Survival analysis of the world ship demolition market

Ship demolition is an important strategy for balancing the fleet capacity of the shipping industry. In addition to the effects of ship obsolescence, technical developments and environmental regulations on ship demolition, the state of the shipping market and operational costs are also significant influences. Using a dataset compiled from various data sources, this study analyzes individual shipowners' ship demolition decisions using survival analysis models. The empirical estimation of the Cox proportional hazards regression suggests the different demolition decision behavior under different shipping market cycles. The results also indicate the active ship demolition activities of the owners from developing countries after the financial crisis. Meanwhile, more aged and less efficient ships have been demolished after 2008 because of the high bunker consumption and the big owners cannot escape from this. Finally, the survival distribution function illustrates the impact of different factors on demolition behavior in different market situations.