A gam assessment of quality premia in the dry bulk time-charter market

This paper revisits the hypothesis of a quality segmented charter market using dry bulk-Panamax time-charter rates from the shipping boom period of 2003-2007. Through generalized additive models (GAMs) the authors assess whether increasing awareness and regulation over time has brought about a change in charterers' perceptions. The results suggest that freight differentiation has become visible in booming markets with high freight rates. Controlling for contract specific effects such as place of delivery, charter length and number of days forward to delivery, as well as for vessel size and consumption, the paper quantifies quality related differences in physical dry bulk charter rates.