Quantitative modelling of shipping freight rates: developments in the past 20 years

ABSTRACT

Understanding the determination mechanism and dynamics of shipping freight rates has significant implications for practitioners, economists, and regulators of maritime transport. This paper systematically reviews the relevant papers on shipping freight rate published between 2000 and 2019. Specifically, it provides empirical insights including the major influencing factors of shipping freight rates and differences among the shipping sectors, and discusses the dominant methods and their applicability, strengths and weaknesses, and opportunities for new methods. Furthermore, the omissions and limitations in methods are explored to identify the research gaps and set a future research agenda. It is found that there is a strong focus on temporal dynamics with a wide range of modelling methods applied, while discussion on cross-sectional dynamics on how shipping freight rates are determined by vessel characteristics, contract terms, market competition, etc., is limited. Besides, the collaboration network analysis shows that more knowledge sharing and cross-discipline collaboration efforts can create potential for more inspired insights with advanced methods in this field.

KEYWORDS:

• Ocean shipping
• freight rate
• quantitative modelling
• time series
• cross-sectional dynamics
• collaboration network

Acknowledgments

The authors would like to thank the associate editor and two anonymous referees for the constructive comments and suggestions which helped to improve the manuscript significantly.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. Papers studying the shipping freight derivatives market are also included.

Additional information

Funding

This work was supported by the UIC-HKBU Research Funds [R72021201] and CCAPPTIA (www.ccapptia.com).