Abstract
Purpose - There are two different vessel employment types in shipping: providing cargo transport services and letting vessels out to other shipping companies. The former is typically in the form of voyage charters or contract of affreightments, and the latter, time charters or trip time charters. This paper analyzes the effect of vessel employment types on the cash flow volatility (CFV) of shipping companies.
 Design/Methodology/Approach - A historical simulation was performed to measure the relationship between transport voyage ratio (TVR, as a proxy of vessel employment type) and realized CFV. The CFV without (Case 1) and with (Case 2) the variation of freight and bunker prices was captured by simulation, and then the relationship was identified by regression analysis. Time series data from Clarkson Research was used to simulate revenues and costs.
 Findings - The results show that the TVR of shipping companies is closely related to the CFV. The TVR reveals a strong positive relation with the CFV both in Case 1 and Case 2, where other determinants, i.e. hire and bunker prices, are included.
 Research Implications - The relationship between vessel employment types and CFV has been neglected in shipping research. This is a novel attempt to analyze the effect of TVR on the CFV of shipping companies. The forecast of CFV is crucial because it is closely related to the financial stability of shipping companies. This research has a practical meaning in enhancing the visibility of corporate CFV in addition to academic contribution in uncovering an additional determinant of CFV.
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