The three Editions of Maritime Economics

Martin Stopford started writing Maritime Economics during the shipping recession in the early 1980s and the first edition was published in 1988.  He was teaching an evening course on shipping economics at the City University Business School in London and needed a text book.  Since none was available he decided to write his own.  Each edition since then has developed the structure set out in the first edition.  The 2nd edition in 1997, now published by Routledge, was a major re-write with five new chapters.  Finally the 800 page 3rd edition appeared in 2009

Book coverThe 3rd Edition of Maritime Economics (left) The latest major re-write of Maritime Economics was published in January 2009, adding another 3 chapters, enlarging the book to 17 Chapters and 850 pages.  When I completed the 2nd Edition I thought there was nothing left to say, and to some extent this was true.  The principal chapters reflect much the same structure as the second edition.  But once again the updating gave a few opportunities to improve the structure, as a result of which the manuscript finally delivered to the publishers had an extra 251 pages and three additional chapters — the resulting volume is heavy enough to beat someone to death with!  Apologies to anyone who tries to carry it around in their briefcase.  The new chapters are:-

Chapter 1: provides a 50 page overview of the historic developments of sea transport, and the role it plays in the global economy.  It is a gamble to start an economics book with history, but previous editions had shipping history scattered in various chapters, and I decided to collect this into a single history.  The present is easier to understand from the perspective of the past.

Chapter 8: focuses on the shipping Return on Investment (ROI).  I had always been puzzled by the apparent paradox that shipping has many very wealthy individuals, but any long-term analysis of the return on capital suggests that it is in fact quite low.  It took me three years to write this chapter, but in the end I found that the answer lay in classical microeconomic theory and the perfect competition model.  The key is to define the factors of production correctly, and then everything falls into place.  I will leave it to you to read the chapter and see what you think.

Chapter 12: covers the transport of specialised cargoes.  In previous editions I had recognised, in passing, that some cargoes do not fit comfortably into the bulk or liner shipping systems which have been prevalent since the Second World War.  Commodities like chemicals; gas; refrigerated cargo; unit load cargo; and passenger shipping all deserve their own place in maritime economics.  Some of the principles are the same, but these businesses with very different market structures.

Finally, in chapter 3 shipping cycles are extended back to 1741.  The freight statistics are published in Annex C and can be downloaded from this website.  So the cyclical analysis now spans a century of sailing ships; a century of the liner and tramp system; and the modern era.

Book coverThe 2nd Edition of Maritime Economics (left).  The 562 page 2nd Edition, published in October 1997, took five years to complete and was a major rewrite.  Whilst retaining the framework of the first edition, it included five new chapters and a considerable amount of new and original research.

I started work on the 2nd edition in 1993.  Originally my intention was to simply update the statistical material and text, but in doing this, I came to the conclusion that the book would be greatly improved by developing the structure.  By the time I had finished the number of chapters had increased from 9 to 14.

My aim was to develop five topics which the 1st edition treated "in passing" into separate chapters — shipping cycles; the four shipping markets; financing ships; the economic principles of maritime trade; and the global pattern of maritime trade.  This meant I could develop the "regulatory framework of maritime economics" as a separate chapter.  I also introduced better technical drawings of ships in the chapter "the economics of ships and ship designs".  So by the time this edition was published in 1997 it had better structure which would enable readers to dip in to each topic in depth, while still remaining manageable.

Book coverThe 1st Edition of Maritime Economics, 412 pages, published by Allen & Unwin in March 1988.  The book has nine chapters which set the framework for the current edition.

It started with an overview of the shipping market, covering sea trade; chartering and the economic principles of supply and demand (figures 1.6 and 1.7).  Chapter 2 outlined the basic theory and practice of supply and demand, finishing with a discussion of business cycles.  Chapter 3 dealt with Costs, Revenues and Cash flow (vital during this period of deep shipping recession); a chapter on seaborne trade.  A late addition to the book was chapter for "the international framework of maritime economics".  This started with a discussion of trade, but then went on to deal with the maritime legal system.  Chapter 5 covered the liner shipping business; Chapter 6 bulk shipping; Chapter 7 the Economics of Ship Design; chapter 8 shipbuilding and demolition.Finally Chapter 9 outlined the approach to maritime forecasting.

Much of this material will be familiar to readers of the third edition, but there are a few developments which were not reproduced in later editions.  One was appendix 1, which includes a model of the shipping industry which focuses on speed; shipping capacity; and the cost of fuel.  A model which is of more interest and now the fuel cost to back up to the level of the 1980s.

The Book

This part of the book has six links which access detailed information about the 3rd Edition of Maritime Economics.

The Courses and Contents links provide an overview.

The Index link accesses a searchable index of the hardcopy book, but has now been greatly extended.  Just type in your keyword and it will direct you to the correct page in Maritime Economics 3rd Edition, but it also includes references and definitions (for example if you want to look up what "ldt" stands for).

The Aims of the Book

Some of the issues tackled in Maritime Economics are theoretical.  Why are there freight cycles?  What drives the decisions of ship owners?  How do shipbuilders fit into the picture?  What determines liner pricing? 

Others are extremely practical.  How do you value a ship (and how likely is it that you will be right)?  What are the main clauses in a newbuilding contract?  What is the return on capital in shipping?  What are the main contractual terms for a shipping loan? 

In both cases the approach is the same — describe the facts as simply a way as possible, and show how all the pieces of the jigsaw fit together.