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Maritime Policy & Management
The flagship journal of international shipping and port research
Volume 47, 2020 - Issue 8
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Articles

The dynamics of fleet size and shipping profitability: the role of steel-scrap prices

Andreas Andrikopoulosa Department of Business Administration, University of the Aegean, Chios, GreeceCorrespondence[email protected]
ORCID Iconhttps://orcid.org/0000-0002-0276-4819
ORCID Icon,
Anna Merikab Department of Accounting, Economics and Finance, Deree College, Athens, GreeceORCID Iconhttps://orcid.org/0000-0001-9950-4724
ORCID Icon,
Andreas Merikasc Department of Maritime Studies, University of Piraeus, Piraeus, GreeceORCID Iconhttps://orcid.org/0000-0002-6644-3520
ORCID Icon &
Mike Tsionasd Lancaster University Management School, Lancaster University, Lancaster, UKORCID Iconhttps://orcid.org/0000-0001-7254-6166
ORCID Icon
Pages 985-1009 | Published online: 02 Mar 2020
 
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ABSTRACT

We discover that in each shipping segment the price of scrap, earnings, and the fleet size are jointly determined. Deploying a Vector Error Correction model, we find that international steel-scrap prices explain ship scrap prices, but the price of nickel, crude oil, and seaborne trade have an even higher positive explanatory power on them. This dependence is mainly attributed to the economic nature of the major ship-breaking countries: they are all emerging economies, heavily relying on steel as well as nickel in their development process.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. Beaching is a lower-cost method of dismantling a ship, with negative labour and environmental effects.

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