A Theoretical Model for Single Voyage Freight Rates in the Short Run
A Theoretical Model for Single Voyage Freight Rates in the Short Run
Serghios Stylianou Serghiou
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By taking an average for the year, we tend to overestimate the size when rates are increasing and underestimate it when rates are de- creasing. Because of this averaging we also expect our model to under- estimate the rates at the peak of the cycle and overestimate these at the trough. An obvious refinement will be achieved by determining the marginal vessel from monthly or even weekly transactions, especially during periods of highly fluctuating rates. (b) The time period between consecutive m...easurements of the pro- portion of the tanker fleet operating in the spot market and the pro- portion of the tanker fleet which is laid up. These parameters are revised monthly. However, in many cases, often near the critical range, these proportions may change 2 or 3 percentage points from one month to the next. Since even a one percentage movement, up or down, in the critical range of the proportion of the fleet operating in the spot market is enough to bring fortune or disaster to shipowners, shortening the period between consecutive measurements of these parameters is likely - 13 - to bring about substantial improvement in the performance of the model.
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