–Mile discussed its

Challenges in thethe “Ton–Mile”

The Adoption of Ton–Mile Metric in Maritime Economics Studies

Concluding Remarks