Seasonality patterns in dry bulk shipping spot and time charter freight rates

This paper investigates the nature of seasonality (deterministic and/or sto chastic) in dry bulk freight rates, and measures and compares it across fre ight rates of different vessel sizes (Capesize, Panamax and Handysize), con tract duration (spot., 1-year and 3-year time charters) and market conditio ns (peaks and troughs). Although, there is no evidence of stochastic season ality, deterministic seasonality in freight rates is found to be varying fr om -18.2% to 15.3% in individual months within a year. Spot rates for large r vessels exhibit higher seasonal fluctuations compared to smaller vessels, although differences in seasonal fluctuations between sectors are eliminat ed as the contract duration increases. Also, for each vessel size, the seas onality declines as the contract duration rises. Asymmetries in seasonal fl uctuations in freight rates over different market conditions are attributed to the high and low elasticities of supply expected under the respective m arket conditions. The results have implications for tactical shipping opera tions such as timing of dry-docking, chartering strategies and switching be tween freight markets. (C) 2001 Elsevier Science Ltd. All rights reserved.