THE purpose of this paper is two-fold; firstly to examine the possibility of the shipping industry providing the economy with certain indirect benefits and to suggest a method of quantifying these benefits; secondly to examine the effects of an increase in the size of a nation's fleet generated by a subsidy programme. The two aspects of the study overlap and the econometric model designed to help answer both parts is able, in addition, to provide a basis for forecasting future values of freight rates and ton-miles. The first aspect involves an estimation of the area of consumers surplus and of its division between importers and exporters, while the second entails building a model capable of providing demand and supply equations for shipping services