In this sequence, we will now look at the specific components that we decided to include in our Line of Shipping Connectivity Index. We developed five components or we considered and included five components. The first one is the number of ships. How many vehicles provide services from and to a country's port? Very straightforward component, like the more ships, the better, the better connected is my country. Linked to this, is the total carrying capacity of these ships. So, if you have bigger average ships, you have more total carrying capacity. These two of course are very closely correlated but not necessarily the same. In some cases, you have many small ships. In other cases, you have fewer ships but more total carrying capacity. It is important to point out that we really only know about the capacity like the size of the ships. We do not know how much they actually carry. Third component is the size of the largest ship. This is an indicator for the infrastructure. How deep the ports are dredged? How big and fast are the cranes and the Hinterland connectivity? So, some ports may claim that they are big and can accommodate the largest ships but in reality, the ships may not come. So, we have the hot data on what is the size of the largest ship that actually provides services from into a country's port. Just a little background and parenthesis in this context, (the largest container ships today can carry 20,000 containers). Imagine 20,000, 20-foot containers. If you wanted to transport these 20,000 20-foot containers with trucks, you would need 20,000 truck drivers. You can't possibly put two containers, 224 containers on one truck, one big truck, but you still need two truck drivers. They go day and night. So, you need 20,000 truck drivers to move these containers. How many seafarers work on one of these ships? 20. 20 seafarers move as much cargo as many containers as 20,000 truck drivers. So the size of the ships, of the largest ships that provide services coming into a port, is also an interesting indicator of connectivity. If you want the bigger the ships, the more capable are the ports of this country. The fourth component is the number of services. Early on, we had provided the example of the tube in London or the metro in Paris, you mentioned you have one station that you have only the red line or the yellow line. On the rail station, you may have the red, the yellow, and the blue line. So, the more lines there are, the better, the better connected is the station of this country. And last but not least, the number of companies that provide services from and to a country. This is not quite the same as a line because the lines maybe provided by the same company. Like in Geneva, the TPG. But you may, of course in shipping, you have competing companies and we found this last component, the number of competing companies quite an interesting component that is may even at a certain thresholds there. You need a certain minimum of companies to actually have competition so that cost reductions actually passed onto the client. So, each one of these five components says something, like the mall, the bigger, the better. But each one says something different. So, what did we do? We grouped them together in one index. The index is constructed as follows, for each of the five components, we calculate the maximum and then divide each country's value by the maximum. So, that's the first set of standardization if you want. And then, we calculate the average of the standards for each countries. Now, I can tell you in the year 2004, when we started this, the highest value for four of the five components was in China. But for one of the five components, which is the number of companies, the level of competition, it was actually the United Kingdom. So, although China had 100 in four of the five components, the average was not 100. The average for China was, I don't remember exactly, 92, 94. So, what we did then as a second step, we divided the average again by the maximum for China, which was if I remember it correctly, 92 to 94. So, by the second standardization, we be forced the value of the LSCI, the value of the Line Shipping and Connectivity Index in 2004, assumed 100 for the country with the highest index which was China. So, China 2004 equals 100 through this methodology. At the bottom of the slide, you can see the actual mathematical formula for those who like the mathematical formulas and the science. So, as explained in this way, the index generates a value of 100 for the highest value. And since then, we have kept this standardization. So, the index highest value is 100 in 2004, and since then, actually China year after year after year has improved its value and today, several countries that haven't have an LSCI above 100, meaning, they are today as good or even better connected than China was in 2004. So, the result or the outcome of these calculations, this five components is our LSCI, which is published online. You'll see the link on your screen. We are quite proud of it. It's being used and incorporated in other in-depth databases, the World Bank, the World Economic Forum, the Economy Commission for Asia and Pacific (ESCAP) and UN colleagues. There are quite a few organisations that use this index as a component of further research or even broader indices. So, although our index is already a compilation of a mixed or it includes five components, then it's safe, it becomes a component of other broader indices on competitiveness on trade connectivity and other types of work. So, this is the index as such one number, developed out of five components. In the next sequence, we will look in a little more detail into the five components, development within the five components.
