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The influence of charterers and owners on bulk shipping freight rates

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  • Adland, Roar
  • Cariou, Pierre
  • Wolff, Francois-Charles

Abstract

We propose a model for freight rate formation in individual contracts that incorporates charterer and owner heterogeneity and owner–charterer match effects. We estimate fixed effect regressions and implement a variance decomposition for 2863 VLCC tanker and 1789 Capesize fixtures between 2011 and 2014. Although market conditions and routes remain the most influential covariates, the characteristics of charterers, owners and of their matches are also significant microeconomic determinants of the freight rate level. The contribution of the charterer fixed effect is large in the VLCC market, while the charterer and match effects are large contributors to the Capesize spot freight rate.

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  • Adland, Roar & Cariou, Pierre & Wolff, Francois-Charles, 2016. "The influence of charterers and owners on bulk shipping freight rates," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 86(C), pages 69-82.
    • Handle: RePEc:eee:transe:v:86:y:2016:i:c:p:69-82
    DOI: 10.1016/j.tre.2015.11.014
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    3. Adland, Roar & Cariou, Pierre & Wolff, Francois-Charles, 2017. "What makes a freight market index? An empirical analysis of vessel fixtures in the offshore market," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 104(C), pages 150-164.
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    5. Adland, Roar & Cariou, Pierre & Wolff, François-Charles, 2018. "Does energy efficiency affect ship values in the second-hand market?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 111(C), pages 347-359.
    6. Prochazka, Vít & Adland, Roar & Wolff, François-Charles, 2019. "Contracting decisions in the crude oil transportation market: Evidence from fixtures matched with AIS data," Transportation Research Part A: Policy and Practice, Elsevier, vol. 130(C), pages 37-53.
    7. Peng, Zixuan & Shan, Wenxuan & Guan, Feng & Yu, Bin, 2016. "Stable vessel-cargo matching in dry bulk shipping market with price game mechanism," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 95(C), pages 76-94.
    8. Yang, Dong & Wu, Lingxiao & Wang, Shuaian, 2021. "Can we trust the AIS destination port information for bulk ships?–Implications for shipping policy and practice," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 149(C).
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    10. Roar Adland & Pierre Cariou & François-Charles Wolff, 2018. "Comparing transaction-based and expert-generated price indices in the market for offshore support vessels," Working Papers halshs-01843720, HAL.
    11. Roar Adland & Pierre Cariou & Francois-Charles Wolff, 2017. "What makes a freight market index ?," Post-Print hal-03913228, HAL.
    12. Fan, Lixian & Gu, Bingmei & Yin, Jingbo, 2021. "Investment incentive analysis for second-hand vessels," Transport Policy, Elsevier, vol. 106(C), pages 215-225.
    13. Bai, Xiwen & Lam, Jasmine Siu Lee & Jakher, Astha, 2021. "Shipping sentiment and the dry bulk shipping freight market: New evidence from newspaper coverage," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 155(C).
    14. Yang, Zhongzhen & Jiang, Zhenfeng & Notteboom, Theo & Haralambides, Hercules, 2019. "The impact of ship scrapping subsidies on fleet renewal decisions in dry bulk shipping," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 126(C), pages 177-189.
    15. Adland, Roar & Jia, Haiying & Strandenes, Siri P., 2018. "The determinants of vessel capacity utilization: The case of Brazilian iron ore exports," Transportation Research Part A: Policy and Practice, Elsevier, vol. 110(C), pages 191-201.
    16. Adland, Roar & Alizadeh, Amir H., 2018. "Explaining price differences between physical and derivative freight contracts," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 118(C), pages 20-33.

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