Forecasting the Suez Canal traffic: a neural network analysis

Although the Suez Canal is the most important man-made waterway in the world, rivaled perhaps only by the Panama Canal, little research has been done into forecasting its traffic flows. This paper uses both univariate ARIMA (Autoregressive Integrated Moving Average) and Neural network models to forecast the maritime traffic flows in the Suez Canal which are expressed in tons. One of the important strengths of the ARIMA modelling approach is the ability to go beyond the basic univariate model by considering interventions, calendar variations, outliers, or other real aspects of typically observed time series. On the other hand, neural nets have received a great deal of attention over the past few years. They are being used in the areas of prediction and classification, areas where regression models and other related statistical techniques have traditionally been used. The models obtained in this paper provide useful insight into the behaviour of maritime traffic flows since the reopening of the Canal in 1975—following an 8-year closure during the Arab-Israeli wars (1967-1973)—till 1998. The paper also compares the performance of ARIMA models with that of neural networks on an example of a large monthly dataset.