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An Analysis of Bunker Adjustment Factors and Freight Rates in the Europe/Far East Market (2000–2004)

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  • Pierre Cariou

    (World Maritime University, Citadellsv&aauml;gen 29, PO Box 500, Malmö S-201 24, Sweden.)

  • Francois-Charles Wolff

    (LEN, University of Nantes, BP52231 Chemin de la Censive du Tertre, Nantes Cedex 3 44322, France.)

Abstract

This paper focuses on the monthly relationship between the bunker adjustment factor (BAF) and bunker price and between the freight rate and charter rate on the Europe/Far East container trade. It investigates whether a causality relationship can be found between these variables in order to know whether tariffs are mainly driven by cost considerations, as claimed by shipping lines during the last 5 years. Results from VAR and VECR models suggest that a Granger causality does exist. This paper calls for a new way to look at pricing elements in liner shipping and more particularly for shipping conferences, that should focus more for instance on justified/unjustified BAF or rate restoration announcements rather than on a general debate on exemption/abolishment of collective pricing. Maritime Economics & Logistics (2006) 8, 187–201. doi:10.1057/palgrave.mel.9100156

Suggested Citation

  • Pierre Cariou & Francois-Charles Wolff, 2006. "An Analysis of Bunker Adjustment Factors and Freight Rates in the Europe/Far East Market (2000–2004)," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 8(2), pages 187-201, June.
    • Handle: RePEc:pal:marecl:v:8:y:2006:i:2:p:187-201
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    Citations

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    Cited by:

    1. Takahashi, Takaaki, 2011. "Directional imbalance in transport prices and economic geography," Journal of Urban Economics, Elsevier, vol. 69(1), pages 92-102, January.
    2. Slack, Brian & Gouvernal, Elisabeth, 2011. "Container freight rates and the role of surcharges," Journal of Transport Geography, Elsevier, vol. 19(6), pages 1482-1489.
    3. Notteboom, Theo E. & Vernimmen, Bert, 2009. "The effect of high fuel costs on liner service configuration in container shipping," Journal of Transport Geography, Elsevier, vol. 17(5), pages 325-337.
    4. Tran, Nguyen Khoi & Haasis, Hans-Dietrich, 2015. "An empirical study of fleet expansion and growth of ship size in container liner shipping," International Journal of Production Economics, Elsevier, vol. 159(C), pages 241-253.
    5. Peter Nielsen & Liping Jiang & Niels Gorm Malý Rytter & Gang Chen, 2014. "An investigation of forecast horizon and observation fit's influence on an econometric rate forecast model in the liner shipping industry," Maritime Policy & Management, Taylor & Francis Journals, vol. 41(7), pages 667-682, December.
    6. Theo Nooteboom & Pierre Cariou, 2011. "Are Bunker Adjustment Factors Aimed at Revenue-making or Cost Recovery? Empirical Evidence on the Pricing Strategies of Shipping Lines," Chapters, in: Kevin Cullinane (ed.), International Handbook of Maritime Economics, chapter 11, Edward Elgar Publishing.
    7. Chen, Gang & Rytter, Niels G.M. & Jiang, Liping & Nielsen, Peter & Jensen, Lars, 2017. "Pre-announcements of price increase intentions in liner shipping spot markets," Transportation Research Part A: Policy and Practice, Elsevier, vol. 95(C), pages 109-125.
    8. Svetlana Avdasheva & Svetlana Golovanova & Gyuzel Yusupova, 2019. "Advance freight rate announcements (GRI) in liner shipping: European and Russian regulatory settlements compared," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 21(2), pages 192-206, June.
    9. Wang, Dong-Hua & Chen, Chung-Ching & Lai, Cheng-Sheng, 2011. "The rationale behind and effects of Bunker Adjustment Factors," Journal of Transport Geography, Elsevier, vol. 19(4), pages 467-474.
    10. Nguyen, Hong-Oanh & Tongzon, Jose, 2010. "Causal nexus between the transport and logistics sector and trade: The case of Australia," Transport Policy, Elsevier, vol. 17(3), pages 135-146, May.
    11. Nikola Kutin & Patrice Guillotreau & Thomas Vallée, 2018. "Assessing competition on Maritime Routes in the Liner Shipping Industry through multivariate analysis," Working Papers halshs-01828643, HAL.

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