Determinants of Container Ship Investment Decision and Ship Choice

Ship investment is one of the most complicated yet essential decisions vexing both existing and potential shipowners, due to market uncertainty and competition. This research applies choice models on observed ship investment data to examine shipowners’ behaviour in making investment decisions and selecting specific ships. The authors found that ship investment increases with the growth rate of demand, but not of price. Preference for large ships is more sensitive to unit cost. The substitutability of new vessels with an equal-size used ship increases with ship size; for second-hand vessels, it decreases.