Determinants and international influences of the Chinese freight market

The past decades witness the impressive development of China. Along with the huge demand of China for commodities, the Chinese shipping market becomes more and more important. This paper investigates the determinants and the interactions of the Chinese shipping market with the international shipping market. We utilize the relatively large-dimensional Chinese commodities data as part of the controlled variables. The principal component analysis is applied to the commodities data to reduce the size of the data dimension. It is found that the controlled variables, including fuel cost, financial markets, and prices of large commodities, have the explanatory capability for the Chinese and the international shipping markets. There are mutual influences between the two shipping markets, with the Chinese market more sensitive to the movements of the international market. The Chinese shipping market has integrated into the international shipping market to some extent, instead of being isolated.