Title: An analysis of entry and exit decisions in shipping markets under uncertainty

Authors: Matteo Balliauw

Addresses: Department of Transport and Regional Economics, Faculty of Applied Economics, University of Antwerp, Prinsstraat 13, 2000 Antwerpen, Belgium

Abstract: For single shipowners, an important question to ask is when the optimal moment of buying or selling a ship has arrived. This decision of buying or selling a ship can be seen as entering or leaving the shipping market. The prices and revenues in this market were proven to follow a cyclical evolution. A real options model involving a discrete-time Markov process is applied in this article to analyse the described decisions in the cyclical environment of container shipowners who charter out their ships under time charter agreements. Parameters are estimated using real data. The outcomes show robust and realistic results. The methodology and the insights from the analysis can be used by shippers to make funded entry and exit decisions. Finally, some advice for future research is given.

Keywords: cyclical markets; real options; shipping markets; container; entry and exit decisions.

DOI: 10.1504/IJSTL.2017.086346

International Journal of Shipping and Transport Logistics, 2017 Vol.9 No.5, pp.527 - 539

Received: 22 Jun 2015
Accepted: 14 Jun 2016
Published online: 04 Sep 2017 *

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