SPOUDAI - Journal of Economics and Business

Number 64 Issue 2, 2014

5-13
The Economic Crisis of 2008 and World Shipping: Unheeded Warnings

Authors: Hercules E. Haralambides, Helen Thanopoulou

Abstract

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Cyclicality in shipping is inherent. However, the speed and amplitude of market changes, since the fateful collapse of Lehman brothers in 2008 - distinguishes this particular crisis from most previous cycles. Predictions and investment moves made until immediately before the crisis have, in retrospect, been proven erroneous. The same applies to many of freight rate forecasts made subsequently. Yet, the information for deciphering market signals was already there in the critical months before the crisis, the authors argue. The paper demonstrates that if investors had relied on certain very simple indices of over-investment in new ships, they would have concluded that the advent of an inflexion point was unavoidable. A market turn should have been anticipated even if favourable demand developments were to continue undisrupted. Indices such as the ratio of orderbook to the existing fleet had deviated manifold from their long-term average since the previous major cycle. The authors conclude that the nature of this last cycle, akin in many respects with the origins and course of the crisis of the 1970s and the 1980s was determined more by what Metaxas called in 1971 «endemic tendency to over-invest». JEL Classification: E32; F170; E37. Keywords: shipping cycles; international trade; freight market forecasts.

14-39
Ex-Post and Ex-Ante Forecasts of Spot Prices in Bulk Shipping in a Period of Economic Crisis using Simultaneous Equation Models

Authors: Nikolaos D. Geomelos, Evangelos Xideas

Abstract

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Number of views: 405

The paper deals with forecasting of spot prices in bulk shipping using simultaneous equations models (SEMs) during the present economic crisis, emphasizing the importance of such models in empirical applied economics and for decision-makers. The SEMs predictive performance on the spot market is estimated for a selection of eight main vessel categories, five in the tanker market and three in the dry bulk market. SEMs take into account feedback loops between the spot market and its environment. SEMs are considered more complete models as spot prices and variables such as time-charter rates, fleet deadweight capacity and prices of second-hand, newbuilding and scrap markets are determined simultaneously by the shipping markets’ operation. This approach enables estimating 29 different systems for each vessel type, generated by the combination of the aforementioned variables. The research sample period consists of an initialization data subset (1970:01-2010:02), of a subset for ex-post forecast (2010:03-2011:02) and a subset for ex-ante forecasts (2011:03-2012:02) employing monthly time series. Results reveal that simultaneous estimation of endogenous variables is described by precision and rationality while the t-tests show that exogenous variables are characterized by very high statistical significance. The out-of-sample forecasts show that SEMs provide useful information about market turning points. JEL Classification: C530; C320; E32. Keywords: econometric methodology; simultaneous equations models; spot prices; ex-post and ex-ante forecasts; forecasting uncertainty.

40-49
Financial Crisis & Passenger Shipping: Evidence from Greece

Authors: Evangelos Sambracos, Marina Maniati

Abstract

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Number of views: 464

The world financial crisis has resulted in the slowdown of Greek economy leading to the recession of certain sectors, like Passenger Shipping. Factors, such as the decrease of private consumption and GDP, have negatively influenced Passenger Shipping, resulting in the reduction not only of the relevant demand, but also of the sector’s financial results. The paper examines the current situation of Greek Passenger Shipping during this “crisis” period. Financial analysis of the sector has indicated that companies face many problems; annual turnover decreases, reduced profit margins and deteriorating liquidity ratios, while the relevant financial ratios are worse than the corresponding ones of the Greek Economy on average. Considering the role of passenger shipping in combination with the particularity of the Greek insular area (many islands connected primarily with mainland and among them through sea transport), the paper examines and evaluates possible solutions, in order for the passenger companies to survive and keep providing their vital services. JEL Classification: R11; G01 Keywords: Financial Crisis; Passenger Shipping; Financial Analysis.

50-63
Proactive Involvement of Local Population in Oil Spill Incidents: Gauging The Potential Of Informal Information Networks

Authors: Helen Thanopoulou, Nikolaos Ventikos, George Georgoulis, Lambros Moulatzikos

Abstract

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Number of views: 365

The analysis of tanker accidents shows varied degrees and forms of involvement of local inhabitants at the different stages of specific events. The aim of the paper is to gauge, through a pilot survey, the potential of marine incident information networks among coastal or island populations within an accident setting. The authors review how reactions to tanker accidents of potentially affected populations may have an impact on the selection, design and implementation of the handling by the authorities of an evolving incident The paper argues that networks such as the Shore Awareness of Vessel Emergencies (S.A.V.E) proposed can eventually create a proactive mechanism to prevent chaotic reactions or disruption/distortion of the optimal response. A pilot survey was conducted to estimate population reactions to shipping accidents with a pollution risk and the willingness to participate in S.A.V.E type networks. The authors process data collected through questionnaires distributed to residents of a major maritime Greek island with a large number of active or retired seafarers. Questionnaire data are analyzed with an emphasis on gauging the degree of confidence in an unofficial but well-organized, network as S.A.V.E which would be based mainly on ad-hoc trained members from targeted parts of the local communities. JEL Classification: R41; Q28; Q58. Keywords: Oil pollution; information network; seafarers.