Seasonality Patterns in Dry Bulk Shipping Spot and Time-Charter Freight Rates
Transportation Research Part E, Logistics and Transportation Review, 2001, Vol. 37, No 6, 443-467
Posted: 18 Feb 2014
Date Written: 2001
This paper investigates the nature of seasonality (determistic and/or stochastic) in dry bulk breight rates, and measures and compares it across freight rates of different vessel sizes (Carpesize, Panamax and Handysize), contract duration (spot, 1-year and 3-year time charters) and market conditions (peaks and troughs). Although, there is no evidence of stochastic seasonality, determistic seasonality in freight rates is found to be varying from- 18.2% to 15,3% in individual months within a year. Spot rates for larger vessels exhibit higher seasonal fluctuations compared to smaller vessels, although differences in seasonal fluctuations between sectors are eliminated as the contract duration increases. Also, for each vessel size, the seasonality declines as the contract duration rises. Asymmetries in seasonal fluctuations in freight rates over different market conditions are attributed to the high and low elasticities of supply expected under the respective market conditions. The results have implications for tactical shipping operations such as timing of dry-docking chartering strategies and switching between freight markets.
Keywords: Shipping; Dry bulk freight markets; Seasonality; Market conditions; Seasonal unit roots
JEL Classification: L91; L92; C22; C51
Suggested Citation: Suggested Citation