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Disentangling Demand and Supply Shocks in the Shipping Freight Market: their Impact on Shipping Investments

Nomikos, N. ORCID: 0000-0003-1621-2991 and Tsouknidis, D. (2021). Disentangling Demand and Supply Shocks in the Shipping Freight Market: their Impact on Shipping Investments. Maritime Policy & Management,

Abstract

We show that demand shocks have a greater effect on real freight rates compared to supply (fleet) shocks both historically and on impact. By contrast, supply shocks have a larger impact on net contracting activity when compared to demand shocks. This paper disentangles for the first time demand and supply shocks driving shipping freight markets and assesses their impact on net contracting activity, a key measure of shipping investments. In the process, we construct novel indices of demand for shipping transportation. Policy related issues are quantified through drawing forecast scenarios for the response of real freight rates to unexpected demand and supply changes.

Publication Type: Article
Additional Information: This article has been accepted for publication in Maritime Policy and Management, published by Taylor & Francis.
Publisher Keywords: hipping freight rates; demand and supply shocks; net contracting; structural VAR.
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HG Finance
Departments: Bayes Business School > Finance
Date available in CRO: 10 Nov 2021 10:42
Date deposited: 10 November 2021
Date of acceptance: 5 November 2021
URI: https://openaccess.city.ac.uk/id/eprint/27084
[img] Text - Accepted Version
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