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UNCTAD Oil Prices and Maritime Freight Rates_dtltlb20092_en

UNCTAD Oil Prices and Maritime Freight Rates_dtltlb20092_en

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UNCTAD/DTL/TLB/2009/21 April 2010
UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT
Oil Prices and Maritime Freight Rates:An Empirical Investigation
Technical report by the UNCTAD secretariat 
UNITED NATIONS
 
ii
Acknowledgements
This technical report was prepared by Cosimo Beverelli, with contributions from HassibaBenamara and Regina Asariotis. The useful and considered comments which were provided byProf. Hercules Haralambides (Erasmus University, Rotterdam), Prof. Anthony Venables (OxfordUniversity) and Gordon Wilmsmeier (Edinburgh Napier University) are gratefullyacknowledged, as are the comments provided by UNCTAD colleagues, in particular,Piergiuseppe Fortunato, Jan Hoffmann, Anne Miroux, Ugo Panizza, Jose Rubiato, AstritSulstarova and Vincent Valentine. Thanks are also due to David Bicchetti, Thomasz Blasiak,Marco Fugazza, Alessandro Nicita and Damieen Persyn for useful discussions.Finally, special thanks are due to Rahul Sharan, Susan Oatway and Parul Bhambri of Drewry,Christian Mueller of Harper Petersen & Co. and David Post of Bunkerworld for kindly providingdata and useful clarification.
 
iii
CONTENTS
PagesAcknowledgements ................................................................................................................... iiAbstract...................................................................................................................................... iv
A. INTRODUCTION
........................................................................................................... 1
B. A BRIEF OVERVIEW OF THE RELEVANT LITERATURE
.................................. 3
C. METHODOLOGY AND RESULTS
............................................................................. 5I. Container freight rates...............................................................................................5I.1. Model...............................................................................................................5I.2. Data..................................................................................................................8I.3. Time series.......................................................................................................9I.4. Estimation results...........................................................................................12I.4.1. Validity of the instrument ..................................................................14I.4.2. Oil prices, freight rates and oil price volatility .................................14I.4.3. Robustness checks..............................................................................16II. Iron ore freight rates................................................................................................19II.1. Model.............................................................................................................19II.2. Data ...............................................................................................................20II.3. Time series.....................................................................................................20II.4. Estimation results...........................................................................................22III. Crude oil freight rates ..............................................................................................25III.1. Data and model..............................................................................................25III.2. Estimation results ..........................................................................................26
D. SUMMARY AND DISCUSSION
..................................................................................28
E. CONCLUDING REMARKS AND SUGGESTIONS FOR FUTURE RESEARCH
...................................................................................................32References................................................................................................................................34
LIST OF FIGURES
Figure 1. Brent crude oil prices and bunker prices (Marine Diesel Oil)................................................8Figure 2. Brent crude oil prices and container freight rates on the mainEast-West container routes (by direction) ........................................................................10Figure 3. Crude oil prices and container freight rates on the main East-West container routes (by route).............................................................................................................11Figure 4. Bunker fuel prices (MDO) across select major bunkering ports.........................................16Figure 5. Iron ore freight rates and prices, Baltic Dry Index (BDI) and Brent crudeoil prices..........................................................................................................................21
LIST OF TABLES
Table 1. Estimation of equation (1) .................................................................................................13Table 2. Estimation of equation (2) .................................................................................................15Table 3. Average bunker fuel prices at select bunkering ports (1998-2008) .....................................17Table 4. Estimation of equation (3), with bunker prices (MDO) ......................................................17Table 5. Estimation of equation (4) .................................................................................................22Table 6. Estimation of equation (5) .................................................................................................24Table 7. Estimation of equations (6) and (7) ....................................................................................26

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