The relation between the international and China shipping markets

Abstract

Since the financial crisis in 2008, both the international and the China shipping markets have remained sluggish. To investigate the relation between the two shipping markets, this paper conducts data analysis, in particular, descriptive statistics and regression analysis. For the regression analysis, we use econometric technique VAR model to study factors influencing the Baltic Dry Index (BDI) and the Tianjin Shipping Index (TSI), in addition to the relations between the two indices. Our data analyses are based on a dataset of the first-order differential natural logarithm sequences of BDI, TSI, Forward Freight Agreements (FFA), Dow Jones Industrial Average (DJIA), Shanghai Composite Index (SCI), and British Brent oil spot price over the period from 2012 to 2018. The time series of BDI, TSI, and FFA are used as endogenous variables in the VAR model with other variables controlled. The results of the VAR model show that in addition to its own lagged changes, BDI is subject to the influences of the movements in the FFA market and international crude oil prices. In contrast, the TSI is relatively less influential. It is mainly affected by its own historical movements and BDI. Meanwhile, TSI exhibits capability in influencing FFA. In terms of the relation between BDI and TSI, there is a unidirectional impact from BDI to TSI, implying that the China shipping market is subject to the influence of the international shipping market while itself impacts the Forward Freight Agreements market but has still a weak influence on the international shipping market.