Synopses & Reviews
Synopsis
Excerpt from A Theoretical Model for Single Voyage Freight Rates in the Short Run
The purpose of this paper is to shed some light on this last issue.
A statistical model is constructed describing spot freight rates in terms of the operating costs of the marginal ship, the size of the various vessels relative to the marginal ship, the proportion of the tanker fleet operating in the spot market and the proportion of the fleet which is laid-up for more than two months.
The model developed is validated by using the empirical data of the entire period from September 1971 to December 1976, and also the stratified data of shorter periods characterized by either abnormally high or abnormally low rates. Based on these results, a measure of the economies of scale for tankers for different sizes is developed, and the proportion of these economies which is enjoyed by the shipowner, under various market conditions, is calculated.
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