A recent study published in the International Journal of Shipping and Transport Logistics has unveiled a new tool known as the Shipping Industry Risk Sentiment Index (SRSI). This groundbreaking tool has been specifically developed to analyze sentiment in the news media regarding South Korea’s shipping industry. By utilizing an innovative method that involves text analysis of news articles from Korean newspapers, the SRSI focuses on terms related to the six C’s of credit—character, capacity, capital, company, conditions, and collateral.
Conducted by Sunghwa Park of Gyeongsang National University, Hyunsok Kim of Pusan National University, and Janghan Kwon and Taeil Kim of the Korea Maritime Institute, the study explains how the SRSI can detect spikes in financial risk sentiment. The team employed statistical models such as the autoregressive distributed lag (ARDL) model and impulse response functions to evaluate the data. Their findings indicate that spikes in risk sentiment are associated with increased news reporting on global financial crises and court receiverships of major Korean shipping companies.
One of the key highlights of this research is the predictive capabilities of the SRSI. Not only does it reflect risk sentiment within the shipping industry, but it also provides valuable insights into market situations. The forecasting capabilities of the SRSI can be used to analyze the impact of risk sentiment on maritime transport freight income. The results demonstrate that the SRSI serves as a statistically significant predictor variable for freight income, showcasing its effectiveness in detecting credit risk in advance. These findings align with the growing recognition of the positive impact that shipping sentiment indices have on freight rates.
Underpinning this research is the powerful concept of big data analysis, which enabled the team to measure credit risk in the shipping industry. The proposed SRSI has the potential to become an invaluable tool for government authorities in managing and supervising risk within the shipping market, aiding in decision-making processes. Furthermore, this approach could potentially be extended to the global shipping industry as a whole considering its interconnected nature. The development of a Global Shipping Market News Index could prove to be extremely beneficial and informative for industry stakeholders.
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1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it
