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Predicting tanker freight rates using parsimonious variables and a hybrid artificial neural network with an adaptive genetic algorithm

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Maritime Economics & Logistics Aims and scope

Abstract

Short-term prediction of tanker freight rates (TFRs) is strategically important to stakeholders in the oil shipping industry. This study develops a hybrid TFR prediction model based on an artificial neural network (ANN) and an adaptive genetic algorithm (AGA). The AGA adaptively searches satisficing network parameters such as input delay size. The ANN iteratively optimizes a prediction network considering parsimonious variables and time-lag effects as predictors. Three parsimonious variables (crude oil price, fleet productivity and bunker price) are selected by a stepwise regression of TFR variables. The article compares the performance of its hybrid model with two traditional approaches (regression and moving average), as well as with the findings of existing ANN studies. The results of our model (root mean squared error (RMSE)=11.2 WS) are not only significantly superior to the regression approach (RMSE=21.6 WS) and the moving average approach (RMSE=17.5 WS), but are even slightly superior to the results of existing ANN studies (RMSE=14.6 WS–15.8 WS).

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Acknowledgements

This work was supported by the Research Fund of the University of Ulsan.

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Authors and Affiliations

  1. School of Industrial Engineering, University of Ulsan, 93 Daehak-ro, Ulsan, 44610, Nam-gu, Republic of Korea

    Payman Eslami, Kihyo Jung, Daewon Lee & Amir Tjolleng

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  1. Payman Eslami
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  2. Kihyo Jung
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  4. Amir Tjolleng
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Correspondence to Payman Eslami.

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Eslami, P., Jung, K., Lee, D. et al. Predicting tanker freight rates using parsimonious variables and a hybrid artificial neural network with an adaptive genetic algorithm. Marit Econ Logist 19, 538–550 (2017). https://doi.org/10.1057/mel.2016.1

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