1. ¹World Maritime University, Citadellsvägen 29, PO Box 500, Malmö S-201 24, Sweden. E-mail: pierre.cariou@wmu.se
2. ²LEN, University of Nantes, BP52231 Chemin de la Censive du Tertre, Nantes Cedex 3 44322, France. E-mail: wolff@sc-eco.univ-nantes.fr

Abstract

This paper focuses on the monthly relationship between the bunker adjustment factor (BAF) and bunker price and between the freight rate and charter rate on the Europe/Far East container trade. It investigates whether a causality relationship can be found between these variables in order to know whether tariffs are mainly driven by cost considerations, as claimed by shipping lines during the last 5 years. Results from VAR and VECR models suggest that a Granger causality does exist. This paper calls for a new way to look at pricing elements in liner shipping and more particularly for shipping conferences, that should focus more for instance on justified/unjustified BAF or rate restoration announcements rather than on a general debate on exemption/abolishment of collective pricing.