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Are there bubbles in the shipping freight market?

Author

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  • Chi-Wei Su
  • Kai-Hua Wang
  • Qi Shao
  • Ran Tao

Abstract

This paper addresses the reconsideration of price bubbles specific to the shipping freight market based on the method of the Generalized Supremum Augmented Dickey–Fuller (GSADF). This approach offers the opportunity to recognize multiple bubbles and set their corresponding original and final dates. Empirical results reveal that four bubbles existed in the shipping freight market between October 1988 and February 2018 in which freight deviated from fundamental values. Strong demand (especially in China), the supply capacity, crude oil prices and U.S. dollar fluctuations are potential explanations for the first three bubbles. The global financial crisis that burst in 2008 is the major factor results in the last bubble. Hence, we must distinguish the potential reasons of bubbles in different periods and take measures such as promoting economic multipolarization, strengthening the bargaining power of China, building an effective information transfer system, employing financial derivatives and accelerating the consolidation of the shipping industry to alleviate the negative influences on global seaborne trade.

Suggested Citation

  • Chi-Wei Su & Kai-Hua Wang & Qi Shao & Ran Tao, 2019. "Are there bubbles in the shipping freight market?," Maritime Policy & Management, Taylor & Francis Journals, vol. 46(7), pages 818-830, October.
    • Handle: RePEc:taf:marpmg:v:46:y:2019:i:7:p:818-830
    DOI: 10.1080/03088839.2019.1619946
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    Cited by:

    1. Chen, Yufeng & Yang, Shuo, 2021. "Time-varying effect of international iron ore price on China’s inflation: A complete price chain with TVP-SVAR-SV model," Resources Policy, Elsevier, vol. 73(C).
    2. Pisit Jarumaneeroj & Amar Ramudhin & Jorge Barnett Lawton, 2023. "A connectivity-based approach to evaluating port importance in the global container shipping network," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 25(3), pages 602-622, September.
    3. Khan, Khalid & Derindere Köseoğlu, Sinem, 2020. "Is palladium price in bubble?," Resources Policy, Elsevier, vol. 68(C).
    4. Khan, Khalid & Su, Chi-Wei & Rehman, Ashfaq U., 2021. "Do multiple bubbles exist in coal price?," Resources Policy, Elsevier, vol. 73(C).
    5. Pisit Jarumaneeroj & Jorge Barnett Lawton & Morten Svindland, 2024. "An evolution of the Global Container Shipping Network: port connectivity and trading community structure (2011–2017)," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 26(2), pages 283-306, June.
    6. Arman Gülnur & Nikolaos Antypas, 2023. "Favourable funding conditions: friend or foe of shipping M&As?," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 25(4), pages 728-754, December.

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