Shipping Markets in Turmoil: An Analysis of the COVID-19 Outbreak and Its Implications

Michail, N. A., & Melas, K. D. (2020). Shipping markets in turmoil: An analysis of the Covid-19 outbreak and its implications. Transportation Research Interdisciplinary Perspectives, 7, 100178, https://doi.org/10.1016/j.trip.2020.100178

9 Pages Posted: 15 Oct 2020

See all articles by Nektarios Michail

Nektarios Michail

Cyprus University of Technology

Konstantinos D. Melas

Metropolitan College, Greece - Faculty of Business and Economics

Date Written: September 1, 2020

Abstract

In the current study, we examine, for the first time in the literature, the impact of exogenous effects in the shipping industry by employing data from the recent COVID-19 pandemic outbreak and explore the reactions of freight rates for dry bulk, clean, and dirty tankers. Our results, using both GARCH (1,1) and VAR specifications, suggest that such events are directly affecting the dry bulk and the dirty tanker segments. In addition, the results also suggest that second round effects, mostly via the decline in oil prices and, in some cases, third round effects via the impact from the stock market, also exist. Finally, by employing daily port calls a proxy variable for the demand for transportation services, we show that both the dry bulk and clean tankers are highly affected by the demand side of the economy, while vessels which transport crude oil do not register such a relationship.

JEL Classification: G11, G12, G13, G20

Suggested Citation

Michail, Nektarios and Melas, Konstantinos, Shipping Markets in Turmoil: An Analysis of the COVID-19 Outbreak and Its Implications (September 1, 2020). Michail, N. A., & Melas, K. D. (2020). Shipping markets in turmoil: An analysis of the Covid-19 outbreak and its implications. Transportation Research Interdisciplinary Perspectives, 7, 100178, https://doi.org/10.1016/j.trip.2020.100178, Available at SSRN: https://ssrn.com/abstract=3711610

Nektarios Michail

Cyprus University of Technology ( email )

Limassol, 3603
Cyprus

Konstantinos Melas (Contact Author)

Metropolitan College, Greece - Faculty of Business and Economics ( email )

74, Sorou St.
Maroussi, 15125
Greece

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