Dynamic Interrelationships between Sea Freight and Shipbuilding Markets

This paper examines the dynamic interrelationships between the sea freight and shipbuilding markets. Many practitioners argue that the freight rates rely on the shipbuilding activities, because the shipbuilding is the primary source of ship supply. Other specialists argue that demand for shipbuilding is activated by the demand of the freight market, where the shipbuilding decisions are made on the outlook of future freight rates. The authors examine these competing views by analysing the time series in dry bulk shipping. The results indicate the shipbuilding market unlikely leads the freight market, implying that the shipbuilding activity depends on the freight market.

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