Abstract
The aim of this study is to empirically examine the impact of real interest rate on global fleet adjustment processes by modelling new orders and demolitions. The data set used consists of 34 annual observations and covers the years between 1985 and 2018. According to the results, the freight rate has a positive impact on amount of new ship orders and a negative impact on amount of ships scrapped, while the real interest rate has a negative impact on both amount of new ship orders and ships scrapped. The impact of freight rate on new ship orders and demolitions is clear whereas the impact of the real interest rate may be explained by two reasons. Increasing capital costs due to increasing interest rates may cause decrease in both new orders and demolitions as ordering new ships becomes more expensive. The second one may be related to expectations of ship investors to gain more revenue by evaluating their capitals on higher interest rates instead of ordering new ships. Therefore, it is important to limit negative impact of high interest rates by various policies so that maritime transport sector can contribute to economic growth by facilitating trade with sustainable costs.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callMore From: Ekonomi, Politika & Finans Araştırmaları Dergisi
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
