The shipping cycle

The Shipping Industry is governed by the shipping cycle which contains peaks and troughs. When the global economy is booming there is a demand for the goods being shipped and more vessels are required. This crates a corresponding shortage of tonnage which increases freight rates however this is always followed by a downturn due to a lower demand for the goods being shipped and the increased available tonnage as a result of new vessels being built during the upwards cycle. Shipping companies have had to become masters at managing their finances to overcome these troughs.