Statistical Evidence on Ship Management Practices

This paper examines the differing cost function associated with bulk carriers and tankers. The paper draws on information gathered from a sample of ships’ owners combined with data from published sources. The study is of an econometric nature, employing flexible functional forms, and looks at broad cost categories. While the level of aggregation involved means that very specific questions of cost differentials cannot be considered, it does allow a rigorous study of scale effects and factor substitutability to be carried our. It also permits some insights to be gained on the importance of crew-related activities, such as maintenance and stores, for the competitive operation of ships while markets are depressed. Comments are also made with regard to differing practices of factor substitution associated with a ship’s country of registry.