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Ship Sales and Purchases Market: Modeling the Influences of Seaborne Trade and Charter Rates/Freight on Dead Weight Tonnage of Global new Building Orders

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  • Nwokedi, Theophilus Chinonyerem
  • Odumodu Chigozie Uzoma
  • Hilary, Owoidighe Efanga
  • Maduabuchukwu Chukwuemeka Donason
  • Olusegu, Sodiq Buhari

Abstract

The study analyzed the global new building order dead weight tonnage (dwt) in ship sales and purchases market and the relationship with global seaborne trade and charter rates/freight between 1999 and 2013. The major aim was to assess the dependency of new building order dwt on global seaborne trade and daily charter rates/freight with a view to ascertaining the influence of the explanatory variables on new building order dwt over the period. It also compared the new building price index and second hand price index of vessels five years older than new orders. The research data were obtained from UNCTAD Review of Maritime Transport 2014 edition and China Ship Building Research Centre as well Clarkson’s price index. The econometric and statistical methods of multiple and simple regression, trend analysis, correlation analysis, and independent sample t-test were used to analyze the data obtained. It was found that global new building order DWT increases as global seaborne trade increases and as daily freight/charter rate increases, global new order DWT does not increase significantly. The practical application of this is that ship owners in order to expand capacity profitably must do when seaborne trade is increasing or in boom with less consideration to charter rates as the major factors that drive and influence the demand for the ordering of new ship tonnages (capacity) are global seaborne trade and increasing time period. A very weak correlation exists between global new building orders dwt and charter rates/freight. Increasing charter rates/freight does not induce demand/order for new ship tonnages.

Suggested Citation

  • Nwokedi, Theophilus Chinonyerem & Odumodu Chigozie Uzoma & Hilary, Owoidighe Efanga & Maduabuchukwu Chukwuemeka Donason & Olusegu, Sodiq Buhari, 2019. "Ship Sales and Purchases Market: Modeling the Influences of Seaborne Trade and Charter Rates/Freight on Dead Weight Tonnage of Global new Building Orders," International Journal of Science and Business, IJSAB International, vol. 3(2), pages 1-10.
    • Handle: RePEc:aif:journl:v:3:y:2019:i:2:p:1-10
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    References listed on IDEAS

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    1. Liping Jiang, 2010. "Price Formation of Dry Bulk Carriers in the Chinese Shipbuilding Industry," Working Papers 104/10, University of Southern Denmark, Department of Sociology, Environmental and Business Economics.
    2. Theophilus C Nwokedi & Ifiok Okonko & Leonard Ndubuisi & Eba Moses Ntor-Ue, 2018. "Assessment of Shippers and Ship Owners Ship and Charter Type Choice in the Wet and Dry Bulk Ship Brokering Market: Knowledge Guide for African Indigenous Ship Brokers," LOGI – Scientific Journal on Transport and Logistics, Sciendo, vol. 9(1), pages 70-82, May.
    3. Steen Koekebakker & Roar Adland & Sigbjørn Sødal, 2006. "Are Spot Freight Rates Stationary?," Journal of Transport Economics and Policy, University of Bath, vol. 40(3), pages 449-472, September.
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