Eco‑Ships vs Non‑Eco Ships: An empirical analysis of dry bulk second-hand prices

Source: Drewry Maritime Research

Source: Drewry Maritime Research

Source: Drewry Maritime Research

This simple analysis shows a clear and consistent premium for Eco Engine ships across vessel types and most age brackets. The premium is most pronounced in younger vessels (0–10 years), where Eco Engine ships were sold for about 5–12% higher than Non-Eco-Engine ships. The statistical significance table confirms these differences are not due to chance and hold across vessel sizes.

However, we aim to test the difference's statistical significance, so we must perform some statistical tests. Hence, we chose a t-test, which allows us to reliably compare average prices between Eco Engine and Non Eco Engine ships, determining if observed variations are statistically significant rather than random.

Let us simplify it. A t-test is a statistical method used to compare the means (arithmetic averages) of two groups to see if their difference is real or just due to random chance. In a nutshell, it is like checking if two sets of numbers — for example, the prices of Eco Engine and Non Eco Engine ships — are genuinely different or if any difference we notice could be a mere coincidence. The test gives a measure called the “p value”; if this value is low (often below 0.05), the difference we see is likely significant and worth paying attention to. 

If it sounds esoteric even now, please do not worry. We are checking if the difference between Eco-Engine and non-Eco Engine ships' prices is systemic or random.

Source: Drewry Maritime Research

It is important to acknowledge that the statistical comparison between the two categories is only valid within specific age ranges where both vessel types have an active and comparable presence in the second-hand market. The dataset shows almost no Non-Eco Engine sales in the 0-5 year range, making price comparisons meaningless due to insufficient data.  

Similarly, for vessels over 15 years of age, the number of Eco Engine sales is too low to draw any robust conclusions. As a result, the only age ranges where both Eco Engine and Non Eco Engine vessels have sufficient transaction data are the 6–10 and 11–15 year brackets. These ranges form the basis of a statistically valid and fair comparison, allowing for a more accurate understanding of pricing differences and second-hand price market dynamics between the two engine types. 

From a business standpoint, the results of this analysis have clear implications for shipowners and bankers. The evidence shows that Eco Engine vessels generally command higher second hand prices than Non Eco Engine vessels, especially in the 6–10 and 11–15 year brackets where both types have active market activity. This highlights the long term value of investing in Eco Engine technologies for shipowners, as these vessels retain stronger resale and financing potential. 

For bankers and financiers, it underscores the importance of considering engine efficiency and emissions profiles when assessing loan terms, vessel valuations and risk profiles. In a market increasingly shaped by evolving environmental regulations and rising fuel costs, Eco Engine ships are positioned to be more attractive assets, making them a more secure bet for owners and lenders.