Earnings yield and predictability in the dry bulk shipping industry

Abstract

We examine the relation between vessel prices, net earnings and holding period returns in the dry bulk shipping industry. In doing so, we provide a framework for pricing shipping assets, with finite economic lives and also subject to wear and tear. Shipping earnings yields negatively forecast future net earnings growth while there is no consistent evidence of time-varying risk premia. We provide an economic interpretation for the obtained results and argue that the investment decisions of shipowners affect the current price of the asset through the expected cash flow stream, thus implying cash flow predictability.

Asset pricing with mean reversion: The case of ships

“…In that respect, our model extends the recent shipping research to cover also the market for second-hand vessels and trading activity. Finally, while there have been numerous studies focusing on the volatility of vessel prices per se (Strandenes 1984;Adland et al 2006;Adland and Koekebakker,2007;Moutzouris and Nomikos 2019), our paper integrates the second-hand market by directly linking cash flows, asset prices, and trading activity through the means of a structural microeconomic model instead of reduced form estimation.…”

Effectiveness Assessment of Non-Specialized Vessel Acquisition and Operation Projects, Considering Their Suitability for Oversized Cargo Transportation

“…In (Petraška et al 2017), the issues of criteria selection and evaluation of the routes of carriage of HL/OS cargo are considered. The tendency of change in the shipping market and ways to improve fleet operation efficiency on the changing freight market are studied in (Moutzouris et al, 2019;Liu et al, 2018;Kou et al, 2018). The relation between the ship's cost, net earnings and profit of ownership in the dry bulk shipping industry was examined in (Moutzouris et al, 2019).…”

“…The tendency of change in the shipping market and ways to improve fleet operation efficiency on the changing freight market are studied in (Moutzouris et al, 2019;Liu et al, 2018;Kou et al, 2018). The relation between the ship's cost, net earnings and profit of ownership in the dry bulk shipping industry was examined in (Moutzouris et al, 2019). Paper (Liu et al, 2018) examines the effects of crisis on the bulk shipping market and assesses the volatility characteristics of specific vessel types.…”

Global strategy gone astray: Maersk's big box boats and the world shipping industry

“…China is the main example where the country became a global factory regarding supplying consumer and industrial products to the world. Because of its sheer size and strategic global routes, the shipping industry played a major role and helped connect countries, regions, and MNCs' businesses (Jephson & Morgan, ; Moutzouris & Nomikos, ; Wright, , ).…”