Date of Award

2015

Document Type

Dissertation

Degree Name

Master of Science in Maritime Affairs

Specialization

Port Management

Campus

Malmö, Sweden

Country

South Korea

First Advisor

Visvikis, Ilias

Abstract

This dissertation starts from the decline of the Baltic Dry Index (BDI) of the Baltic Exchange in 2008 from 11,793 point to 663 point, which decreased by 94% from the peak within 7 months. To detect the reasons for the sharp decline of BDI, this dissertation has focused on the direction of research into demand and supply on shipping industry. All variables related with demand on shipping are divided into two groups - sea borne trade volume variables and the physical commodity price variables, ship dead weight tonnage (DWT) was selected as a supply variable, and Net Futures Position and Open-Interest were selected as financial market variables. On one hand, this dissertation tried to find the reasons for the collapse of BDI through the comparison of explainable power on the estimated model obtained by the empirical tests. Furthermore, in order to find the reasons for the sharp decline of BDI in 2008, this dissertation investigated correlation and causality between BDI and Seaborne trade volume, BDI and commodity price, and commodity price and financial market through the correlation test and regression analysis by empirical test. To sum up, the results of empirical test and the findings so far, this dissertation found that at least the reasons for the sharp decline in BDI did not caused by seaborne trade volume. Secondly, the increase of supply ship commitment was one of the main reasons for the collapse of BDI in line with the nature of demand and supply curves of freight market. And finally, further discussions on causality between physicalbased commodity price and futures market need to be conducted by further research, due mainly to the “financialization”, which means that the role of futures market against physical-based commodity price has increased over the time of crisis.