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Niver Lines: A System-Dynamics Approach to Tanker Freight Modeling

Author

Listed:
  • George Dikos

    (Aegean Speed Lines, Commercial Center “City Plaza,” 85 Vouliagmenis Avenue and Antheon 16674, Athens, Greece)

  • Henry S. Marcus

    (Department of Ocean Engineering, Room 5-207, Massachusetts Institute of Technology, Cambridge, Massachusetts 02139)

  • Martsin Panagiotis Papadatos

    (Judge Business School, University of Cambridge, Trumpington Street, Cambridge CB2 1AG, United Kingdom)

  • Vassilis Papakonstantinou

    (Eugenides Foundation, 387, Syngrou Avenue 175 64, Athens, Greece)

Abstract

Managers can improve their investment decisions in a cyclical market, such as the tanker market, by using system-dynamics models. We developed and implemented a system-dynamics model for the tanker market for Niver Lines. We combine entry, exit, and lay-up decisions, and determine the flow of transportation supply. Then, we compare supply and demand and calibrate the system. We derived time-charter rates from the interaction of supply and demand using historical data from 1980 through 2002. Our results reveal the key factors that affect tanker rates and unforeseen dynamics. The model is a powerful tool for modeling the impact of changes in various factors on time-charter rates.

Suggested Citation

  • George Dikos & Henry S. Marcus & Martsin Panagiotis Papadatos & Vassilis Papakonstantinou, 2006. "Niver Lines: A System-Dynamics Approach to Tanker Freight Modeling," Interfaces, INFORMS, vol. 36(4), pages 326-341, August.
    • Handle: RePEc:inm:orinte:v:36:y:2006:i:4:p:326-341
    DOI: 10.1287/inte.1060.0218
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    References listed on IDEAS

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    1. Brunner, Karl & Meltzer, Allan H., 1976. "The Phillips curve," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 1(1), pages 1-18, January.
    2. Lucas, Robert Jr, 1976. "Econometric policy evaluation: A critique," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 1(1), pages 19-46, January.
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    Cited by:

    1. Federico Cosenz & Guido Noto, 2016. "Applying System Dynamics Modelling to Strategic Management: A Literature Review," Systems Research and Behavioral Science, Wiley Blackwell, vol. 33(6), pages 703-741, November.
    2. Saeed, Naima & Nguyen, Su & Cullinane, Kevin & Gekara, Victor & Chhetri, Prem, 2023. "Forecasting container freight rates using the Prophet forecasting method," Transport Policy, Elsevier, vol. 133(C), pages 86-107.
    3. Furkan Oztanriseven & Heather Nachtmann, 2020. "Modeling dynamic behavior of navigable inland waterways," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 22(2), pages 173-195, June.
    4. Alizadeh, Amir H. & Talley, Wayne K., 2011. "Vessel and voyage determinants of tanker freight rates and contract times," Transport Policy, Elsevier, vol. 18(5), pages 665-675, September.
    5. Amir Alizadeh & Wayne Talley, 2011. "Microeconomic determinants of dry bulk shipping freight rates and contract times," Transportation, Springer, vol. 38(3), pages 561-579, May.

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