Containership Charter Rates: Analysis of Unprecedented Growth After Covid-19 Pandemic Outbreak

Sergey Yakubovskiy (), Grigoriy Zaidman (), Giorgio Dominese () and Tetiana Rodionova ()

Journal Global Policy and Governance, 2021, vol. 10, issue 2, 21-38

Abstract: The covid-19 pandemic outbreak disrupted the entire world economy with no exception. The shipping industry was hit hard short-term, after which the dry shipping sector demonstrated a surprisingly rapid return to the pre-covid level and subsequently exceeded the same. The containership segment experienced the most unprecedented surge. The current paper examines the containership market by analyzing charter rate as a main variable of interest for all shipping industry stakeholders and investigates the nature of the 10-time increase of rates on the charter market, concentrating on the containerships of certain capacity (2750 TEU). To conduct this analysis, the vector autoregression model, namely the Granger test, is constructed. The impact of various independent macroeconomic variables, namely vessel prices, industrial production of several countries, several goods prices, the market capitalization of the leading container shipping companies, container throughput of the leading global ports, on containership charter rate is assessed. It was proven that the swift increase of containership charter rate could not have a basic demand-related justification, as the volume of containerized trade was more or less stable within the period of consideration (2020-2021) and neither Singapore nor Hong Kong nor Los Angeles port container throughput indicators appeared to have an effect on containership charter rate. It was ascertained that geographical factor determined the way macroeconomic indicators influenced charter rate – the more dependent region or country on seaborne trade and maritime transportation of goods, the more significant the relation with charter rate. Europe appears to be the least dependent. US industrial production affects the charter rate, although it is not affected in return. In turn, Asian indicators (Asian port throughputs and industrial development of Asian countries) are affected by charter rate, while Chinese industrial production is the solo Asian indicator influencing charter rate. The remaining factors impacting charter rate are Maersk market capitalization and steel price.

Keywords: shipping; charter rate; containership; chartering market; vessel price (search for similar items in EconPapers)
Date: 2021
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