Scandinavian Working Papers in Economics
Working Papers,
Swedish National Road & Transport Research Institute (VTI)
No 2022:3: Effects of fairway dues on the deployment and utilization of vessels: Lessons from a regression discontinuity design
Axel Merkel () and Samuel Lindgren ()
Additional contact information
Axel Merkel: Swedish National Road & Transport Research Institute (VTI), Postal: Dept. of Transport Economics, P.O. Box 55685, SE-102 15 Stockholm, Sweden
Samuel Lindgren: Swedish National Road & Transport Research Institute (VTI), Postal: Dept. of Transport Economics, P.O. Box 55685, SE-102 15 Stockholm, Sweden
Abstract: The objective of this paper is to provide empirical insights into how shipowners’ fleet deployment decisions are affected by changes in vessel-specific voyage costs. Voyage cost components which are fixed with respect to sailed distance, e.g., port charges or other infrastructure fees, may significantly influence the competitiveness of a maritime transport service, for instance if the level of such costs necessitate a very high degree of capacity utilization. We investigate empirically the effect of charges on the deployment and utilization of vessels in short-sea shipping by using the most recent reform of the Swedish fairway dues system as a natural experiment. Exploiting a stepwise differentiation of fees with respect to size, we utilize a regression discontinuity approach to elicit plausibly causal effects of increased fees on the deployment and utilization of vessels. The results show that increased voyage costs in the form of raised charges lead to affected vessels being deployed on fewer calls but with a slightly higher degree of capacity utilization. Heterogeneity analyses reveal estimates for port calls are larger for small shipowners and for vessels in high-frequency traffic. Overall, the results of the study highlight that charges levied on ships affect the supply structure of short-sea shipping by inducing shipowners to mitigate increased costs through adjusted deployment strategies.
Keywords: Short-sea shipping; Capacity utilization; Fleet deployment; Regression discontinuity; Infrastructure pricing
Language: English
30 pages, May 9, 2022
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