Work

Box rates unveiled: Predictive analytics for ocean freight rates with system dynamics and text mining under supply chain disruptions

Year: 2025

Type: article

Abstract: Ocean freight rates are key drivers of supply chain costs, global inflation, trade and economic growth, and their volatile nature, particularly manifest during supply chain disruptions, causes significant supply chain and economic turbulence. This study presents a parameterized system dynamics model to predict the Shanghai Containerized Freight Index (SCFI), incorporating both linear and nonlinear interrelationships among transport supply, demand, market sentiment, and freight rates. The model comprises four integrated components: (1) a transport demand estimator based on past container shipping volumes, Gross Domestic Product (GDP), and the Purchasing Managers' Index (PMI); (2) an actual containership capacity model that considers shipping liners’ strategic and tactical capacity decisions; (3) a novel Market Sentiment Index (MSI) using lexicon-based text mining of news articles, integrated with PMI to quantify market sentiment; and (4) an SCFI prediction model that captures the bidirectional feedback between these components. Results indicate that our system dynamics model outperforms established methods such as XGBoost and ARIMA. Furthermore, we find that freight rates are sensitive to the balance between supply, demand, and market sentiment. Specifically, an oversupply of capacity and declining demand reduce freight rates, whereas capacity constraints caused by supply chain disruptions increase rates. Sensitivity analysis further demonstrates that strategic capacity adjustments, particularly through blank (cancelled) sailings, can effectively increase freight rates. These insights have important implications for strategic, tactical, and operational decision-making within global supply chains.

Source: International Journal of Production Economics

DOI: 10.1016/j.ijpe.2025.109669

Authors: Junwoo Jeon, Çağatay Iris, Sungchul Hong, Andrew Lyons

Institutions: Sungkyul University, University of Liverpool, Samsung (South Korea)

Language: English

Topic: Maritime Ports and Logistics

Subfield: Industrial and Manufacturing Engineering

Field: Engineering

Domain: Physical Sciences

SDG: Industry, innovation and infrastructure

Open Access status: hybrid

Estimated APC paid: $4,420