An Econometric Analysis of Ocean Freight Rates for Grain Shipments from the United States to Major Importing Countries

Abstract

This article uses a cross-sectional econometric model to evaluate structural changes and price differentials in ocean freight rates for grain shipments from U.S. ports to various major importing countries. Cost factors included are distance and the ship size, and competitive factors are shipping seasons, shipping frequencies, multiple destinations, commodity types, and characteristics of origins and destinations. Results suggest cost factors play a significant role in determining ocean freight rates, and the ocean shipping industry charges different rates by season and commodity. This study also indicates that ocean freight rate structures have changed during the 1987-1998 period.