Okay. This sequence, we'll look at the history of the index, and the history of the index it's very much linked to the history of the Container. You may know that the Container was invented in 1956, so in 2006, the Container celebrated its 50th birthday, and two years before this birthday, we started preparing the birthday. We looked at ways to measure to develop an indicator, an index that would measure a country's position in the global line of shipping networks. The line of shipping networks are the container shipping networks. There have been studies published recently in The Economist Magazine that called the container The humble hero and there are studies that show the importance of the container for globalization, for competitiveness. We, ourselves, we have done studies that show that better connectivity, better position in the global shipping network leads to a lower freight costs for example. Other studies show that a larger number of liner services is more competition leads to lower freight costs. We have found that actually, the large number of country pass, they are not connected to each other with direct services, but they need trans-shipment. This will be looked at later on in the bilateral index like how many trans-shipments do you need to get from one country to another to import or export or to get your goods from one country to another. So, we know that actually, more than 80 percent of country pass do not have a direct service. There's not one ship going from one country to another without loading and unloading the container in between on another ship. It's less than 20 percent where the direct service is more than 80 percent you need at least one trans-shipment. And one way that I find interesting to illustrate this concept that we thought of, how do we really present, how do we measure, how do we develop an index of connectivity, is to compare the global shipping network with say, a bus network like the TPG in Geneva or the Tube in London or the Metro in Paris. I guess all of you have been on some Tube or metro or bus service, and when you want to go from one station to another. It is unlikely that you will find a direct services, it is more likely that you will need at least one trans-shipment like you need to change bus, you need to change Tube. In fact, if you think of last time, you went to London or Paris on the Tube, it is probable that you needed only one change, at least in theory. You connect to the circular line or to the [inaudible] line somewhere then, you go from one station to another. That's exactly the same in the global container shipping. So, as you have regular services that have a time table, that have several stops along their journey, and you get on or off at one of these stops, and connect to another. So, what we are trying with the country level index of the LSCI, Line of Shipping Connectivity Index, the first one we developed is to measure the connectivity of one station of the point, so one country. Later on, we will explain to you the bilateral index like how do we measure the connectivity between two stations. For example, how many trans-shipment do I need? How many options do I have to get from one station to another? This is later, our first step which started in 2004 was really only to see look at the timetable of a country, like the services from into a country and from this data try to capture the country's position in the global shipping network. So the basic concept of the LSCI, Line of Shipping Connectivity Index is we made use of the time table of regular transport services. So in our case it's the schedule of the container ships. So, the container ships emerged in between Europe and Asia, you have a regular service every week, there's one ship leaving Rotterdam and Hamburg for example, and next the another ship may need, eight ships on that service. So that's the type of data we have, how many ships and what is the timetable of those ships. So we count and measure at each station, at each country. The vehicles or the buses, on our case the container ships according to the timetable. We do not have the data on how many vehicles or how many ships actually stopped or left or neither do we know, how many passengers were on that tube or on that bus or how many containers were on the ship. We really look at the timetable because the beauty is that you have this data, you have the timetable for the shipping services for all countries in the world, and so with this type of index we continue the discussion later on. Often you have to make a trade off between the availability of data and what you would ideally have. So we have available data for the timetables of the services. So you could use different indicators which component, with data point do I take now from these timetables. So we synthesize several measures in one indicator, we group them together, and with this we develop the overall indicator for maritime connectivity. So the first index we developed in 2004 actually had nine components. We tried to correct for example, country size, China is by far best connected country there is more services, more ships, the biggest ships, and then if we want to compare China with say Figi or even Singapore may not be fair. So we try to correct, we looked at coefficient, ships per country and so on and so forth. Did some principal component analysis. In the end, we realized that the ranking among the countries and the logic was not really improved if we made it more complicated. So, the trade off between simplicity and like how sophisticated we should make it. We found it was good enough with just five very specific components which we will explain in the next sequence.
