Valuation of VLCCs under income uncertainty

In this paper two alternative ways of modelling the stochastic nature of the time charter equivalent spot rate in the market for Very Large Crude Carriers (VLCC) are presented. It has been proposed that the freight rate follows an Ornstein-Uhlenbeck process. We follow up this approach of relating uncertainty directly to the rate process itself by suggesting a geometric mean reversion process. Empirical findings are presented. Then we address the question of valuing a VLCC. Due to the presence of uncertainty, flexibility to choose operation policy influences the value. We focus on lay up and scrapping as alternatives to spot operation. The option to lay up is relatively more important for a new vessel than for an old one, whereas the option to scrap becomes relatively more valuable as the vessel gets older.     

Bridge officers’ non-technical skills: a literature review

The present review examines the research literature on Non-Technical Skills (NTS) used by ships’ bridge officers in connection with navigation. The aim of the study was to (i) identify the cognitive and interpersonal skills which have been the focus of previous studies and (ii) explore how the content of these skills has been described. Databases searched included Academic Search Premier, PsycINFO, Science Direct, and Web of Science. Nineteen studies were included in the review. Five NTS were identified: situation awareness (SA), decision-making (DM), workload management (WM), communication, and leadership. In addition to discussing each skill, the review raises four overarching issues with the present literature for the bridge domain: (1) Have all the relevant skills been subject to exploration? (2) Have the skills identified been explored in detail? (3) There seems to be an uneven distribution of research between cognitive and interpersonal skills. (4) There is little research into understanding the skills as a complete taxonomy. Knowledge on how the skills are linked and interplay with one another is incomplete. Overall, further research on all these aspects of NTS in the maritime domain could increase scientific understanding and contribute to bridge operational practice and to the further development and evaluation of NTS training such as Bridge Resource Management (BRM).     

A new perspective on price dynamics of the dry bulk market

The main result of this article is that freight rates and second hand prices in the dry bulk market seem to be stationary. By unit-root tests, an established tool for testing for random walk in economic time series, the random walk hypothesis can be rejected in most cases for the freight rate samples. This result is in contrast to the findings of a number of papers during the 1990s. However, the results confirm classical shipping market models that indicate stationarity in freight rates, which is not the case if the freight rates follow a random walk. By transforming all observations from US$ to Japanese yen detrended freight rates and prices seem to become stationary and volatility is reduced.     

A new perspective on price dynamics of the dry bulk market

The main result of this article is that freight rates and second hand prices in the dry bulk market seem to be stationary. By unit-root tests, an established tool for testing for random walk in economic time series, the random walk hypothesis can be rejected in most cases for the freight rate samples. This result is in contrast to the findings of a number of papers during the 1990s. However, the results confirm classical shipping market models that indicate stationarity in freight rates, which is not the case if the freight rates follow a random walk. By transforming all observations from US$ to Japanese yen detrended freight rates and prices seem to become stationary and volatility is reduced.