Navigating Through Torpedo Attacks and Enemy Raiders: Merchant Shipping and Freight Rates During World War I

60 Pages Posted: 4 Jun 2017

See all articles by Jan Tore Klovland

Jan Tore Klovland

Norwegian School of Economics (NHH) - Department of Economics

Date Written: May 25, 2017

Abstract

During World War I ocean freight rates rose to extraordinary levels. Using a new monthly dataset it is shown that freight rates can be well explained by economic activity, commodity prices, war risk and world tonnage in the period 1912 to 1916. In the first two years of the war part of the British merchant fleet was directly controlled by the Government but neutral shipping was basically free to operate as normal. In this period neutral shipping accounted for about one third of British imports. In the final two years of the war a much stricter regime of freight control was introduced that resulted in the withdrawal of a large proportion of neutral shipowners from British and Allied trade. Together with the mounting losses of tonnage due to the German submarine campaign this created an acute shortage of carrying capacity and reduced imports. It is argued that the policy of freight control may have rested on a misconception of the role of freight rates as a source of the high wartime inflation.

JEL Classification: N74, N14, E31

Suggested Citation

Klovland, Jan T., Navigating Through Torpedo Attacks and Enemy Raiders: Merchant Shipping and Freight Rates During World War I (May 25, 2017). NHH Dept. of Economics Discussion Paper No. 07/2017, Available at SSRN: https://ssrn.com/abstract=2979175 or http://dx.doi.org/10.2139/ssrn.2979175

Jan T. Klovland (Contact Author)

Norwegian School of Economics (NHH) - Department of Economics ( email )

Helleveien 30
N-5035 Bergen
Norway

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