Modelling the relationship between ship price and freight rate with structural changes

Ying Kou, Meifeng Luo

Research output: Journal article publicationJournal articleAcademic researchpeer-review

9 Citations (Scopus)

Abstract

This study examines the relationship between the freight rate and ship prices, incorporating the influence of structural changes. The long-term ship price-freight rate relationship is modelled based on ship investment decisions, with the assumption that the freight rate follows an extended mean-reverting process. Theoretically, the sensitivity of ship prices to freight rate changes is found invariant to structural change. Empirically, we verify this result and find that the sensitivity is lower for larger ships and for new ships. We also find that second-hand ship investors are more interested in short-term benefits.
Original languageEnglish
Pages (from-to)276-294
Number of pages19
JournalJournal of Transport Economics and Policy
Volume49
Publication statusPublished - 1 Jan 2015

ASJC Scopus subject areas

  • Transportation
  • Economics and Econometrics
  • Management, Monitoring, Policy and Law

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