David Jacks, Martin Stuermer, 18 April 2021

As the recent past has shown, maritime transport costs are subject to wide swings. This column analyses a large new dataset on dry bulk freight rates from 1850 to 2020, when maritime transport costs fell 79%. Turning to the drivers of booms and busts in the dry bulk shipping industry, it finds that shipping demand shocks dominate both fuel price and shipping supply shocks. Shipping demand shocks have increased in importance over time while shipping supply shocks have become less relevant.

James Hamilton, 08 July 2019

Shipping costs offer a potentially attractive measure of world real economic activity. However, the popular approach of removing a deterministic trend is not consistent with the observed behaviour of shipping costs and results in an unrealistic measure in data since 2015. This column compares alternative monthly measures based on shipping costs with direct estimates of world industrial production in terms of coherence with world GDP and usefulness for forecasting commodity prices, and concludes that industrial production is a much better measure. If shipping costs are to be used, the cyclical component should not be calculated using residuals from a linear trend.

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