Investment into container shipping capacity: A real options approach in oligopolistic competition

Rau, Philipp; Spinler, Stefan

doi:10.1016/j.tre.2016.05.012

Cited by 40 publications

(14 citation statements)

References 39 publications

(24 reference statements)

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“…Form alliances with other shipping companies Strategic alliances can help companies effectively use resources/equipment and share risks. Each shipping company in an alliance group often contributes several ships that co-operate on the same routes, which could lead to sharing of the capital investment and risk for these shipping companies Notteboom (2004), Lu et al (2010), Tan and Thai 2014, Rau and Spinler (2016) 15. Acquire and merge with other shipping companies Acquisition is deemed a quick and effective way to increase profit, expand the business and improve competitive position.…”

Section: Methodsmentioning

confidence: 99%

“…Shipping companies can also build trust with partners (Kwon and Suh, 2005;Sodhi and Son, 2009) and then further enter into long-term contracts with shippers (Notteboom, 2004), share information with partners without co-management (Harrison and Hoek, 2005;Schmidt, 2009), exchange ideas with partners to resolve conflicts or improve service quality (Harrison and Hoek, 2005;Sodhi and Son, 2009). They can also form alliances with other shipping companies (Lu et al, 2010;Tan and Thai, 2014;Rau and Spinler, 2016) or acquire and merge with other shipping companies (Notteboom, 2004;Lu et al, 2007). Table I summaries the risk mitigation strategies from the existing literature.…”

Section: Identification Of Risk Mitigation Strategies From the Literamentioning

confidence: 99%

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Selection of effective risk mitigation strategies in container shipping operations

Chang

Dong

et al. 2019

MABR

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Purpose Container shipping companies face various risks with different consequences that are required to be mitigated. Limited empirical research has been done on identifying and evaluating risk management strategies in shipping operations with different risk consequences. This paper aims to identify the appropriate risk mitigation strategies and evaluate the relative importance of these strategies. Design/methodology/approach Literature review and interviews were used to identify and validate the appropriate risk mitigation strategies in container shipping operations. A questionnaire with a Likert five-point scale was then conducted to rank the identified risk mitigation strategies in terms of their overall effectiveness. Top six important strategies were selected to evaluate their relative importance under three risk consequences (i.e. financial, reputation and safety and security incident related loss) through using another questionnaire with paired-comparison. Fuzzy analytic hierarchy process (AHP) was then conducted to analyse the paired-comparison questionnaire. Findings After conducting a systematic literature review and interviews, 18 mitigation strategies were identified. The results from the first questionnaire show that among the 18 strategies, the top three are “form alliances with other shipping companies”, “use more advanced infrastructures (hardware and software)” and “choose partners very carefully”. After conducting fuzzy AHP, the results show that shipping companies emphasize more on reducing the risk consequence of financial loss; and “form alliance with other shipping companies” is the most important risk mitigation strategy. Originality/value This paper evaluates the risk mitigation strategies against three risk consequences. Managers can benefit from the systematic identification of mitigation strategies, which shipping companies can consider for adoption to reduce the operational risk impact.

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Section: Methodsmentioning

confidence: 99%

Section: Identification Of Risk Mitigation Strategies From the Literamentioning

confidence: 99%

Selection of effective risk mitigation strategies in container shipping operations

Chang

Dong

et al. 2019

MABR

View full text Add to dashboard Cite

show abstract

“…• A large part of excess volatility in vessel prices can be attributed to shipowners' behavioural biases; that is, they overpay for vessels and overinvest during booms, thus realizing poor subsequent returns Rau and Spinler (2016) Application of ROA in liner shipping under oligopolistic market structure Case study -…”

Section: Resultsmentioning

confidence: 99%

“…For example, Kyriakou et al (2017b) propose a ROA model for investments valuation and timing in the dry bulk segment based on the exponential mean-reverting property of freight rates. Rau and Spinler (2016) propose a ROA for optimal investment decisions in liner shipping under the assumption of oligopolistic competition. They find that the number of market participants and the intensity of competition affect optimal capacity, company values and investments.…”

Section: Investment Valuation Methodsmentioning

confidence: 99%

A survey of shipping finance research: Setting the future research agenda

Alexandridis

Kavussanos

Kim

et al. 2018

Transportation Research Part E: Logistics and Transportation Re

111

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Financing shipping related investment projects has always been a focal area of debate and research within the international maritime industry since access to funding can determine the competitiveness of a capitalintensive business as well as its success or failure under adverse market conditions. This paper provides, for the first time, a comprehensive and structured survey of all published research in the area of shipping finance and investment. The review spans approximately four decades (1979-2018) of empirical evidence, including 162 studies published in 48 scholarly journals, complemented with select books and book chapters. The study provides a bibliometric analysis and comprehensive synthesis of existing research offering an invaluable source of information for both the academic community and business practice, shaping the future research agenda in shipping finance and investment. JEL Code: G10, G20, G30.

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“…Traditional studies in the shipping economic literature attempt to model ship prices such as Beenstock and Vergottis (1989), Strandenes (1984), Hawdon (1978) and Haralambides et al (2004), Gkochari (2015), and Rau and Spinler (2016), among others. All these studies are based on the assumptions that ships are capital assets and reward the investors with operational revenue as well as capital gains or losses.…”

Section: Markets For Ships: the Traditional Modelsmentioning

confidence: 99%

Investors’ behavior and dynamics of ship prices: A heterogeneous agent model

Alizadeh

Thanopoulou

Yip

2017

Transportation Research Part E: Logistics and Transportation Re

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Distinguishing investors into speculators and operators, and classifying the former group into momentum and contrarian investors, we develop a heterogeneous agent model (HAM) to examine the dynamics of price of secondhand dry bulk ships. The results suggest that momentum strategies based on short-term measures of earnings perform significantly better than the contrarian or passive (buy-and-hold) strategies. The HAM seems to capture the dynamics of vessel prices and the investors' behavior in the market for ships very well. Finally, an increase in participation of momentum investors tends to increase price volatility, whereas higher demand from contrarian investors seems to lower price variability.

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Investment into container shipping capacity: A real options approach in oligopolistic competition

Cited by 40 publications

References 39 publications

Selection of effective risk mitigation strategies in container shipping operations

Selection of effective risk mitigation strategies in container shipping operations

A survey of shipping finance research: Setting the future research agenda

Investors’ behavior and dynamics of ship prices: A heterogeneous agent model

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