respects, long-range demand forecasting has advanced a great deal since the 1950s as computational capacity, modeling techniques, and information sources have improved.
Basic kinds of forecasting methods are described in Box 2-1. Each has strengths and weaknesses. Some of the simpler methods that are based on few variables have the advantage of flexibility; decision makers find them easy to use for “what-if” scenario analyses. They may not be especially accurate, but they are capable of providing “ballpark” estimates for the initial stages of decision making. At the other end of the spectrum are complex forecasting models designed to provide detailed projections across many economic sectors and regions with a high degree of internal consistency (e.g., imports equal exports for all commodities on a global basis). They may be used to inform national policy making. Such complex multivariate modeling systems require large amounts of data and computer processing and a substantial amount of time from the modeler.
Major Sources of Demand Forecasts
Because the quantity of marine traffic is heavily influenced by international commerce, forecasts of international trade are especially important inputs in most marine freight forecasts. Similarly, projections of domestic and international energy demand, as well as the demand for agricultural commodities, are important.
The major commercial and government suppliers of long-term trade and commodity forecasts tend to use the most sophisticated forecasting methods described in Box 2-1, which incorporate time series, constrained demand, and multivariate modeling approaches. These suppliers include
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Global Insight, Inc.,1 which forecasts trade in all major physical commodities (i.e., nonphysical commodities, such as electricity and services, are not included), across nearly all countries, and in detail by commodity, trade route, and vessel type (e.g., container, tanker, dry bulk);
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Box 2-1 Common Methods of Demand Forecasting
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The Energy Information Administration (EIA) of the U.S. Department of Energy, which publishes the Annual Energy Outlook containing long-term forecasts of U.S. energy balances, including projected imports and exports of specific energy commodities (e.g., crude oil, coal, petroleum products, natural gas); and
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The Institute of Water Resources (IWR) of the U.S. Army Corps of Engineers (USACE), which projects demand for transportation on the nation’s waterways, including the inland waterways. Because bulk cargoes are the chief source of demand for inland waterways, IWR employs specialty consulting firms to develop long-range forecasts of agricultural products, minerals, energy, and other commodities moved in large quantities on inland waterways.
Forecast Results
Several forecasts from the preceding sources are examined in this section. They offer insight into the factors that can influence demand, and they illustrate the kinds of information that decision makers in the public and private sectors have at their disposal to plan for the future. Results from the latest (at the time of this study) 20-year forecasts from Global Insight, EIA, and USACE are presented at different levels of aggregation and across different demand sectors, starting with forecasts of all U.S. international trade and then focusing on specific categories of freight, including containerized cargo, energy, and agricultural commodities.
International Trade (Total) Forecasts
Global Insight’s forecasts are developed from dynamic trade models of supply and demand that cover more than 75 physical commodity types in each trading region of the world (currently encompassing 54 major countries and 16 regions). Factored into the models are current and projected exchange rates, price deflators, demographic trends, expected production capacities, and other relevant variables such as transportation costs. Forecasts for U.S. international trade in all commodity sectors are
