1. ¹Department of Economics, University of Leicester, Leicester, UK
2. ²HSH Nordbank AG, Hamburg, Germany. E-mail: mail@sebastian-koehn.de

Abstract

The recent increase in operating expenses of merchant vessels (opex) has stimulated interest in explaining their determinants. However, the available literature cannot explain this development nor does it provide information on a level of necessary detail. This paper considers a quantitative model of opex that is particularly successful in explaining the variation in opex across vessels of different type, size, age and specification. This paper employs a generalised additive model framework to analyse the determinants of opex. The results confirm that differences in opex are due to the behaviour of a vessel's operator and to regulatory requirements. Furthermore, it shows that there are significant differences in opex due to earnings and employment status of a vessel.