Container freight rate forecasting with improved accuracy by integrating soft facts from practitioners

Schramm, Hans-Joachim ORCID: https://orcid.org/0000-0001-8635-6195 and Haque Munim, Ziaul (2021) Container freight rate forecasting with improved accuracy by integrating soft facts from practitioners. Research in Transportation Business & Management. ISSN 2210-5395

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Abstract

This study presents a novel approach to forecast freight rates in container shipping by integrating soft facts in the form of measures originating from surveys among practitioners asked about their sentiment, confidence or perception about present and future market development. As a base case, an autoregressive integrated moving average (ARIMA) model was used and compared the results with multivariate modelling frameworks that could integrate exogenous variables, that is, ARIMAX and Vector Autoregressive (VAR). We find that incorporating the Logistics Confidence Index (LCI) provided by Transport Intelligence into the ARIMAX model improves forecast performance greatly. Hence, a sampling of sentiments, perceptions and/or confidence from a panel of practitioners active in the maritime shipping market contributes to an improved predictive power, even when compared to models that integrate hard facts in the sense of factual data collected by official statistical sources. While investigating the Far East to Northern Europe trade route only, we believe that the proposed approach of integrating such judgements by practitioners can improve forecast performance for other trade routes and shipping markets, too, and probably allows detection of market changes and/or economic development notably earlier than factual data available at that time.

Item Type: Article
Additional Information: Article in Press. Open access funding was provided by the University of South-Eastern Norway under the UNIT agreement.
Keywords: Container shipping, Freight rate, Forecasting, Sentiment, Confidence, Perception
Divisions: Departments > Welthandel
Depositing User: Gertraud Novotny
Date Deposited: 18 May 2021 16:20
Last Modified: 18 May 2021 16:20
Related URLs:
FIDES Link: https://bach.wu.ac.at/d/research/results/99856/
URI: https://epub.wu.ac.at/id/eprint/8126

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