Economic modeling in shipping and transport: the case of bulk shipping
Πολίτης, Ευάγγελος Δ.
SubjectΝαυτιλιακή οικονομική ; Πλοία -- Οικονομικές απόψεις ; Θαλάσσιες μεταφορές ; Bulk carrier cargo ships
The maritime sector is a capital-intensive industry in which fixed assets are instantly liquidated and employed. The ship owner must go through the decision-making process involved in acquiring a vessel and estimating all variables, both endogenous and exogenous. The valuation incorporates all future cash inflows and outflows of the vessel during the ownership of the asset. However, a significant dilemma arises in the final decision stage: whether to acquire a new ship or a secondhand vessel. New construction prices are difficult to estimate, since most of the associated costs are determined by various factors, and the available databases do not incorporate all the required (and valuable) information. Additionally, the construction period varies among shipyards because of their different slot capacities. A ship owner has the option to weigh the price of a new structure against the value of a secondhand vessel and determine which is the optimal choice for the particular period and conditions of the shipping market. The valuation process involved in purchasing a secondhand vessel may be more feasible, since most of the variables that determine the price can be easily obtained from various databases. Secondhand vessel prices can be described in terms of supply and demand. Considering all the above parameters and incorporating modern econometric theory, which is based on co-integration methodology, this research focused on the construction of a valuation model. Gathering monthly data for a period of 11 years, a valuation model for a secondhand vessel was constructed and evaluated using a vector error correction model (VECM). The results were consistent with those of other studies pertaining to the shipping environment, which suggest that there are indicative differences between small-sized and large-sized vessels—differences which have a significant effect on vessel prices.