WAFI - Maritime Economics

The paper explores the correlation between the Baltic Dry Index (BDI) and daily Chicago Board of Trade (CBOT) data for wheat future contracts, referred to as WZ1, for the period 1985 - 2022, with a particular focus on periods of global wheat crises, also investigating the predictive power of their observed relationship during periods of market stress along with evidence on the chain of causality between WZ1 and BDI as the Pearson correlation was found to be high for a number of such years. While, in theory, prices of transported goods have limited influence on the effective volume of transport of goods transported in bulk, the chain of causality between WZ1 and BDI seems mediated through WZ1 movements signaling similar ones in grain volumes traded in the physical market. Correlation findings are further explored through Granger causality tests, and through a Vector Autoregressive (VAR) model. These steps allow the authors to identify patterns of causality for periods of market stress and predict the short-term behavior of the BDI at such times with a high degree of accuracy, validated by calculating the Mean Absolute Percentage Error (MAPE) for predictions. This was found to be impressively low during wheat crisis periods when the average MAPE obtained was 2.87% for BDI and 5.37% for WZ1 validating the hypothesis that market agents should expect a chain effect during wheat crises signaled shortly earlier by WZ1 changes.

Existing literature on firms entering into a voluntary carbon disclosure project has paid little attention to its impact on upstream supply chain emissions. Using the case of US firms that entered into the US carbon disclosure information system from 2018 to 2022, we offer a methodology to estimate their international shipping carbon footprints, based on data from Automatic Identification System (AIS) of ship movements and on U.S. customs records. We then examine firm level, the impact of carbon disclosure on shipping carbon emissions using a difference-in-differences (DID) model, and apply various robustness checks. The findings reveal that following the decisions of 8000+ US firms to disclose or not information on their emissions, we observe a general increase in shipping-related emissions, suggesting that firms disclosing their in-house emissions have a tendency to increase pollution to upstream suppliers. A heterogeneous analysis shows that this effect is more likely to happen for firms in the manufacturing sector, contrary to those in wholesale and retailing for which downstream emissions have a tendency to decrease post-disclosure. Furthermore, US firms sourcing from lower-income regions have increased their shipping emissions after disclosure. This study offers new empirical insights into the environmental trade-offs of voluntary carbon disclosure.

This paper investigates the impact of voyage Carbon Intensity Indicator (CII) rating and EU allowance costs on dry bulk freight rates using fixture data for Capesize voyages. Specific voyage characteristics and industry related data are utilized to investigate the impact on freight rates of vessels' carbon performance measured by their CII rating and of compliance costs under the EU Emissions Trading System (ETS). The CII rating, the EU allowance cost, the laycan duration, the Baltic 5 TC rate and the Baltic C16 route are among the statistically significant factors that our study finds affect the Capesize freight rates. This study provides valuable insights into how carbon performance, allowance costs and specific voyage characteristics affect freight rates in the era of evolving environmental regulations and market conditions.

This paper examines the role of Arctic shipping in reconciling economic growth with greenhouse gas (GHG) reduction objectives. The standard GTAP-E model is extended to include a nested route-choice structure within the maritime transportation sector and the GTAP-E database is expanded with route-specific costs and emissions derived from vessel movement data and maritime industry reports. Coupled with a simple climate model, the extended framework simulates the global economy under emission reduction targets, comparing scenarios with and without Arctic shipping and incorporating a global carbon emission permit trading scheme. The model captures the effects of GHG policies which shift the economy toward less carbon-intensive goods and services, transportation modes and routes. This will alter transportation costs and emissions across modes and routes and influence global GHG emissions. The findings highlight Arctic shipping's potential to reduce transportation costs and emissions, mitigate welfare losses, and offset the adverse effects of emissions reduction targets, demonstrating its value in achieving a balance between economic and environmental goals for certain regions.