Dry Bulk Shipping and the Evolution of Maritime Transport Costs, 1850-2020
Research by David S. Jacks, Ph.D., J.Y. Pillay Professor of Social Sciences, Yale-NUS College, Singapore, Professor, Simon Fraser University, Canada and Member of the GCARD’s Editorial Advisory Board; and Martin Stuermer, Ph.D., Senior Research Economist, Federal Reserve Bank of Dallas
This paper evaluates the dynamic effects of fuel price shocks, shipping demand shocks, and shipping supply shocks on real maritime transport costs in the long run. The authors first analyze a new and large dataset on dry bulk freight rates for the period from 1850 to 2020, finding that they followed a downward but undulating path with a cumulative decline of 79%. Next, the authors turn to understanding the drivers of booms and busts in the dry bulk shipping industry around this trend, finding that shipping demand shocks strongly dominate all others as drivers of real dry bulk freight rates. Furthermore, while shipping demand shocks have increased in importance over time, shipping supply shocks in particular have become less relevant.
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