Ship-Owners' Decisions to Outsource Vessel Management

Abstract

Shipping companies frequently outsource the management of their vessels. In this paper, we use data from Lloyd's Register Fairplay [(2009) IHS Fairplay World shipping encyclopaedia. Available at http://www.ihs.com/products/maritime-information/ships/world-shipping-encyclopedia.aspx?pu=1&rd=ihsfairplay_com] on 45 456 vessels belonging to 9580 different ship-owners to investigate the extent of outsourcing in shipping and to identify the key factors affecting the likelihood of outsourcing. The results of our econometric analysis indicate that ship-owners' decisions to outsource are explained by the characteristics of the vessels in question (age, type and size) and the characteristics of the ship-owner (country of domiciliation and number of vessels). In addition, a specific country effect is identified for Greek ship-owners, which is in line with the findings of previous studies.

Acknowledgements

We are indebted to three anonymous reviewers for their helpful comments and suggestions on a previous draft. The usual disclaimers apply.

Notes

For example, an owner with four vessels contributes four observations to the vessel sample but only one to the owner sample.

Detailed results are available upon request from authors.

This is because of the importance of German KG partnership systems, which provide tax exemptions for investments in container ships. German vessels are, therefore, relatively younger as a result of the surge in investment for these vessels in recent years (Cariou, 2008).