Islamic finance : an econometric model for tanker dry-docking cost financing

Abstract

The emerging of Islamic finance as an alternative mode for funding of ships is the trigger of the present thesis. The thesis, first, investigates the different types of Islamic finance and evaluates the most suitable one for the financing of ship repair and drydocking. Later, the current thesis deals with the effects of a vessel’s inherent physical parameters, such as type, size and age on her dry-docking cost. Special attention is paid to size and age influence on such costs. To this end, an investigation for primary data managed to collect approximately eight hundred dry-docking actual bills for a period of four successive years. Finally, an economic model has been developed correlating a tanker repair and dry-docking cost with a number of ship inherent parameters as well as with shipyard (material & labour) cost and ship employment conditions. Ship finance is a growing segment of the Islamic finance. Further penetration of funds into the industry requires explicit knowledge of ship operating costs the most unexplored of which is the dry docking cost. The modelling of dry docking cost using primary hand collected data could establishes the necessary link in order to facilitate and strengthen the evolving interdependence between Islamic finance and the shipping industry.