DYNAMIC RELATIONSHIPS IN THE MARKET FOR OCEAN GRAIN FREIGHTING SERVICES

A vector autoregressive model containing ocean grain freight rates, gr ain shipments, idled tonnage, new carrier deliveries and fuel prices i s used to evaluate dynamic linkages in the ocean grain transport marke t. Dynamic relationships are of particular importance in ocean freight ing markers because freighting services are often contracted several m onths before shipment. In addition, such markets may be slow to adjust to shocks because of significant short-run Fixities in shipping servi ces. Ocean grain freight rates are found to be responsive to fuel pric es and new ship deliveries, but are nor affected by demand shocks. Shi p idling rates are found to be sensitive to fuel prices, grain shipmen ts and freight rates. Significant adjustment lags are revealed.