ICM283-Economic Modelling and Analysis of Shipping Markets

Module Provider: ICMA Centre
Number of credits: 10 [5 ECTS credits]
Level:7
Terms in which taught: Spring term module
Pre-requisites:
Non-modular pre-requisites:
Co-requisites:
Modules excluded:
Current from: 2022/3

Module Convenor: Dr Satya Sahoo
Email: satya.sahoo@reading.ac.uk

Type of module:

Core

Summary module description:

Following the Introduction to Quantitative Methods for Finance module in the previous term, the primary objective of this module is to provide an application to the most common empirical methods used in the economic modelling and analysis of shipping markets. The module provides the students with the business modeling tools and skills necessary to conduct empirical analysis in shipping. It follows a “hands-on” approach where students use real shipping market data and dedicated software and apply the empirical assessment methods through case studies. Emphasis is placed on practical applications of the research techniques used in international shipping markets.

Aims:

It aims to learn students to use real shipping market data and dedicated software and apply the empirical assessment methods through case studies.

Assessable learning outcomes:

By the end of the module, it is expected that the students will be able to:

• Explain what types of research methods are employed in the shipping industry and apply each in real-life case studies 


• Describe and apply the most widely used sources of data for freight markets research, data collection, processing and post-processing techniques 


• Explain the fundamentals of the statistical theory underlying the tools employed to estimate and test econometric models in shipping


• Interpret and analyze the results from an estimated econometric model using shipping data

Additional outcomes:

The module also aims to encourage the development of IT skills and in particular the employment of data using statistical software packages (i.e. Eviews). Students will also improve their ability to translate abstract theoretical concepts into practical solutions to maritime economics problems.

Outline content:

1. Types of research used by the shipping industry 

- Long-term fundamental, Short-term fundamental, Qualitative, Technical, Relative value 

- Description of methodology, Theoretical rationale

- Historical developments discussion

 

2. Shipping markets data

- Sources of data, Data frequency

- Methods of coll ecting data

- Processing and post-processing of data

 

3. Econometric concepts applied in practice

- Returns, Normal distribution of returns, Correlation, Seasonality

- Tests applied: Causality, Stationarity, Cointegration 

- Models applied: OLS, LR, MLR

 

4. How to model the shipping market in the medium to long-term

- Data sources, Frequency 

- Theoretical rationale

- Practical implementation

4.1. Supply-side analysis: Existing fleet, Scrapping activity, Order book

4.2. Demand-side analysis: Trade flow matrix 

4.3. Macro-economic inputs: GDP, PMI, IP, FAI, FX, Credit/M2 

 

5. Short-term market outlook

- Data sources, Frequency

- Theoretical rationale

- Practical implementation

5.1. Supply drivers: Active fleet, Idle fleet, Speed, Regional imbalances

5.2. Demand drivers: Trade flows, Import/export arbs, Crops, Seasonality, Inventory cycles 

5.3. Macro drivers: Short-term economic activity metrics

 

6. Technical analysis and outlook

- Example of early entry, overlay with fundamental model, or lock into an existing trend 

 

7. Relative Value (RV) analysis and outlook

- RV as statistical arbitrage or RV based on fundamental data

 

8. Qualitative analysis

- News analysis, interviews, behavioural patter ns-

Brief description of teaching and learning methods:

Lectures will be used for the exposition of theory. Classes will be used to discuss non-assessed problem sets and case studies. There will be 5 3-hour lectures and 5 1-hour seminars. The techniques used to achieve the stated module objectives will consist of a combination of active teaching, question-answer sessions, class examinations, assignments and class discussions.

Contact hours:

	Autumn	Spring	Summer
Lectures		15
Seminars		5
Guided independent study:
Wider reading (independent)		10
Wider reading (directed)		5
Exam revision/preparation		10
Preparation for tutorials		10
Preparation for seminars		5
Preparation of practical report		10
Group study tasks		30
Total hours by term	0	100	0
Total hours for module	100

Summative Assessment Methods:

Method	Percentage
Written assignment including essay	70
Class test administered by School	30

Summative assessment- Examinations:

Summative assessment- Coursework and in-class tests:

Individual assignment based on a research project. 3,000 words maximum. Assignment is given at the start of the term and its deadline is near the end of the term.

The in-class mid-term test takes place in the middle of the term and its duration is one-hour long. It involves short essay questions.

Formative assessment methods:

Penalties for late submission:

The below information applies to students on taught programmes except those on Postgraduate Flexible programmes. Penalties for late submission, and the associated procedures, which apply to Postgraduate Flexible programmes are specified in the policy £Penalties for late submission for Postgraduate Flexible programmes£, which can be found here: http://www.reading.ac.uk/web/files/qualitysupport/penaltiesforlatesubmissionPGflexible.pdf
The Support Centres will apply the following penalties for work submitted late:

• where the piece of work is submitted after the original deadline (or any formally agreed extension to the deadline): 10% of the total marks available for that piece of work will be deducted from the mark for each working day (or part thereof) following the deadline up to a total of five working days;
• where the piece of work is submitted more than five working days after the original deadline (or any formally agreed extension to the deadline): a mark of zero will be recorded.

The University policy statement on penalties for late submission can be found at: http://www.reading.ac.uk/web/FILES/qualitysupport/penaltiesforlatesubmission.pdf
You are strongly advised to ensure that coursework is submitted by the relevant deadline. You should note that it is advisable to submit work in an unfinished state rather than to fail to submit any work.

Assessment requirements for a pass:

A minimum total final mark of 50%.

Reassessment arrangements:

Reassessment by assignment 

Additional Costs (specified where applicable):

Required text books: Brooks, C. (2019). Introductory Econometrics for Finance. Cambridge: Cambridge University Press. RRP: £42 

Last updated: 29 March 2022