Comparisons of Volatility in the Dry-Cargo Ship Sector. Spot versus Time-Charters, and Smaller Versus Larger Vessels
Journal of Transport Economics and Policy, January 1996. Vol. XXX, No. 1,67-82
Posted: 18 Feb 2014
Date Written: January 1, 1996
This paper examines volatility as a measure of risk in the dry-bulk ship market. In particular, it compares volatility estimates between time-charter and spot rates. Volatility is also compared between different sizes of dry-bulk vessels. It is found that time-charters are more volatile than spot rates, and small vessels are less risky than larger ones when spot rates are used. The policy implications for ship owners who are risk-averse are to utilise the spot market in preference to time charters, and to invest in smaller vessels rather than large ones.
Suggested Citation: Suggested Citation