The dynamics between newbuilding ship price volatility and freight volatility in dry bulk shipping market Online publication date: Fri, 29-May-2015
by Lei Dai; Hao Hu; Feier Chen; Jianing Zheng
International Journal of Shipping and Transport Logistics (IJSTL), Vol. 7, No. 4, 2015
Abstract: Dry bulk shipping market is a key element of international trade. Newbuilding vessel prices tend to fluctuate drastically, however the price volatility mechanism and major determinants were neglected, regardless of the abundant research on newbuilding price formation and price determinants. This paper applied the GARCH (1, 1) model to investigate the key determinants of newbuilding vessel price volatility and how freight rate affects it. The empirical results revealed that freight rate volatility is the most important and the positive determinant for newbuilding price volatility in capesize, panamax, handymax and handysize sectors. Shipyard capacity change, exchange rate volatility and shipbuilding cost volatility are key determinants for some vessel types, while secondhand vessel price volatility is not the key determinant for any vessel type. Our findings could help the practitioners better understanding the market dynamics and managing the market risks.
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Shipping and Transport Logistics (IJSTL):
Login with your Inderscience username and password:
Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.
If you still need assistance, please email subs@inderscience.com
Our Blog 
Follow us on Twitter 
Visit us on Facebook