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A destination choice model for very large gas carriers (VLGC) loading from the US Gulf

Bai, Xiwen, Lam, Jasmine Siu Lee
Energy 2019 v.174 pp. 1267-1275
energy, freightage, markets, models, planning, prices, propane, shipping, traffic, Panama, United States
This study is one of the first to model energy shipping destination choice behaviors and identify their associations with various market factors from charterers' perspective. The paper uses very large gas carriers loading from the US Gulf as an illustration. Attributes include freight rate, propane price spread, bunker costs and number of ships in the destination areas. It also identifies the effects of the Panama Canal expansion on destination choices, by dividing sample data into two sub-periods: pre- and post-expansion. Furthermore, both aggregate and disaggregate analysis for different ports are provided. This work draws significant implications for energy transport planning. Understanding the charterer's choice of destinations is vital in determining traffic flow to a specific destination and in forecasting supply patterns. This model can be applied to other downstream commodity shipping segments with available arbitrage opportunities, less sticky trade flows and active traders.