An Analysis of Bunker Adjustment Factors and Freight Rates in the Europe/Far East Market (2000–2004)

Pierre Cariou () and François-Charles Wolff
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Pierre Cariou: World Maritime University, Citadellsv&aauml;gen 29, PO Box 500, Malmö S-201 24, Sweden.

Maritime Economics & Logistics, 2006, vol. 8, issue 2, 187-201

Abstract: This paper focuses on the monthly relationship between the bunker adjustment factor (BAF) and bunker price and between the freight rate and charter rate on the Europe/Far East container trade. It investigates whether a causality relationship can be found between these variables in order to know whether tariffs are mainly driven by cost considerations, as claimed by shipping lines during the last 5 years. Results from VAR and VECR models suggest that a Granger causality does exist. This paper calls for a new way to look at pricing elements in liner shipping and more particularly for shipping conferences, that should focus more for instance on justified/unjustified BAF or rate restoration announcements rather than on a general debate on exemption/abolishment of collective pricing. Maritime Economics & Logistics (2006) 8, 187–201. doi:10.1057/palgrave.mel.9100156

Date: 2006
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