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What makes a freight market index? An empirical analysis of vessel fixtures in the offshore market

Author

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  • Roar Adland

    (NHH - Norwegian School of Economics and Business Administration, Department of Economics - Norwegian School of Economics and Business Administration)

  • Pierre Cariou

    (Kedge Business School [Talence])

  • François-Charles Wolff

    (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - IEMN-IAE Nantes - Institut d'Économie et de Management de Nantes - Institut d'Administration des Entreprises - Nantes - UN - Université de Nantes)

Abstract

We estimate a hedonic pricing regression to generate a market index from heterogeneous fixture data in the Offshore Support Vessel (OSV) market. We consider a fixed effect framework where we control for vessel characteristics and contract-specific variables. Applied to a dataset of more than 30,000 transactions from 1989 to 2015, estimates show that around 70%-80% of variation in dayrates is explained by the time fixed effects used to estimate the market index. Spot freight rates increase with engine power and transport capacity. The volatile market index is seasonal and is positively correlated to both oil prices and production volumes.

Suggested Citation

  • Roar Adland & Pierre Cariou & François-Charles Wolff, 2017. "What makes a freight market index? An empirical analysis of vessel fixtures in the offshore market," Working Papers halshs-01513364, HAL.
    • Handle: RePEc:hal:wpaper:halshs-01513364
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01513364
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    References listed on IDEAS

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    1. Regli, Frederik & Nomikos, Nikos K., 2019. "The eye in the sky – Freight rate effects of tanker supply," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 125(C), pages 402-424.
    2. Adland, Roar & Cariou, Pierre & Wolff, François-Charles, 2018. "Does energy efficiency affect ship values in the second-hand market?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 111(C), pages 347-359.
    3. Roar Adland & Pierre Cariou & François-Charles Wolff, 2018. "Comparing transaction-based and expert-generated price indices in the market for offshore support vessels," Working Papers halshs-01843720, HAL.

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    Keywords

    offshore support vessel; spot freight rate; hedonic price regressions; fixture data;
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