The Correlation Between Lease Prices Of Tankers And BDTI

The industry of oil transportation is risky since the prices vary from minute to minute which brings huge risks to the participants. The best way to avoid risks is to make sure that the costs do not fluctuate obviously. Therefore, it is significantly im-portant for shipping enterprises to predict the tanker lease prices, at least the ranges.The purpose of this paper is to study the relationship between freights and BDTI. The objects are tanker freights that belong to different kinds of tankers and different maturities. Both quantitative and qualitative methods are used. In the part of quantita-tive study, there are impulse response analysis and variance decomposition analysis which are based on the VAR model. With the help of VEC model, it explains whether there is long-term Cointegration relationship and the short-term impacts of variables. While the study of time series with the help of econometrics model is considered lon-gitudinal, the analysis between different kinds of tankers is horizontal. Conclusions are as follows. Firstly, freight of different term structures and BDTI are abnormal dis-tribution, which is the sign of strong volatility. In spite of volatility, the trends of freights and BDTI are similar. Secondly, the reaction of BDTI is more intense than freights after the impacts. Thirdly, freights are mainly affected by themselves instead of BDTI. Fourthly, there is a long-run equilibrium relationship between the freights of different term structures. Compared with short-term influence, the long-term effect is stronger.With the help of the conclusions, the operators and other stakeholders could have a better understanding about the freight and avoid risks. However, there is some limi-tations of this study. The model which is selected can not control all the variables which represent diversifiable and non-diversifiable risks.