Forecasting Dry Bulk Freight Index with Improved SVM

Abstract EN

An improved SVM model is presented to forecast dry bulk freight index (BDI) in this paper, which is a powerful tool for operators and investors to manage the market trend and avoid price risking shipping industry.

The BDI is influenced by many factors, especially the random incidents in dry bulk market, inducing the difficulty in forecasting of BDI.

Therefore, to eliminate the impact of random incidents in dry bulk market, wavelet transform is adopted to denoise the BDI data series.

Hence, the combined model of wavelet transform and support vector machine is developed to forecast BDI in this paper.

Lastly, the BDI data in 2005 to 2012 are presented to test the proposed model.

The 84 prior consecutive monthly BDI data are the inputs of the model, and the last 12 monthly BDI data are the outputs of model.

The parameters of the model are optimized by genetic algorithm and the final model is conformed through SVM training.

This paper compares the forecasting result of proposed method and three other forecasting methods.

The result shows that the proposed method has higher accuracy and could be used to forecast the short-term trend of the BDI.