What Causes the Shipping Cycle?
The shipping market is driven by a competitive process in which supply and demand
interact to determine the freight rate. Excessive demand leads to a shortage
of ships, which in turn increases the freight rate. On the other hand, excessive
supply of ships leads to a reduction in the freight rate.
In general, the shipping cycle is unique, comprising the following characteristics
(Stopford 2004):
• The shipping cycle is a mechanism to coordinate supply and demand in the
shipping market.
• A complete shipping cycle has the following stages: trough, recovery, peak,
and collapse.
• There are no set rules about the length of each stage.
• There is no formula to predict the pattern of the next shipping cycle.
What Causes the Shipping Cycle?The shipping market is driven by a competitive process in which supply and demandinteract to determine the freight rate. Excessive demand leads to a shortageof ships, which in turn increases the freight rate. On the other hand, excessivesupply of ships leads to a reduction in the freight rate.In general, the shipping cycle is unique, comprising the following characteristics(Stopford 2004):• The shipping cycle is a mechanism to coordinate supply and demand in theshipping market.• A complete shipping cycle has the following stages: trough, recovery, peak,and collapse.• There are no set rules about the length of each stage.• There is no formula to predict the pattern of the next shipping cycle.
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