The article uses a real options valuation model with stochastic freight rates to investigate market efficiency and the economics of switching between the dry bulk and the tanker markets in international shipping. A dry bulk carrier is replaced with a tanker when the expected net present value of...

In the recent literature, empirical tests of stationarity of freight rates often conclude that spot freight rates are non-stationary processes. However, many maritime economists would argue that the freight rate cannot exhibit asymptotically explosive behaviour, as implied by non-stationarity,...

This paper outlines the methodology to price the newly introduced Forward Ship Value Agreements (FOSVAs). FOSVAs are derivatives aimed at managing asset risk in the second-hand markets for bulk vessels and are traded over the counter. We then estimate the implied forward prices from historical...