How do microeconomic determinants constitute the freight rate of individual contracts in the VLCC spot market?
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- Master Thesis 
In this paper, we build a hedonic price model to explain the variation in freight rates in individual contracts using microeconomic data of the VLCC market. Using XGBoost and SHAP values to investigate the importance and significance of the various variables, we found that market condition and cyclicality have the greatest impact on the variance of freight rates, followed by route and charterer identity as a result of strategic behavior and bargaining power of charterers. Moreover, dominant charterers on westbound routes possess bargain power to reduce the fixture rates while their counterparts on eastbound routes are willing to pay a higher price than mean estimation. Finally, SHAP value can be considered as an efficient and reliable tool to assess the fixture rates in individual contracts.