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

Listed author(s):
  • 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] - M.E.N.E.S.R. - Ministère de l'Éducation nationale, de l’Enseignement supérieur et de la Recherche)

  • François-Charles Wolff

    (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - UN - Université de Nantes)

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.

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File URL: https://halshs.archives-ouvertes.fr/halshs-01513364/document
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Paper provided by HAL in its series Working Papers with number halshs-01513364.

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Date of creation: 25 Apr 2017
Handle: RePEc:hal:wpaper:halshs-01513364
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-01513364
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  17. Adland, Roar & Cullinane, Kevin, 2006. "The non-linear dynamics of spot freight rates in tanker markets," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 42(3), pages 211-224, May.
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