COVID-19 impact on the shipping industry: An event study approach

The COVID-19 pandemic, apart from leading to human cases and deaths, is also distracting the shipping stock market and the Baltic Indices. While event studies, as well as macroeconomic research has been conducted in the literature, we have not witnessed any effort yet to investigate how external shocks - and in particular the COVID-19 outbreak - may impinge on the shipping markets. Therefore, our research tries to fill in this gap by studying how a sanitary incident might influence shipping freight rates and stock values. We have used a market-model event study approach to investigate how fast and comprehensively shipping markets react upon certain latest evidence. To quantify the pandemic's economic impact, we estimated the abnormal returns; in a phase before and after the event, they may work as a measure of the unexpected effect of the event on a shipping firm's performance. The data that we have used in stock analysis come from a major shipping index, while for our freight study, time-series come from all main Baltic indices. Our results show that according to the key date set as the event window, different results appear of how pandemic-proof the dry market, the tanker market, and the shipping stock market have proven to be.