The determinants of vessel capacity utilization: The case of Brazilian iron ore exports

The objective of this paper is to determine the drivers behind the utilization of a vessel’s cargo-carrying capacity on individual voyages. Based on maritime economic theory the authors propose that a vessel’s capacity utilization - defined as the ratio of cargo size divided by deadweight tonnage (DWT) - should be positively correlated with freight rates, as poor market conditions will force vessels to compete for lower-than-optimal stem sizes. Furthermore, the authors propose that capacity utilization is dependent on the distance sailed, the fuel price and the value of the cargo. Using a unique data set sourced from port agent lineup reports and covering nearly 10,000 individual shipments of iron ore from Brazil between 2009 and 2014 the authors estimate a multiple regression model consisting of macroeconomic, route-specific and vessel-specific determinants. The authors' empirical results suggest that vessel-specific determinants (DWT) dominate the impact of general market conditions, with smaller vessels typically having lower capacity utilization. The impact of freight market conditions conforms to the authors' a priori expectations. Their findings and modeling approach contributes to maritime environmental policymaking by enabling more accurate bottom-up estimation of emissions. The research is also crucial for improved modeling of real vessel earnings and tonne-mile demand based on observations of global ship movements from automatic identification systems (AIS) data.

Language

  • English

Media Info

Subject/Index Terms

Filing Info

  • Accession Number: 01666349
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Apr 2 2018 10:42AM