Scandinavian Working Papers in Economics

Discussion Papers,
Norwegian School of Economics, Department of Business and Management Science

No 2008/26: Modeling Freight Markets for Coal

Jonas Andersson (jonas.andersson@nhh.no), Kurt Jörnsten (kurt.jornsten@nhh.no), Siri Pettersen Strandenes (siri.strandenes@nhh.no) and Jan Ubøe (jan.uboe@nhh.no)
Additional contact information
Jonas Andersson: Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration, Postal: NHH , Department of Finance and Management Science, Helleveien 30, N-5045 Bergen, Norway
Kurt Jörnsten: Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration, Postal: NHH , Department of Finance and Management Science, Helleveien 30, N-5045 Bergen, Norway
Siri Pettersen Strandenes: Dept. of Economics, Norwegian School of Economics and Business Administration, Postal: NHH , Department of Economics, Helleveien 30, N-5045 Bergen, Norway
Jan Ubøe: Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration, Postal: NHH , Department of Finance and Management Science, Helleveien 30, N-5045 Bergen, Norway

Abstract: In this paper we study bulk shipping of coal between the central regions in the world. We compare the performance of cost-minimizing models with a gravity model approach. The main finding in the paper is that cost minimizing models provide relative poor fits to data. A simple one parameter gravity model, however, provides very satisfactory fits to observed behaviour.

Keywords: Bulk freight; cost efficiency; gravity modeling

JEL-codes: F10; F17; R41

13 pages, February 10, 2009

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