A repeat sailings index of ocean freight rates for the 1850s

Abstract

The middle of the nineteenth century has long been a challenge to researchers of ocean freight rates. The data originating from the circulars of the London shipbroker firm of Angier Brothers have been the basis of much of the early work on pre-WWI freight rate movements, including the well-known Isserlis index published in 1938. These data only extend back to 1869, however. This paper presents new ocean freight rate indices for the 1850s using a number of previously unexplored data sources, including contemporary Norwegian and British newspapers and freight rate circulars. Monthly indices of 14 homeward trade routes and 14 outward coal freight routes from Britain are presented, giving new information on the cyclical movements of ocean freight rates in the 1850s. The application of a new method of index construction to the freight rate data is suggested. This method has previously been successfully applied to construct price indices for property markets, where it is known as a ‘repeat sales index’. It is argued that this method may be applied to ocean freight rate data as well, because the property markets and the tramp shipping markets share the basic characteristics of the price information flow: prices of specific objects are usually available only at infrequent and irregular intervals.