A transportation model for the world sugar trade : a spatial analysis

Abstract

This thesis is concerned with efficiency in ocean transportation of sugar. Efficiency in sugar distribution is important in order to help promote and maintain the competitiveness of sucrose sugar in, relation to other sweeteners; to conserve resources, especially non renewable ones; and to increase the net incomes of sugar producing countries in general and the less developed ones in particular, whose overseas sugar earnings are critical for their economic wellbeing.

The research has three objectives. First, to determine the most efficient shipping system that minimises total shipping costs. Second, to use the results of the most efficient shipping pattern as the benchmark with which to compare the actual 1975 world distribution of sugar. Finally, to suggest policy measures to improve the efficiency of the present world sugar distribution system.

To meet the first objective, six models using the transportation framework, are constructed. They handle the trade between 50 producing and 68 consuming countries which amount to about 95 percent of the total world sugar trade. Three of these models are 'run' with free trade between all origins and destinations, i.e. unconstrained; they represent the most efficient systems in this study, using three criteria ton-miles, actual and computed freight rates, and only computed freight rates. The other three models, using the same criteria, are 'run' with restrictions on trade of 14 origins and a number of destinations in order to reflect real world conditions. They represent less efficient systems. The shipping pattern and the least cost of each model are simultaneously determined,

To achieve the second aim, the costs of the 1975 actual distribution pattern are determined and these are compared with those of the models. The results indicate that the actual world distribution of sugar is less efficient than those of the six models, and that there is substantial scope for savings of total shipping costs. This is apparent even within the limitations of the data, the model used, and when political constraints are taken into account.

With regard to the third objective, there are three ways in which total shipping cost of sugar can be reduced: (a) by reducing the level of existing freight rates, (b) by changing the existing inefficient pattern to one that is more efficient, and (c) by a combination of (a) and (b). Recommendations are made on (a) reducing freight rates. With respect to (b) further research is suggested to confirm the findings of this thesis and to understand sugar marketing and distribution more fully both in isolation and in the context of other commodity trades. This is advisable because of the limitations of the study and the possible repercussions on the trade of other commodities, if a change in shipping pattern of sugar is adopted in isolation.