Econometric analyses of liquefied petroleum gas and product tanker shipping markets

• Main Author: Bai, Xiwen
• Other Authors: Lam Siu Lee, Jasmine
• Format: Theses and Dissertations
• Language: English
• Published: 2019
• Subjects: Engineering::Maritime studies
• Online Access: https://hdl.handle.net/10356/83539; http://hdl.handle.net/10220/49753
• Institution: Nanyang Technological University

Today, crude oil is refined all over the world. However, there is a mismatch of refined products between supply and demand, among and within various regions due to the different numbers of refineries, refinery specifications and outputs, and demand in the region. Therefore, refined products need to be transported by sea to balance supply and demand, which constitutes an important part of the energy supply chain. This thesis aims to provide econometric analyses of product tanker and Liquefied Petroleum Gas (LPG) shipping markets - the dominant markets for refined product seaborne transportation. This research starts with a review of past work on tramp shipping freight market modeling, identifying the major trends and methods in each topic. The existing research can be classified into four categories, namely supply-demand modeling, freight rate process modeling, freight rate forecasting and freight rate relationships. The study also reviews the specific literature on LPG and product tanker shipping market. Based on the review, major literature gaps are identified, namely the lack of coverage for LPG and product tanker shipping market, the inadequacy of current methodologies in tackling shipping freight market relationships, and limited research in spatial pattern analysis. Based on the literature review, specific models are proposed to tackle the research problems, including structural equation modeling, copula model, and discrete choice modeling. Accordingly, econometric analyses of the LPG shipping market are provided. Specifically, the relationship among very large gas carrier (VLGC) market variables, VLGC freight rate dependency with product price arbitrage and oil prices, and VLGC vessel destination choices have been studied. Last but not least, a disaggregate approach has been used to study the freight relationships across major routes for the product tanker market. This research provides useful guidance for both academics and industrial practitioners on better understanding the freight market dynamics for chartering, asset allocation and diversification purposes. It also fills the gap in the existent shipping literature by analyzing the LPG and product tanker shipping markets, which is of great importance in the seaborne transportation family, however, received limited research attention.