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

See all articles by Amir H. Alizadeh

Amir H. Alizadeh

City University London - Sir John Cass Business School

Manolis G. Kavussanos

Athens University of Economics and Business - Department of Accounting and Finance

Date Written: 2001

Abstract

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

Alizadeh, Amir H. and Kavussanos, Manolis G., Seasonality Patterns in Dry Bulk Shipping Spot and Time-Charter Freight Rates (2001). Transportation Research Part E, Logistics and Transportation Review, 2001, Vol. 37, No 6, 443-467. Available at SSRN: https://ssrn.com/abstract=1435279

Amir H. Alizadeh

City University London - Sir John Cass Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

Manolis G. Kavussanos (Contact Author)

Athens University of Economics and Business - Department of Accounting and Finance ( email )

76 Patission St
TK 104 34 Athens
Greece
0030 210 8203167 (Phone)
0030 210 8228816 (Fax)

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