| Article ID | Journal | Published Year | Pages | File Type |
|---|---|---|---|---|
| 1023009 | Transportation Research Part E: Logistics and Transportation Review | 2016 | 14 Pages |
•We investigate buyers and sellers contributions to individual freight contracts.•Market conditions are the most influential covariates.•Time-invariant factors explain 15–22% of price variations for VLCC-Capesize.•Charterer fixed effects are much higher than owner fixed effects.
We propose a model for freight rate formation in individual contracts that incorporates charterer and owner heterogeneity and owner–charterer match effects. We estimate fixed effect regressions and implement a variance decomposition for 2863 VLCC tanker and 1789 Capesize fixtures between 2011 and 2014. Although market conditions and routes remain the most influential covariates, the characteristics of charterers, owners and of their matches are also significant microeconomic determinants of the freight rate level. The contribution of the charterer fixed effect is large in the VLCC market, while the charterer and match effects are large contributors to the Capesize spot freight rate.
