Container Freight Rates and International Trade Causality Nexus: Evidence from Panel VAR Approach for Shanghai and ASEAN-6 Countries

Container shipping drives the development of international trade, yet previous studies have not fully appreciated the possible bidirectional causal relationship between container freight rates and international trade. In the context of the “twenty-first Century Maritime Silk Road,” we use data on ex...

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Bibliographic Details
Published inDiscrete dynamics in nature and society Vol. 2022; no. 1
Main Authors Ding, Xingong, Wang, Mengzhen
Format Journal Article
LanguageEnglish
Published New York Hindawi 2022
John Wiley & Sons, Inc
Hindawi Limited
Wiley
Subjects
21st century
Containers
Costs
Economies of scale
Exports
Impact analysis
Imports
Impulse response
International trade
Marine transportation
Maritime industry
Ports
Response functions
Shipping
Shipping industry
Variables
Southeast Asia
Vietnam
Singapore
Philippines
China
Malaysia
Thailand
Indonesia
Latin America
Europe
Africa
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Summary:Container shipping drives the development of international trade, yet previous studies have not fully appreciated the possible bidirectional causal relationship between container freight rates and international trade. In the context of the “twenty-first Century Maritime Silk Road,” we use data on export container freight rates and import/export data from Shanghai to ASEAN-6 countries (Singapore, Vietnam, Thailand, Philippines, Malaysia, and Indonesia) from February 2017 to January 2020 and apply a panel VAR to explore the relationship between maritime transport costs and international trade in the container shipping market. We use the freight rate data are from the Southeast Asia Freight Index, which is used for the first time in an empirical study. The quality and reliability of the freight rate data allow this paper to better identify causal relationships. The results of the panel Granger causality test and the orthogonal impulse response function suggest a bidirectional causal relationship between freight rates and export trade; to further explain, an increase in export trade lowers export freight rates, but an increase in export freight rates hinders export trade, and a growth in import trade unidirectionally raises export freight rates. We believe that international trade may impact freight rates through economies of scale and trade imbalances.
ISSN:1026-0226
1607-887X
DOI:10.1155/2022/2415914