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

Andreas Andrikopoulos, Anna Merika, Andreas Merikas and Mike Tsionas

Maritime Policy & Management, 2020, vol. 47, issue 8, 985-1009

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.

Date: 2020
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DOI: 10.1080/03088839.2020.1735007

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