INVESTMENT EVALUATION OF A SUBURBAN COASTAL TRANSPORT SYSTEM

1
INVESTMENT EVALUATION OF A SUBURBAN COASTAL
TRANSPORT SYSTEM

• SAMBRACOS Evangelos
• Professor
• Dept. of Economics
• University of Piraeus
• e-mail sambra_at_unipi.gr

2
Objective

• Investigate the viability and economic
  possibility of a suburban coastal shipping system
  in the area of Athens
• Estimation of the best viable solution

3
Development of Suburban coastal transportation
system

• Characteristics of Athens urban center
• expansion of residences towards the suburbs
• road transport system for citizen mobility
  goods transit
• private costs for its users
• high society cost, externalities
• negative secuences on the environment (pollution,
  noise, etc.)
• the cost of accidents
• the cost of traffic congestion, etc.

4
Development of Suburban coastal transportation
system

• The establishment of a suburban coastal transport
  system
• - movement of cargo and passengers by sea between
  ports situated in a geographical area, that is
  the area of Athens
• - connection between Piraeus and South Athens
  (Moschato, Kalithea, P.Faliro, Alimos, Elliniko,
  Glyfada, Voula, Vouliagmeni, etc.)

5
(No Transcript)
6
Economic features of a suburban coastal shipping
operation

• Cost of the System
• - investment cost,
• - operating cost (fixed and running cost)
• - the depreciation cost
• - the financial cost
• Scenarios
• A. one stop between the ports of origin and
  destination, using two vessels on pick hours
• B. two stops between the ports of origin and
  destination, using three vessels on pick hours

7
(No Transcript)
8
Investment Cost and Operating cost for the two
scenarios (000drh)
9
Viability of the suburban coastal transport system

• Case? Scenario 1 (1 mid-stop), price of the
  ticket 700drh.
• Case ? Scenario 2 (2 mid-stops), price of the
  ticket 700drh.
• Case C Scenario 1(1 mid-stop), price of the
  ticket 500drh.
• Case D Scenario 2 (2 mid-stops), price of the
  ticket 500drh
• Revenues
• Case ? 913 mil.drh.
• Case ? 961 mil.drh.
• Case C 828 mil.drh.
• Case D 875 mil.drh.

10
Financial analysis of the suburban coastal
transport system

• Financial viability of the system for its
  operator, the entrepreneurial cost and benefit
  from such an undertaking
• Variables
• number of stops/vessels
• price of the ticket
• of loan and own capital
• loan interest
• Indicators NPV,IRR

11
Relation of Loan and NPV
12
Financial analysis of the suburban coastal
transport system
13
Financial analysis of the suburban coastal
transport system
14
Loan Interest and of Loan
15
Sensitivity analysis for Case A
16
Conclusions

• The above quantitative analysis proves the
  following
• There is a reverse analogy between NPV and the
  of Loan for the investment cost
• Case A shows the higher NPV (and IRR) and
  therefore is the most efficient financial
  solution
• The of Loan that makes NPV0 is higher for Case
  A, in every level loan interest
• The sencitivity analysis for Case A, shows that
  the higher the level of uncertainty in the total
  revenues (reduction in demand) the lower the of
  Loan