A Novel approach to ship valuation prediction: An application to the supramax and ultramax secondhand markets
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View abstract on PubMed
Summary
This summary is machine-generated.Machine learning (ML) models improve ship valuation accuracy for supramax/ultramax vessels. A simplified model using historical Baltic Exchange indices before the sales month, particularly with XGBoost, offers superior and reliable predictions.
Area Of Science
- Maritime Economics
- Data Science
- Financial Modeling
Background
- Accurate ship valuations are critical for ship sales, purchases, and marine insurance.
- Traditional valuation methods often lack the precision required in dynamic markets.
- Machine learning (ML) algorithms show potential for superior predictive performance.
Purpose Of The Study
- To develop a highly accurate ship valuation model for the supramax/ultramax segment using ML.
- To compare the predictive accuracy of various ML algorithms based on linear regression models.
- To create a simplified, market-accessible model for practical application in ship valuation.
Main Methods
- Developed two linear regression models using historical data (August 2005-December 2022) for supramax/ultramax ships.
- Independent variables included Baltic Exchange indices from the month of sale and preceding months.
- Applied Linear Regression, Decision Tree, Random Forest, and XGBoost algorithms for price prediction and model validation.
Main Results
- A simplified model using easily obtainable market variables demonstrated comparable prediction performance to the initial model.
- Incorporating data up to 2023 further improved the simplified model's accuracy and reliability.
- The model utilizing Baltic Exchange indices from months preceding the sales month significantly outperformed other models, with XGBoost identified as the best-performing algorithm.
Conclusions
- A simplified ML model based on historical Baltic Exchange indices can provide accurate and reliable ship valuations.
- The XGBoost algorithm demonstrates superior performance for predicting supramax/ultramax ship values.
- The proposed simplified model offers a practical and effective tool for stakeholders in the maritime industry.
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