Proceedings of the 2nd International Conference On Systems Engineering and Modeling (ICSEM 2013)

Container Ship Investment Based on Real Option

Authors
Siqin Yu, Bin Ji, Jinhai Chen
Corresponding Author
Siqin Yu
Available Online April 2013.
DOI
10.2991/icsem.2013.54How to use a DOI?
Keywords
Real option, Container ship investment, Oligopoly
Abstract

This study investigates liner companies' timing of investment and sealing up container ships based on real option theory. The Dixit model is adopted to find out a pair of trigger prices for entry and exit with the assumption freight rate obey Geometric Brownian Motion. More new ship-building orders and entrants lead to lower future freight rate in the oligopoly liner shipping market. This model is tested empirically basic on the data of a 9000 TEU container ship on Far East- Europe route and the result is positive comparing to the number of ship orders. Liner companies' should make decision base on the freight of the ship in operation. Therefore, ship investment should be made at the new ship order trough and freight trough.

Copyright
© 2013, the Authors. Published by Atlantis Press.
Open Access
This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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Volume Title
Proceedings of the 2nd International Conference On Systems Engineering and Modeling (ICSEM 2013)
Series
Advances in Intelligent Systems Research
Publication Date
April 2013
ISBN
10.2991/icsem.2013.54
ISSN
1951-6851
DOI
10.2991/icsem.2013.54How to use a DOI?
Copyright
© 2013, the Authors. Published by Atlantis Press.
Open Access
This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

Cite this article

TY  - CONF
AU  - Siqin Yu
AU  - Bin Ji
AU  - Jinhai Chen
PY  - 2013/04
DA  - 2013/04
TI  - Container Ship Investment Based on Real Option
BT  - Proceedings of the 2nd International Conference On Systems Engineering and Modeling (ICSEM 2013)
PB  - Atlantis Press
SP  - 281
EP  - 285
SN  - 1951-6851
UR  - https://doi.org/10.2991/icsem.2013.54
DO  - 10.2991/icsem.2013.54
ID  - Yu2013/04
ER  -