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Pretty much the entire ocean transportation industry, with the exception of container shipping, works this way. Prices are largely based on predictions of marke
by acrooks 5y ago
Pretty much the entire ocean transportation industry, with the exception of container shipping, works this way. Prices are largely based on predictions of market conditions in your load port at the time of loading, and the the same wherever you’re sending the cargo.
If you’re trying to load cargo in an area with an undersupply of vessels, you’ll pay a lot for the opportunity. If you’re sending a ship to an area with an oversupply of vessels, you pay more for that because the company renting it to you doesn’t have good confidence in its ability to get a contract once your cargo is offloaded.
- angry_octet 5y agoDespite the significant increase in commercial intelligence products from satellite imagery, ripoffs etc, the information available is still quite limited. And the MILP problems that result are extremely challenging to solve. A lot of the shipping companies still seem to use heuristics instead of models. But shipping lines seem able to control capacity because of consolidation, and hence maintain high utilisation: https://www.freightwaves.com/news/qa-flexport-on-2021-container-crunch-liner-pricing-coup https://www.freightwaves.com/news/qa-flexport-on-2021-contai...
- acrooks 5y agoI helped start an organisation which builds data science models for the shipping and commodity markets, and has had great success trading on the results of those models. Within most shipping companies, there continues to be a significant hubris amongst charterers of "I know what I know" - a lot of people who have worked for decades in the industry and still trust their gut instinct over anything else. As a result, since so few decisions are significantly data-driven, it's actually not that complex to build predictive models that take advantage of arbitrage opportunities in the market.