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Ship Valuation Using Cross-Sectional Sales Data: A Multivariate Non-Parametric Approach

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  • Roar Adland

    ([1] Clarkson Fund Management, London, UK. [2] Agder University College, Kristiansand, Norway)

  • Steen Koekebakker

    (Agder University College, Kristiansand, Norway)

Abstract

Despite the illiquid and heterogeneous nature of the second-hand market for bulk ships and the resulting difficulty of creating reliable time series of ship prices for generic ships, the literature on ship price dynamics relies heavily on time series models. In this paper we present, for the first time, an analysis of ship valuation using cross-sectional data based on actual sale and purchase transactions in the second-hand market for bulk ships. This allows us to investigate price formation in the second-market free of broker bias and measurement error. Moreover, we do not impose a strict linear model specification but allow for the presence of non-linearity in a flexible non-parametric vessel valuation function. Based on data from more than 1,850 individual sales of Handysize bulk carriers from January 1993 to October 2003, we find that the second-hand value of a vessel can be well described as a partially non-linear function of three main factors: DWT, age, and the state of the freight market. Maritime Economics & Logistics (2007) 9, 105–118. doi:10.1057/palgrave.mel.9100174

Suggested Citation

  • Roar Adland & Steen Koekebakker, 2007. "Ship Valuation Using Cross-Sectional Sales Data: A Multivariate Non-Parametric Approach," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 9(2), pages 105-118, June.
    • Handle: RePEc:pal:marecl:v:9:y:2007:i:2:p:105-118
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    Cited by:

    1. Alexandridis, George & Kavussanos, Manolis G. & Kim, Chi Y. & Tsouknidis, Dimitris A. & Visvikis, Ilias D., 2018. "A survey of shipping finance research: Setting the future research agenda," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 115(C), pages 164-212.
    2. Giovanni Pantuso & Kjetil Fagerholt & Stein W. Wallace, 2016. "Uncertainty in Fleet Renewal: A Case from Maritime Transportation," Transportation Science, INFORMS, vol. 50(2), pages 390-407, May.
    3. Peter Løchte Jørgensen & Domenico De Giovanni, 2010. "Time Charters with Purchase Options in Shipping: Valuation and Risk Management," Applied Mathematical Finance, Taylor & Francis Journals, vol. 17(5), pages 399-430.
    4. Adland, Roar & Cariou, Pierre & Wolff, François-Charles, 2018. "Does energy efficiency affect ship values in the second-hand market?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 111(C), pages 347-359.
    5. Ingrid van Putten & Emmanuelle Quillérou & Olivier Guyader, 2012. "How constrained? Entry into the French Atlantic fishery through second-hand vessel purchase," Post-Print hal-00815455, HAL.
    6. Pantuso, Giovanni & Fagerholt, Kjetil & Hvattum, Lars Magnus, 2014. "A survey on maritime fleet size and mix problems," European Journal of Operational Research, Elsevier, vol. 235(2), pages 341-349.
    7. Görçün, Ömer Faruk, 2022. "A novel integrated MCDM framework based on Type-2 neutrosophic fuzzy sets (T2NN) for the selection of proper Second-Hand chemical tankers," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 163(C).
    8. Theodore Syriopoulos & Michael Tsatsaronis & Ioannis Karamanos, 2021. "Support Vector Machine Algorithms: An Application to Ship Price Forecasting," Computational Economics, Springer;Society for Computational Economics, vol. 57(1), pages 55-87, January.
    9. Myrto Kalouptsidi, 2011. "Time to Build and Shipping Prices," 2011 Meeting Papers 661, Society for Economic Dynamics.
    10. Moutzouris, Ioannis C. & Nomikos, Nikos K., 2020. "Asset pricing with mean reversion: The case of ships," Journal of Banking & Finance, Elsevier, vol. 111(C).
    11. Bakkehaug, Rikard & Eidem, Eirik Stamsø & Fagerholt, Kjetil & Hvattum, Lars Magnus, 2014. "A stochastic programming formulation for strategic fleet renewal in shipping," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 72(C), pages 60-76.

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