This article discusses the market efficiency of bulk shipping fleets in both the short and long term perspectives. In the short term it demonstrates that shipowners are profit maximizers and that freight rates are equal to marginal cost, that evidencing allocative efficiency of resources. It assumes that the market is differentiated but the intra-marginal substitution takes place. While it is shown that the marginal cost functions of individual vessels, which are aggregated to provide the market supply schedule, are only unique for a specific voyage, provided the general pattern of trade remains more or less constant the supply function is likely to be relatively insensitive to individual changes in ships' MCs. In the long term it is argued that the market is far less efficient with many factors combining to prevent accurate matching of supply and demand for any but for a very short period of time. In recent years supply has exceeded demand by a considerable amount and it is concluded that finance for ships should be provided primarily from shipowners' accumulated reserves and that loan capital should finance a much smaller proportion of the costs of independent tonnage.


    Access

    Check access

    Check availability in my library

    Order at Subito €


    Export, share and cite



    Title :

    An analysis of efficiency of the bulk shipping markets


    Contributors:

    Published in:

    Publication date :

    1994-01-01




    Type of media :

    Article (Journal)


    Type of material :

    Electronic Resource


    Language :

    Unknown





    An analysis of freight rate volatility in dry bulk shipping markets

    Jing, Lu / Marlow, Peter B. / Hui, Wang | Taylor & Francis Verlag | 2008


    Efficiency and interconnectivity in international shipping markets

    Berg-Andreassen, J. A. | British Library Online Contents | 1997