An Econometric Analysis of Freight Rates for Grain Import in Korea

A substantial amount of grain has been shipped from the various major exporting countries to Korea during the last decade. This article uses a cross-sectional econometric model to evaluate structural changes and price differentials in ocean freight rates for grain shipments from various major exporting countries to Korea Cost factors included in this study are distance and the ship size, and competitive factors are shipping seasons and the Korean flag. Results suggest cost factors, such as distance and ship size play a significant role in determining ocean freight rates, and the ocean shipping industry charges different rates by season and flag. The ocean freight rates for grain shipments are differentiated on the basis of seasons and flag. This study also indicates that ocean freight rate structures have changed during the 1985-1998 period.