Modeling and Application of an Early Warning System of China’s Foreign Trade Container Shipping Market

Abstract

To provide effective analysis tools, an early warning system is proposed for China’s foreign trade container shipping market. Firstly, by analyzing volatility mechanism of foreign trade container shipping market, a set of monitoring indicators is presented, including container throughput, freight index CCFI and PMI new export orders index et al. The monthly samples of the indicators from 2005 to 2014 are collected. Secondly, the warning threshold and interval of each indicator are determined by the combination method of statistical analysis and expert scoring. According to the design principle of early warning signal system and the indicator state division method, the early warning signal system of China's foreign trade container shipping market is proposed. To monitor the long-term market wave trend, an early warning index model is further proposed by the method of synthetic index, in which the indicator weights are determined by the principal component analysis method. Finally, the comparison results between the system operating and the real market volatility further demonstrate the validity of the proposed system.