Container Freight Rate Forecasting with Improved Accuracy by Integrating Soft Facts from Practitioners

Hans-Joachim Schramm, Ziaul Haque Munimc

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

This study presents a novel approach to forecast freight rates in container shipping by integrating soft facts in the form of measures originating from surveys among practitioners asked about their sentiment, confidence or perception about present and future market development. As a base case, an autoregressive integrated moving average (ARIMA) model was used and compared the results with multivariate modelling frameworks that could integrate exogenous variables, that is, ARIMAX and Vector Autoregressive (VAR). We find that incorporating the Logistics Confidence Index (LCI) provided by Transport Intelligence into the ARIMAX model improves forecast performance greatly. Hence, a sampling of sentiments, perceptions and/or confidence from a panel of practitioners active in the maritime shipping market contributes to an improved predictive power, even when compared to models that integrate hard facts in the sense of factual data collected by official statistical sources. While investigating the Far East to Northern Europe trade route only, we believe that the proposed approach of integrating such judgements by practitioners can improve forecast performance for other trade routes and shipping markets, too, and probably allows detection of market changes and/or economic development notably earlier than factual data available at that time.
Original languageEnglish
Article number100662
JournalResearch in Transportation Business and Management
Number of pages11
ISSN2210-5395
DOIs
Publication statusPublished - 17 May 2021

Bibliographical note

Epub ahead of print. Published online: 17. May 2021

Keywords

  • Container shipping
  • Freight rate
  • Forecasting
  • Sentiment
  • Confidence
  • Perception

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