Investment Evaluation of a Suburban Coastal Transport System
Uploaded by notis2005 on Nov 02, 2006
Summary
This paper aims at determining the optimum viable solution of an investment on a
suburban coastal shipping system in the area of Athens. More specifically it refers to
the development of a sea transport system, alternative to the existing road one, that
would connect Piraeus with the southern suburban coastal area of Athens. The best
viable solution of such an undertaking is considered to be the one, which under the
existing constraints maximises the total profit that derives from this investment. The
variables used for the formation of the constraints are the number of vessels used, the
routing and the price of the services. The article after presenting the methodology of
the market analysis, focuses on the financing alternatives of the project and their
impact on its economic efficiency and concludes with the best viable scenarios and
optimum solution.
1. Introduction
The paper’s main objective is to determine the optimum solution of an investment
undertaking that includes an alternative transportation system, that is a suburban
coastal transport system in the south region of Athens. Such a system is believed that
can offer a possible solution to the transport problems of congestion, which
characterise the existing overloaded road network of Athens.
Suburban coastal shipping has a special character. First there are not many examples
of cities that use an analogous transport system. Secondly, the main competitor of sea
transport is road transport or fixed track systems (train, tram). It should be mentioned
that the current transportation system despite its deficiencies in terms of time, cost as
well as externalities remains a strong travel alternative and consequently a constraint
for the development of the proposed seaborne transport. This is due to the several
advantages it offers to its users like door to door services, flexibility and speed. City of
Athens disposes a road system as the main one satisfying the transport demand to and
from the suburban areas.
The best economic solution for an investment of this kind is determined as the one that
maximises the profit of the investor, under the constraints that the current transport
system sets. In this context, in order to format the constrains of the system, a market
analysis has been conducted taking all the above into consideration in order to
examine the possible demand for such a system versus the existing road transport one
(Greek Bank of Industrial Development, 1995). However, the question is whether an
enterprise in this field would be economically viable and which would be the required
demand of that service, in order to be able to equalise the marginal costs with the
marginal revenue.
2. A methodology...