Comparisons of Volatility in the Dry-Cargo Ship Sector. Spot versus Time-Charters, and Smaller Versus Larger Vessels

This paper examines volatility as a measure of risk in the dry-bulk ship market. In particular, it compares volatility estimates between time-charter and spot rates. Volatility is also compared between different sizes of dry-bulk vessels. It is found that time-charters are more volatile than spot rates, and small vessels are less risky than larger ones when spot rates are used. The policy implications for ship owners who are risk-averse are to utilise the spot market in preference to time charters, and to invest in smaller vessels rather than large ones.

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