The impact of economic activities in US on container freight rates: An application on China-USA route
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Copyright (c) 2021 Kamil Özden Efes
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Container shipping is a crucial transportation method for manufactured consumer goods. Seaborne trade and container shipping is highly affected by various factors. Global economic growth, international trade, demand-supply balance in the container shipping market affect the container shipping industry. The global economy is the most critical demand factor. Supply in container shipping is container fleet capacity which is inelastic, and the market cannot respond to sudden demand changes. Therefore, changes on the demand side can rapidly impact freight. This study aims to empirically examine the effect of changes in demand on container shipping freight rates. In the analysis, the impact of the changes in the GDP of the USA, the world's largest economy, on the container freights between the USA and China was examined by the regression analysis method. The research results have determined that the relationship between the variables is positive when the structural breaks are taken into account, and a 1% change in GDP causes a 3.17% change in freight rates. It was also determined that there was a structural break in the model after 2020 Q1 with COVID-19. The findings show how sensitive maritime transport is too large economies and how big this situation poses.
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