The Eye in the Sky: Freight Rate Effects of Tanker Supply

Frederik Regli, Nikos K. Nomikos

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

We show how the evolution of crude oil tanker freight rates depends on the employment status and geographical position of the fleet of very large crude oil carriers (VLCCs). We provide a novel measure of short-term capacity in the voyage charter market which is a proxy for the percentage of vessels available for orders. We find that our capacity measure explains parts of the freight rate evolution at weekly horizons, where traditional supply measures are uninformative. The fact that freight rates directly influence shipowners’ profitability and charterers’ expenditures makes our measure particularly relevant for these groups of market participants.
Original languageEnglish
JournalTransportation Research. Part E: Logistics and Transportation Review
Volume125
Pages (from-to)402-424
Number of pages23
ISSN1366-5545
DOIs
Publication statusPublished - May 2019

Keywords

  • AIS
  • Crude oil
  • Forward freight agreements
  • Freight rates
  • Tanker markets
  • VLCC

Cite this