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Capacity retirement in the dry bulk market: A vessel based logit model

Author

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  • Alizadeh, Amir H.
  • Strandenes, Siri Pettersen
  • Thanopoulou, Helen

Abstract

The paper investigates the effect of vessel specific and market variables on the probability of scrapping dry bulk ships. Using a dataset from 2012 to 2015, we find that the probability of scrapping increases with age, but that the relation between vessel size and scrapping probability varies across the different segments. In addition, while the relation between earnings and probability of scrapping ships is negative, bunker prices seem to affect only the scrapping rate of smaller tonnage. Scrapping probability also increases with an increase in interest rates, freight market volatility and scrap steel prices.

Suggested Citation

  • Alizadeh, Amir H. & Strandenes, Siri Pettersen & Thanopoulou, Helen, 2016. "Capacity retirement in the dry bulk market: A vessel based logit model," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 92(C), pages 28-42.
  • Handle: RePEc:eee:transe:v:92:y:2016:i:c:p:28-42
    DOI: 10.1016/j.tre.2016.03.005
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    References listed on IDEAS

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    1. Antoine Bonleu & Gilbert Cette & Guillaume Horny, 2013. "Capital utilization and retirement," Applied Economics, Taylor & Francis Journals, vol. 45(24), pages 3483-3494, August.
    2. Iain Cockburn & Murray Frank, 1992. "Market Conditions and Retirement of Physical Capital: Evidence fron Oil Tankers," NBER Working Papers 4194, National Bureau of Economic Research, Inc.
    3. Austan Goolsbee, 1998. "The Business Cycle, Financial Performance, and the Retirement of Capital Goods," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(2), pages 474-496, April.
    4. Knapp, Sabine & Kumar, Shashi N. & Remijn, Anna Bobo, 2008. "Econometric analysis of the ship demolition market," Marine Policy, Elsevier, vol. 32(6), pages 1023-1036, November.
    5. Avinash K. Dixit & Robert S. Pindyck, 1994. "Investment under Uncertainty," Economics Books, Princeton University Press, edition 1, number 5474, December.
    6. Hercules E. Haralambides & Helen Thanopoulou, 2014. "The Economic Crisis of 2008 and World Shipping: Unheeded Warnings," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 64(2), pages 5-13, April-Jun.
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    Cited by:

    1. Nikos Kagkarakis, 2017. "The Effect Of Vessel Supply On Ship-Demolition Prices," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 5(1), pages 78-94.
    2. repec:eee:transe:v:126:y:2019:i:c:p:177-189 is not listed on IDEAS
    3. repec:eee:energy:v:174:y:2019:i:c:p:1267-1275 is not listed on IDEAS
    4. repec:eee:transe:v:104:y:2017:i:c:p:36-51 is not listed on IDEAS

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