ECONOMIC VIABILITY OF INDIVIDUAL VESSELS AND FLEETS

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ECONOMIC VIABILITY OF INDIVIDUAL VESSELS AND
FLEETS

• The Concept of Viability
• The Viable Vessel
• The Viable Fleet
• Some Hypothetical Examples

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The Concept of Economic Viability

• Economic costs include all required returns to
  labour and capital.
• Normal profit is included in these returns.
• All inputs costs are covered and the two main
  factors of production receive the payment equal
  to the next best alternative or what is required
  to keep them in the activity.
• Must be sustained over the life of the assets.
• Regulatory regimes cannot guarantee viability
  of every participant.

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The Viable Vessel

• Produces an annual catch that covers all costs
  and gives labour and capital their required
  returns.
• Determined by all fixed, variable and
  semi-variable costs of fishing operations.
• Costs vary by days at sea, days fished and type
  of fishing.
• Required annual revenue can vary by efficiency
  of individual enterprises.

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The Viable Fleet

• The total number of enterprises that can cover
  all costs from available total revenues.
• Overall average cost structure of existing
  vessels is normally less than that of newly
  constructed vessels of the same size class.
• Larger replacement vessels means fewer can be
  supported or are necessary.

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Comments on Table

• Difference in required catches less than 15
  /- because of fuel efficiencies and capital
  costs of 75 and 85 footers.
• Newly constructed 65 ft may have trouble making
  number of trips.
• 75 and 85 ft may have design overcapacity
  because of efficiencies in relation to required
  catches.
• Gross revenues influenced more by fixed costs
  (especially ROI) than most variable costs
  excepting maybe labour.