Abstract
ABSTRACT In one of the most capital-intensive industries in the world, the investment decisions of container shipping companies, especially concerning new ships, are crucial to the success of companies. This study investigates shipowners’ ship choice decisions and ship size preference through multinomial logit models using a dataset compiled by Clarkson Research Services Limited. The model incorporates the factors that affect ship size choice from three aspects: the internal traits of companies (company trait), the environment of the shipping market (market-driven strategy) and the performance of rivals (competition strategy). Different factors have different influences on shipping companies’ ship choice behaviour and ship size preference in different market situations. From a market-driven perspective, the high new-built ship price makes companies choose small ships. In a prosperous market, when freight rates are high, medium-sized vessels are preferred, and investment in large vessels is less likely. From the company attributes perspective, the empirical estimation shows that larger container ships are preferred by larger shipping companies. When it comes to competitive strategy, shipping companies will be more inclined to choose larger ships when they see capacity expansion among their competitors. These results confirm the nature of an oligopolistic market structure of the container market.
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