| dc.description.abstract | Classical maritime theory suggests that vessel operators optimize speed based on prevailing
market conditions. However, numerous academic contributions have failed to provide
supportive empirical evidence of real life speed optimization and many believe that
contractual limitations constitutes the hurdle for the theory being practiced.
In this thesis we empirically test the effect of contractual constraints on speed optimization.
More specifically, we test whether speed choice and the extent of observable speed
optimization differentiates before and after a vessel has entered into a contract. In
addition, we test whether an estimate for revenue expectations is a better predictor for
speed than current spot market rates. Using geospatial (AIS) data for ballasting Capesize
vessels and corresponding freight market indices, we find that vessels increase speed after
entering into a contract. This implies that the contract structure might affect speed
decisions. When testing the effect from exogenous market conditions, such as freight
rate levels and fuel prices, we get ambiguous results. Surprisingly, we cannot detect any
trustworthy indicators for vessel speed optimization whilst vessels are free of contractual
constraints. On the contrary, we find that operators are more responsive to shifts in market
conditions after having entered into a contract. These effects are however only marginal
compared to what is suggested by theory. Overall we conclude that it is questionable
whether or not speed optimization theory is adequate to describe speed optimization in
practice. As we can not find evidence that the contracting state constitutes a significant
hurdle for speed optimization, we believe earlier literature tend to overemphasize the
importance of contractual barriers. | en_US |
