Time–frequency analysis of the Baltic Dry Index

Angelopoulos, Jason

doi:10.1057/s41278-016-0052-6

Cited by 6 publications

(8 citation statements)

References 24 publications

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“…Recent studies have tried to incorporate novel approaches to forecasting bulk freight rates. Angelopoulos (2017) has used the dynamic spectral content of the BDI to discuss its cyclical behavior through time-frequency analysis; and Tsioumas et al 2017have integrated the Dry Bulk Economic Climate Index (DBECI) into a VARX model to improve the accuracy of BDI forecasts. Although these methods provide a good basis for freight rate prediction, they often miss the psychology of the market impact on the rates.…”

Section: Technical Analysis and The Psychology Of Freight Rates Litermentioning

confidence: 99%

Technical analysis: the psychology of the market of dry bulk freight rates

et al. 2020

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Financial technical analysis of markets and trends differs from fundamental analysis in that econometrics are used on “fundamental” economic data in fundamental analysis. Technical analysis, however, adds to the overall trend analysis an additional examination of the psychology of markets. For freight rate predictions, there has been an exclusive reliance on typical fundamental analysis. Our results indicate that adding technical analysis to freight rate prediction can provide a better overall result. Psychological forces such as “irrational exuberance” or severe bearishness can influence trend predictions making them at best incomplete and at worst inaccurate for predicting the demand for shipping services. Further, ship construction decisions use freight rate predictions. In this paper, we perform a 20-year technical analysis of the BDI/Baltic Dry Index (formerly BFI/Baltic Freight Index) This analysis is a better, richer evaluation of freight rate trends that influence ship construction. Furthermore, technical analysis requires specific in-depth knowledge of the psychology of the market and experience in this type of trend analysis.

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Section: Technical Analysis and The Psychology Of Freight Rates Litermentioning

confidence: 99%

Technical analysis: the psychology of the market of dry bulk freight rates

et al. 2020

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“…According to maritime economics theory, the freight rates direct the supply decisions of the market, which include new ship building, utilization of the existing fleet, and scrapping of ships [1]. Therefore, freight rates have a direct impact on the decision to increase the fleet capacity of transport operators [13].…”

Section: The Supply and Demand Mechanism In Maritime Transportmentioning

confidence: 99%

“…Thus, earnings can be maximized and uncertainty-associated risks can be minimized. Timely purchasing and selling decisions are of vital importance for stakeholders, and a bad decision can have irreversible consequences [1]. At this point, only those who can read the market well can be regarded as good maritime stakeholders [14].…”

Section: The Supply and Demand Mechanism In Maritime Transportmentioning

confidence: 99%

“…Therefore, an index named the Baltic Dry Index was established in 1985 as a follow-up to the prices in the bulk market, and has gained importance as a demonstration of the maritime industry. The BDI reflects changes in dry bulk freight transport in different segments as a component indicator [1]. It covers dry bulk shipping rates and provides an assessment of the price of moving the major raw materials by sea.…”

Section: The Supply and Demand Mechanism In Maritime Transportmentioning

confidence: 99%

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Supply-Demand Interaction in the Formation of Freight Rates

2019

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Freight revenues are a fundamental objective of the maritime industry, and provide a baseline for stakeholders to plan their current strategies and future investments. Reduction of uncertainty-induced risk is therefore essential for predicting market prospects and for achieving sustainable growth for sector participants. This can be achieved by conceiving the formation of freight rates as well as the macro variables that have the greatest impact on rates. This study aims to contribute to the existing freight rate formation literature by empirically testing the supply–demand balance of China, one of the world’s largest economies. The Baltic Dry Index (BDI) has been selected as a measure of freight rates, trade volume of China has been selected as a demand-side indicator and the dry bulk fleet has been selected as a supply-side indicator in the model. It has been hypothesized that a larger trade volume has the effect of increasing freight rates, while an increasing fleet capacity has the effect of reducing freight rates. Correlation and regression analyses have been applied to test the econometric relationships between variables. The results of the study have confirmed the hypotheses, and it has been found that freight rates reacted more vigorously to changes in the dry bulk fleet, which forms the supply side.

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“…While the business cycle is a rule of thumb in the shipping industry, the analysis of cycles is more of a subjective effort with selections of turning points based on predefined patterns in the time domain. Exploitation of the frequency domain(Chistè and van Vuuren, 2013) and the evolution of the frequency domain over time(Angelopoulos, 2014) provide a unique opportunity to classify and investigate cycles at their natural domain without any prior assumptions, as well as possible stylized facts.5.1.2 The Role of the Baltic IndexesFreight rates, the shipping spot market and the BDI have been the subjects of considerable amount of work, related to their seasonality, cyclical attributes, as wellas their relation to macroeconomic shocks, in the last 15 years. Examples of time domain freight rates analysis include Alizadeh and Kavussanos (2001), Adland and Cullinane (2006), Batchelor et al (2007) and Jing et al (2008).…”

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confidence: 99%

Time–frequency analysis of the Baltic Dry Index

Cited by 6 publications

References 24 publications

Technical analysis: the psychology of the market of dry bulk freight rates

Technical analysis: the psychology of the market of dry bulk freight rates

Supply-Demand Interaction in the Formation of Freight Rates

Creating and assessing composite indicators: Dynamic applications for the port industry and seaborne trade

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