Working Paper: NBER ID: w28627
Authors: David S. Jacks; Martin Stuermer
Abstract: We provide evidence on the dynamic effects of fuel price shocks, shipping demand shocks, and shipping supply shocks on real dry bulk freight rates in the long run. We first analyze a new 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, we turn to understanding the drivers of booms and busts in the dry bulk shipping industry, finding that shipping demand shocks strongly dominate all others as drivers of real dry bulk freight rates in the long run. Furthermore, while shipping demand shocks have increased in importance over time, shipping supply shocks in particular have become less relevant.
Keywords: dry bulk shipping; freight rates; shipping demand shocks; shipping supply shocks; fuel price shocks
JEL Codes: E30; N70; R40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| shipping demand shocks (J23) | real dry bulk freight rates (L99) |
| shipping supply shocks (L87) | real dry bulk freight rates (L99) |
| fuel price shocks (Q31) | real dry bulk freight rates (L99) |
| residual shocks (C22) | real dry bulk freight rates (L99) |
| aggregate demand shock (E00) | shipping demand shocks (J23) |
| shipping demand shocks (J23) | freight rate dynamics (L91) |