ABSTRACT
This chapter revisits the ton-mile approach and critically reviews with its historical backings and the basis on which the theory is built. Mainstream economics particularly emphasizes the supply-demand framework for pricing of products and services. In the conventional service industry, demand factors are usually measurable and allow assessments in relation to the limited size of their markets. In the modern economics of maritime transport, shipping service is assumed to be measured via the ton-mile metric. Seaborne trade volume or, in other words, ton-mile of 'materialized' shipments is preferred as a measure of demand rather than supply. In theoretical economics, identical units are used for demand and supply so as to analyze prices balance or imbalance. The majority of past and ongoing research in maritime economics implicitly or explicitly assumes the ton-mile metric as an indicator of demand in various ship types. Econometric studies in maritime economics are usually designed to observe relationships between variables in historical data.
