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The economics of concentration in shipping: Consequences for the VLCC tanker sector

Author

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  • Andreas G Merikas

    (Department of Maritime Studies, University of Piraeus, 33-35 Marathonos Street, Voula, 16673, Greece)

  • Anna A Merikas

    (Department of Maritime Studies, University of Piraeus, 33-35 Marathonos Street, Voula, 16673, Greece)

  • Dionysis Polemis

    (Department of Maritime Studies, University of Piraeus, 33-35 Marathonos Street, Voula, 16673, Greece)

  • Anna Triantafyllou

    (Department of Economics, Deree College, 33–35 Marathonos Street, Voula, 16673, Greece)

Abstract

This article focuses on the issue of market concentration in the VLCC tanker sector and its significance for freight rates during 1993(1)–2010(12). It explores the nature of changes in freight rate volatility along business cycles and finds that freight rate volatility generally increases during both upswings and downswings of the market, but becomes evidently more intense during market upswings. Industrial concentration in the VLCC sector is measured via application of concentration measures that are well founded in the literature. The empirical results obtained reveal a significant increase in market concentration post-1993. Subsequently, the effect of changes in market structure upon the formation and volatility of VLCC spot and time charter freight rates is investigated. We substantiate a positive relationship between spot freight rates and market concentration over the period examined, concluding that expectations regarding the future course of concentration are critical for forecasting the direction of freight rates in the future.

Suggested Citation

  • Andreas G Merikas & Anna A Merikas & Dionysis Polemis & Anna Triantafyllou, 2014. "The economics of concentration in shipping: Consequences for the VLCC tanker sector," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 16(1), pages 92-110, March.
    • Handle: RePEc:pal:marecl:v:16:y:2014:i:1:p:92-110
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    Cited by:

    1. Saeedi, Hamid & Wiegmans, Bart & Behdani, Behzad & Zuidwijk, Rob, 2017. "European intermodal freight transport network: Market structure analysis," Journal of Transport Geography, Elsevier, vol. 60(C), pages 141-154.
    2. Pierre Cariou & Patrice Guillotreau, 2022. "Capacity management by global shipping alliances: findings from a game experiment," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 24(1), pages 41-66, March.

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