Principal-agent problems in decarbonizing container shipping: A panel data analysis
Christopher Dirzka, Michele Acciaro
Abstract
Only a few empirical studies have investigated principal-agent problems in transportation, notwithstanding the significant attention gained by agency theory in the last decade. The container shipping industry’s charter market exhibits a particular type of principal-agent problems deriving from information asymmetries between charterer and owner. We investigate agency theory in transportation science by analyzing the impact of split incentives and information asymmetries on carbon emissions. To construct a robust panel analysis, we collaborated with a leading maritime NGO to source cross-sector operational information for the period 2010–2019. We show that in the case of container shipping, chartering results in about 8% higher carbon emissions, benchmarked against owner-operated vessels, which can be explained as a consequence of principal-agent problems. We also discuss operational cost increases deriving from levying a carbon price in accordance with the Paris Agreement targets. We present guidance to respective carbon policies and point to incentives to overcome underinvestment in green technologies.