Today’s Journal Review:

ECONOMIC EFFICIENCY OF SEA TRANSPORT.

CASE STUDY: CONSTANTA-GALATI
by Liviu Iulius Rusu

 Presented by: Karina Raesita (134117022)

Today’s Journal Review:
ECONOMIC EFFICIENCY OF SEA TRANSPORT.
CASE STUDY: CONSTANTA-GALATI
by Liviu Iulius Rusu

How sea transport build efficiency:

•Optimizing shipping routes between ports
•Optimizing ship capacity
•Sending the river-sea ships on potentially profitable voyages
•Short time delivery with minimum risks and expenses
Purpose: to describe efficiency challenge of sea transport and how Romanian
optimized water transport between two ports (Constanta as sea port and Galati as
inland port)
Methods: scenario analysis using ships with different cargo carrying capacity
Case
There is a cargo shipping company, SC Iulius RL SRL, headquartered in
Constanta. The company owns two shipping vessels:
 a river-sea vessel capable of sailing both by sea and on the Danube
 an exclusively river vessel, as well as a fleet of barges and a pusher tug.

Company manager attempts to identify

the most efficient way to ship a
consignment of sheet-metal from
Constanta to Galati. Shipping
circumstances are complex, due also to
the fact that the navigation on the
Danube will be upstream. The degree of
loading of vessels for the three scenarios
differs for both the outward and the
return voyage.
 Sea transport agreement
 What is a transport agreement?
 Dispatch (premium) for the need of speedy loading and unloading merchandise
 What are the clauses of international charter party?
 Name and construction year of vessel
 Name and addresses of ship owners
 Flag country
 Class of vessel
 IMO identification number
 GRT (Gross Register Tonnage)
 NRT (Net Register Tonnage
 Volume of storerooms
 Speed of vessel and fuel consumption
 Etc.
 Knowing these elements may contribute greatly to increasing or decreasing the
performance of international sea transport and may generate competitive
advantage
 Efficiency
 Efficiency of international sea transport depends on ratio between expenses
and income.
 Expense: fuel consumption and price, number of crew member and their salaries, technical
condition of the ship, maintenance expense, level and compexity of repairing,
administrative expense, sparepart procurement, deck and engine room equipment,
lubricants, expenses associated with each voyage, port and canal transit expenses, payment
of installments and interests accrued from past funding, loading, stowage and unloading
expenses.
 Income: ship capacity and productivity, freight rate, charter period, off-hire period
 In order for an activity to be lucrative it is not enough to keep costs at the
lowest level, it is also necessary to obtain the highest income from the
exploitation.
 Constanta-Galati Case Study
 River route (210 kms): only for river ship or river sea ship
 Maritime danube route (black sea up to galati)
 During the summer months the drought periods may cause the fairway
river depth to become so shallow
 Choosing the type of the ship: maritime, coastal, river vessel
 Crew structure (OMTC nr: 342/2008; OMTCT 219/2009)
 Expenses
 Operating expenses
 Voyage expenses
 Financial expenses
 Cargo loading and unloading expenses
Scenario A: River vessel
 Speed: 9km/hour, distance 210km, time needed: 28 hours
 Extends to about 2,5 days for harbor lock operations and other
related operations
 Add another 2,5 days for the vessel to return to the departing
port
 Add 4 days to load and unload cargo
 Overall time = 9 days
 Salaries: 150/crew consist of 3 people
 Charge for shipping: 0.35/shipped tone when vessel is fully
loaded and 250/vessel when it is empty
 Scenario A Scenario B Scenario C
Expense 6967.5
Average freight 9
Gross income 11.250
(9x1250)
Gross profit 4.282,5
Scenario B: 4 barges+river pusher tug
 Speed: 7km/hour, distance 210km, time needed: 36 hours
 1,5 days per unit
 6 days for loading and unloading 4 barges
 Overall time = 15 days
 Scenario A Scenario B Scenario C
Expense 6967.5 18.750
Average freight 9 7.7
Gross income 11.250 30.800
(9x1250) (7.7x4000)
Gross profit 4.282,5 12.050
Scenario C: maritime vessel
 Distance: 190km, time: 9 hours, speed: 24 km/hour
 Sulina to Galati - Distance: 150km, time: 17 hours, speed:
9km/hour
 Overall time = 26 hour
 Scenario A Scenario B Scenario C
Expense 6967.5 18.750 47.975
Average freight 9 7.7 9
Gross income 11.250 30.800 64.800
(9x1250) (7.7x4000) (9x7200)
Gross profit 4.282,5 12.050 16.850