Sunday, December 20, 2015

Artificial Neural Networks in the prediction of tanker freight rates

I always start my classes in shipping economics by defining econometrics as the art of saying what is going to happen and then explaining why it didn’t. But it may not always be so. 

Notwithstanding the notorious volatility and unpredictability of shipping freight rates, research appearing soon in Maritime Economics and Logistics looks quite promising. Artificial Neural Networks (ANN) and Genetic Algorithms (GA) are used to develop forecasting models of the tanker market with remarkable predictive accuracy. These models outperform by far traditional time-series forecasting models, and are able to predict seasonality, trends and cyclical movements much more accurately. HH