Oversupply Concerns in Global Shipping Industry: Evidence from the 2016 Panama Canal Expansion

다국어 초록 (Multilingual Abstract)

[Purpose]Using an event study approach, we examine the oversupply concerns in global shipping industry from 2016 expansion of the Panama Canal. Our results suggest that the market value of deep－sea shipping companies is, on average, negatively affected by oversupply concerns.
[Methodology]We examine the stock market reactions. Using the Institute of Shipping Economics and Logistics Merchant Fleet database for 2016, we choose the 30 largest shipping countries in the world. Using OLS Regression. we also examine the difference between containership and bulk shipping industry.
[Findings]We show that shipping companies are negatively affected by the Panama Canal expansion. We find a negative relationship between the dummy for the 25 largest bulk shipping companies and the stock market reaction of a company in short－term period. The result suggests that bulk shipping companies are not enough to deal with the change relative to other shipping companies. However, long－term performance of containership companies is negative because of high market competition after the completion of Panama Canal expansion. We expect that the change of market competition significantly affects the performance of shipping companies.
[Implications]This study shed lights to understand oversupply concerns caused by external event. We also shows the potential risk of shipping industry from perspective of market competition. In addition, this study suggests that investors deeply consider about the new infrastructure investment that is related to their own companies’ business.

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