An empirical study of the impact of COVID‐19 on container freight rates: Evidence from the panel data of China

Abstract

The container shipping industry has undergone significant changes in the post‐COVID‐19 era. This study examines the impact of the pandemic on container freight rates (CFR) through a demand analysis approach, using 11 major international container trade lanes from Shanghai, China as a case study. We analyze the CFR data on both weekly and monthly bases, with a focus on retaining more individual and time information using long panel data. To better reveal the pandemic's impact on CFR, we introduce interactive terms and simultaneous equations in our model. Our empirical analysis shows that the pandemic has not only directly and positively affected CFR, but, more importantly, has also indirectly promoted the growth of container shipping cost by stimulating the demand for containerized goods exported from China. Additionally, the connectivity or capacity of a given trade lane has inhibited the pandemic's effects on CFR to a certain extent. These findings provide insights into the remarkable growth of CFR from the demand side in 2020.