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The Relationship Between Freight Revenues And Vessel Disposal Decisions

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  • Abdullah AÇIK
  • Sadık Özlen BAŞER

Abstract

Ship demolition market helps to balance over supply in shipping market. Some factors accelerate and some factors slow down this process. Freight revenues are one of the most important factor that directly affect this process. Because even the old and obsolete ships can survive and carry out their operations profitably in buoyant market with high freight rates. In this context, this study aims to contribute existing literature by presenting an econometric analysis of the relationship between freight revenues and ship disposal decisions. Total tonnage sent to the demolition and Baltic Dry Index (BDI) variables are chosen, and annual data between 1985 and 2015 is used in the model. BDI is selected as a representative of freight revenues due to data constraint. Total tonnage sent to the scrapping is taken as a result of the decision to send ships to disposal. Correlation and regression analysis are conducted to determine the econometric relationship between variables. The results verifies the negative relationship between freight revenues and vessel disposal decisions.

Suggested Citation

  • Abdullah AÇIK & Sadık Özlen BAŞER, 2017. "The Relationship Between Freight Revenues And Vessel Disposal Decisions," Journal of Research in Economics, Politics & Finance, Ersan ERSOY, vol. 2(2), pages 96-112.
    • Handle: RePEc:ahs:journl:v:2:y:2017:i:2:p:96-112
    DOI: 10.30784/epfad.363721
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    References listed on IDEAS

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    1. Lin, Faqin & Sim, Nicholas C.S., 2013. "Trade, income and the Baltic Dry Index," European Economic Review, Elsevier, vol. 59(C), pages 1-18.
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    More about this item

    Keywords

    BDI; freight revenues; demolition; business cycles;
    All these keywords.

    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure

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