Price Premiums in the Shipbuilding Market : A study of determinants for bulker, tanker and container segments in the 1990-2014 period

Abstract

In this thesis we investigate whether a number of variables specific to a vessel, the contracting parties, or market conditions affect the price charged for the ship. Literature in maritime economics seems to suggest that competitive shipbuilders are price takers, and thus have little influence on the prices they charge ship owners. However, deviations in price for comparable vessels contracted in the same period are observed. Determinants derived from contract information and market conditions make up the covariates of the study, and we are particularly interested in the effects of delivery time, shipyard experience and firm size. The data sample contains contract information on 3,759 individual ships constructed at 77 shipyards between 1990 and 2014. We perform separate fixed effects regressions on the shipbuilding segments of bulk, container and tanker vessels, in order to incorporate shipyard and ship owner heterogeneity as well as capture segment specific effects. The results suggest that macroeconomic determinants are the most influential covariates, although we also find the microeconomic determinants gross tonnage, top speed, delivery time, as well as ship owner and shipyard heterogeneity affecting prices. The effects from these covariates prove to have different effects in the three segments. Similar for all markets is that ship owner fixed effects have a greater influence on price movements than those of shipyards.