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The impact of ship scrapping subsidies on fleet renewal decisions in dry bulk shipping

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  • Yang, Zhongzhen
  • Jiang, Zhenfeng
  • Notteboom, Theo
  • Haralambides, Hercules

Abstract

We introduce a novel dimension to the fleet renewal decisions of a shipping company, taking into account the effects of ship scrapping subsidies. The fleet renewal behavior of a company is analyzed with focus on early scrapping decisions prompted by the subsidy. We present a fleet renewal decision model which maximizes firm profit given market demand and the features of a scrapping subsidy. To assess the effects of a potential subsidy on corporate decisions, we compare the optimal fleet renewal schemes with and without the subsidy. We calculate the outcome of such a policy measure for China COSCO Shipping.

Suggested Citation

  • Yang, Zhongzhen & Jiang, Zhenfeng & Notteboom, Theo & Haralambides, Hercules, 2019. "The impact of ship scrapping subsidies on fleet renewal decisions in dry bulk shipping," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 126(C), pages 177-189.
    • Handle: RePEc:eee:transe:v:126:y:2019:i:c:p:177-189
    DOI: 10.1016/j.tre.2019.04.008
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