A Study On Shippers’ Strategy Of Carriage Of Iron Ore By Sea Based On GHM Model

The shipping operation is an important part of commodity trade. Inmany circumstances, the transport cost may exceed the price of the goodsthemselves. For a long time, the dry bulk market has showed strongvolatility. There is great significance to control total cost and volatility ofmaritime transport.This thesis researched the iron ore shipping market by divided it intotwo parts-the short-term market which is less than five years and the longterm market which often sustained for decades. The Eviews has been usedwhen deal with the short term market data. It is showed that the volatilityof time charter has significantly decreased with the extension time underfive years. For the long term market, the GHM model has been introducedto analysis the transaction cost and ownership. The study found that ifthere is prior agreement, the long term COA contract is efficient. If theasset specificity is strong, vertical integration could reduce the transactioncost.Through the overall research of iron ore maritime market, this thesisoffered some suggestions for practice：It should be considered from theglobal perspective to reduce logistics cost; The transaction structure shouldmatch with asset specificity; The volatility and cost have Significantlydecreased if the COA contracts be adopted as main way.