The Relationship Between Freight Revenues and Vessel Disposal Decisions

Açık, Abdullah; Başer, Sadık Özlen

doi:10.30784/epfad.363721

Cited by 8 publications

(20 citation statements)

References 15 publications

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“…The increase in freight rates implies an economic recovery, as the demand for transportation activities has increased. In addition, as mentioned in the previous studies by the same authors, the increase in freight rates cause a decrease in the amount of vessel sent to the demolition (Açık and Başer, 2017). Increased steel demand caused by the economic recovery and the shortage of ships in the demolition yards due to the buoyant freight market conditions may cause an increase in the offered demolition prices.…”

Section: Literature Reviewsmentioning

confidence: 68%

“…However, as the subject also has a maritime side, the relationship is not clear and becomes partially complicated. Especially, developments in the freight market affect the number of ships sent to the demolition (Açık and Başer, 2017) and demolition prices (Açık and Başer, 2018) consequently. Taking into account all of these, the relationship between demolition price and construction cost is likely to be nonlinear.…”

Section: Resultsmentioning

confidence: 99%

“…In a study conducted by Açık and Başer (2017), the relationship between the freight rates and the amount of vessel sent to the scrapping is investigated through correlation and regression analysis. In theory, the decline of revenues in the market causes the operational activities of old and obsolete ships to be unsustainable, therefore when the freight rates fall, there is an increase in the amount of vessel going to scrapping.…”

Section: Literature Reviewsmentioning

confidence: 99%

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The Reflection of Ship Demolition Prices to Construction Costs in Turkey

Açık¹,

Baran²

2019

Marine Science and Technology Bulletin

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The ship demolition sector is one of the major suppliers of the steel market, even though its share in the total scrap market is very small. As the sector is a supplier of the steel market, it is inevitable that the price changes will be reflected in the construction sector, which is one of the largest steel customers. In this context, it is aimed in this study to determine whether the changes in demolition prices of Turkey, which is one of the main ship demolition locations in the world, have an effect on the construction costs in the country. In order to investigate possible relationships, Turkish demolition prices and Construction Cost Index (CCI) variables are used. The dataset covers the dates between January 2015 and December 2018, and consists of 48 monthly observations. Asymmetric causality test is used to determine the causal relationship between the variables by separating the shocks they contain as positive and negative. The econometric relationship is analyzed with both the USD currency price offered by Turkish demolition businesses and the corresponding TL currency prices in order to diversify the results. According to the results, causality relation from positive shocks in USD based demolition prices to the positive shocks in construction costs index is determined. In addition, there are causalities from positive shocks in TL based demolition prices to the positive shocks in construction cost index, and from negative shocks in demolition prices to the negative shocks in the index. This situation shows that the foreign exchange rates also play an important role in shaping the costs of the construction sector.

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Section: Literature Reviewsmentioning

confidence: 68%

Section: Resultsmentioning

confidence: 99%

Section: Literature Reviewsmentioning

confidence: 99%

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The Reflection of Ship Demolition Prices to Construction Costs in Turkey

Açık¹,

Baran²

2019

Marine Science and Technology Bulletin

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“…In a study conducted by Açık and Başer (2017), the relationship between the freight rates and the amount of ship sent to demolition was investigated by correlation and regression analyses. As a result of the research, it was determined that there exists a negative significant relationship between the freight revenues and the amount of ship sent to demolition.…”

Section: Literature Reviewmentioning

confidence: 99%

Çelik Fiyatının Gemi Hurdası Fiyatlarına Etkisi: Gelişmekte Olan Ülkeler Heterojen Panelinden Bulgular

Tunç

Açık

2019

Sosyoekonomi

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In this study, the causal relationship between global steel prices and demolition prices in five developing countries (Bangladesh, China, India, Pakistan, and Turkey) that host five main ship scrap centers in the world are examined. The bootstrap panel Granger causality analysis is employed to take heterogeneity and cross-sectional dependence into account. The data set used in this study consists of 289 weekly observations from January 8, 2013 to July 16, 2018. As a result of the study, a collective causality relationship from steel price to demolition prices is determined and individual causality relationships for all countries except Bangladesh are identified.

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“…When the demolition related studies have been investigated, it has been found that no studies have examined the effect of volatility spillovers between the demolition markets. Most of the studies in the literature carry out analyzes based on demolition prices; the relationship between international scrap price and ship demolition prices (Kagkarakis et al, 2016), the relationship between demolition price and the amount of vessel sent to the demolition (Açık and Başer, 2017), the relationship between the demolition price and the freight rate in the dry bulk market (Açık and Başer, 2018a), and efficient market hypothesis in ship demolition prices (Açık and Başer, 2018b). There are two more studies; one of them has investigated the probability of a ship to be scrapped in different locations and impact of some drivers on that probability (Knapp et al, 2008); and the other one has investigated the ship scrapping decisions of shipowners in several market conditions (Yin and Fan, 2018).…”

Section: Literature Reviewmentioning

confidence: 99%

Price Volatility Spillover in Ship Demolition Markets

Açık

Başer

2019

Optimum Ekonomi Ve Yönetim Bilimleri Dergisi

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World ship demolition activities are mainly carried out in Bangladesh, China, India, Turkey and Pakistan. Conducting in so few countries leads to a high level of competition among countries, as well as being influenced by each other's prices. So, there is no natural situation for each other to follow their prices, and this can be reflected as a flow of information to the variances of the prices. When this information flow exists, volatility spreads can be observed between the prices. In this context, this study aims to determine the flow of information between the major countries operating in the demolition sector in the world by using the causality in variance method. The dataset covers the dates between 8th January 2013 and 24th December 2018 and consist of 309 observations on a weekly basis. According to the results, there are volatility spillovers from Turkish demolition prices to all other country prices except China in terms of both general cargo and tanker ships. In addition, there are volatility spillovers from Pakistani tanker demolition prices to Bangladeshi and Indian prices. These results reveal that the demolition business entities of other countries follow the Turkish prices in determining general and tanker demolition prices, and Pakistani prices only in determining tanker demolition prices. Thus, the volatilities in Turkish and Pakistani prices are reflected in the prices of the other demolition countries. On the other hand, Chinese has a special position since its prices are not affected by the other prices and do not affect the other prices.

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The Relationship Between Freight Revenues and Vessel Disposal Decisions

Cited by 8 publications

References 15 publications

The Reflection of Ship Demolition Prices to Construction Costs in Turkey

The Reflection of Ship Demolition Prices to Construction Costs in Turkey

Çelik Fiyatının Gemi Hurdası Fiyatlarına Etkisi: Gelişmekte Olan Ülkeler Heterojen Panelinden Bulgular

Price Volatility Spillover in Ship Demolition Markets

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