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Ship investment at a standstill? An analysis of shipbuilding activities and policies

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  • Jane Jing Xu
  • Tsz Leung Yip

Abstract

In the wake of the global financial crisis which started around mid-2008, the global shipbuilding industry is no longer in a state of euphoria as before. The volume of new ship orders dropped dramatically after August 2008. We are motivated to examine three issues in this article: First, in the context of shipping industry, which variable(s) play the most important role in a ship investment decision? Second, do government support and favourable investment conditions really help to save shipbuilding industry from the distressing situation? Third, if we separate Japan, South Korea and China as leading shipbuilding clusters, what will the cluster effect be? Our results indicate that the investment of ships can be decided by the freight level, the supply of the market (fleet size), the demand of the ships (trade volume) and the transport service share (location advantage). However, the state of the freight market is of major importance to the investment decision of ships. Shipbuilding price, second-hand ship price and foreign direct investment in transport are proved to have no linkage to ship investment. Besides, the rising role of Japan, South Korea and China in shipbuilding is also identified.

Suggested Citation

  • Jane Jing Xu & Tsz Leung Yip, 2012. "Ship investment at a standstill? An analysis of shipbuilding activities and policies," Applied Economics Letters, Taylor & Francis Journals, vol. 19(3), pages 269-275, February.
  • Handle: RePEc:taf:apeclt:v:19:y:2012:i:3:p:269-275
    DOI: 10.1080/13504851.2011.572842
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    References listed on IDEAS

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    1. Wolfgang Bessler & Wolfgang Drobetz & Jörg Seidel, 2008. "Ship funds as a new asset class: An empirical analysis of the relationship between spot and forward prices in freight markets," Journal of Asset Management, Palgrave Macmillan, vol. 9(2), pages 102-120, July.
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    5. Wolfgang Bessler & Wolfgang Drobetz & Jorg Seidel, 2008. "Erratum: Ship funds as a new asset class: An empirical analysis of the relationship between spot and forward prices in freight markets," Journal of Asset Management, Palgrave Macmillan, vol. 9(3), pages 254-254, September.
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    Cited by:

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    2. Theocharis, Dimitrios & Pettit, Stephen & Rodrigues, Vasco Sanchez & Haider, Jane, 2018. "Arctic shipping: A systematic literature review of comparative studies," Journal of Transport Geography, Elsevier, vol. 69(C), pages 112-128.
    3. Bianca Borca & Lisa-Maria Putz & Florian Hofbauer, 2021. "Crises and Their Effects on Freight Transport Modes: A Literature Review and Research Framework," Sustainability, MDPI, vol. 13(10), pages 1-21, May.

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