An Analysis of seasonality patterns in container freight rates using HEGY method

Abstract

This paper strongly inspects the behavior of seasonality (deterministic) in container freight rates, and measures and compares seasonality patterns in different freight rate indices. We have performed deterministic seasonality unit root test in order to achieve set objectives. From this study we have drawn conclusion that all the indices (tested in this paper) exhibit significant deterministic seasonality. For the months of January and August, there is no seasonal effect observed in all five series. Whereas all the indices except Exports from Europe rate index (EEI) exhibit significant seasonal patterns in the months of February, September and December. All five indices exhibit significant seasonality during May, and the coefficient sign indicates a drop in the freight rates. During the months of March, October and November; it is observed that only EEI exhibit significant seasonal patterns. The results are extremely useful for carriers and agents who are involved in containerized freight transport business. Also, shippers can get a clear idea about the nature of the freight rates across various trade routes. This study is of great help to a broad category of stakeholders in containerized cargo transport business.