Ship Price Risk and Risk Management

Abstract

Investors in shipping markets have always been faced with important and difficult decisions about timing of investment and divestment because of the complex and volatile nature of the shipping industry. Volatility of ship prices has also been of concern to banks, shipyards and shipping companies, because changes in ship prices over short periods of time have serious impact on their businesses. For this reason, banks financing ships, investors providing equity to shipowners and operators, shipyards building new ships, and asset players in shipping markets all tend to monitor the volatility of the market for ships and incorporate such information in their lending, investment, portfolio construction and divestment decisions.