TAEI - Maritime Economics

Research on price bargaining has been extensively developed from a methodological perspective. However, the study of bargaining efficiency in the context of suboptimal pricing remains underexplored. This study addresses this gap by proposing a methodology to analyze bargaining efficiency arising from mispricing in successful transactions, using the secondary shipping asset market as a case study. Examining bargaining efficiency in successful transactions provides valuable insights into the behavior of market players, enabling both buyers and sellers to better understand their own strategies and those of their counterplayers. A deeper understanding of bargaining behavior not only enhances transaction utility and satisfaction but also contributes to long-term improvements in bargaining efficiency. Over time, these improvements foster greater market efficiency, particularly in imperfect markets such as the shipping asset market.

In an incomplete bargaining setting, the counterparty's reservation price can lead to mispricing, transaction delays, or bargaining failure. While existing studies have attempted to quantify inefficiencies from bargaining failures or design mechanisms to mitigate delays, limited attention has been given to the fundamental challenge of uncovering the counterparty's reservation price. This study addresses this gap by estimating the reservation price of participants in a bilateral bargaining game, using the containership time charter freight market as a case study. The containership freight market provides an ideal setting for this analysis due to the limited number of market players and the presence of incomplete information about counterplayers. This study employs a two-tier stochastic frontier model to analyze price bargaining, drawing on over 9,000 containership time charter contracts from 2010 to 2024. The findings reveal an asymmetric bargaining dynamic between shipowners and charterers: on average, shipowners exhibit greater bargaining power, while individual shipowners and charterers display varying bargaining powers and reservation prices under identical market conditions. From an academic perspective, this study aims to initiate a broader discussion within maritime economics on analyzing freight market pricing through a bargaining lens, potentially enhancing transaction efficiency.

International shipping is responsible for nearly 3% of global greenhouse gas (GHG) emissions, a figure that continues to rise due to increasing transport activities. In response, both international and regional bodies have implemented various emissions regulations targeting the shipping industry. However, many ships continue to operate on conventional fuels for reasons such as the high cost of alternative fuels and uncertainties surrounding technological advancements. Given the challenges of reducing shipping emissions, the FuelEU Maritime regulation was introduced in 2025, enabling shipping companies to calculate emissions at the fleet level. This raises two key questions: (i) to what extent should companies replace their fleets, and (ii) whether early adopters of cleaner fuels benefit from the EU emission regulations? The second question is closely tied to the EU Emissions Trading System (EU-ETS), which will include GHG emissions from the shipping sector starting in 2026. This research explores these questions using containerships as a case study to assess potential economic benefits. Preliminary findings suggest that several alternative fuels could offer financial advantages at various timeframes, depending on their cost and availability. Identifying the optimal timing for introducing new ships and determining the extent to which shipping companies adopt cleaner technologies may provide valuable insights into the future trajectory of alternative fuels.

The current study examines the intensity and direction of the asymmetric cost behaviour in the shipping industry and investigates the effect of capital structure on the asymmetric cost behavior of shipping firms. We use a panel dataset of shipping firms' revenues and operating expenses for the period 2000 to 2023, to provide empirical evidence that operating expenses exhibit sticky cost behavior and that leverage decreases the level of cost stickiness. Specifically, we conclude that shipping managers adjust resources slower when revenues decrease than when they rise and leverage diminish the degree of sticky cost behavior. This is attributed to the competitive nature of the shipping industry. Our findings are robust to using (i) an alternative variable of expenses associated with cost stickiness, (ii) a battery of control variables, (iii) an entropy balancing method and (iv) a variety of econometric specifications taking into account potential asymmetric cost behavior.

In this paper, we examine the impact of a group of market participants with irrational beliefs (IB group) on freight rate fluctuations. To uncover the structure that generates these fluctuations, we apply the theoretical model developed by De Long et al. (1990) (DL model). The main results of the DL model are as follows: First, the presence of a certain proportion of the IB group affects prices/freight rates and achieves high expected returns. Second, regarding volatility, the smaller the proportion of the IB group among market participants, the smaller the variance. Third, the existence of the IB group leads to deviations from fundamental prices. These characteristics arise from the misperceptions and the proportion of the IB group within the entire market. We apply the DL model to the shipping market and examine differences between voyage charter rates and time charter equivalent rates.