Analysis of the Impact of Technical Barriers to Trade on the Shipping Freight Rate

This study aims to investigate the impact of technical barriers to trade (TBT) on the shippping freight rate. While the international shipping industry had undergone severe recession since the financial crisis in 2008, a significant surge in shipping freight rate has been witnessed during the COVID-19 pandemic period in 2020 resulting from collapse of global supply chain. Meanwhile, it is also observed that the level of TBT has escalated at ever-increasing pace during the same period. Although the skyrocketing freight rate during the pandemic period largely results from the interaction between demand and supply factors within the shipping industry, it is also highly likely that externality from non-tariff barriers, notably represented with the trade war between USA and China, has an impact on freight rate. In this regard, this study examines the relationship between the level of TBT and the shipping freight rate. To this end, monthly data on the TBT and the freight rate for the period between 2016 and 2023 is analyzed. The results indicate that shipping freight rate is positively associated with the level of TBT. However, the relationship is time-varying. Specifically, the positive relationship between the TBT and the shipping freight rate is significant since the outbreak of COVID-19 pandemic.