shipping cycle expla nation.

1. Members:
• Mónica González
• Isaac Granja
Lecturer:
Mr. Max Galarza
Grade 10Logistics II – B
06 de Junio del 2016

2.  The shipping cycle is an economic concept that
explains how shipping companies and freight
charges respond to supply and demand. It
examines how and why ships build up in sea
trading ports. The cycle also seeks to explain
what affects the selling price of ship fleets and
what types of ships sell during slow business
periods.

3. 1. TROUGH
The first stage of the shipping cycle is called a trough. An
excess in capacity characterizes a trough. Ships begin to
accumulate at trading ports, while others slow down
shipments by delaying their arrivals at full ports.

4. 2. RECOVERY
Recovery is the second stage of the shipping cycle. In this
stage, supply and demand move toward equilibrium,
meaning both supply and demand levels match each other
closely. Freight charges begin to increase, eventually
surpassing operating costs.

5. 3. PEAK
The shipping cycle's third stage is a peak or plateau. At
this point, the shipping freight rates become quite high -
often double or triple the amount of fleet operating
costs. The levels of supply and demand are almost
completely equal.

6. 4. COLLAPSE
The fourth stage of the shipping cycle, collapse, occurs
when supply levels begin to exceed demand. Freight rates
begin to decline during a collapse. Shipping containers and
fleet begin to accumulate in trading ports once again.

7. Market cycles are the driving force behind shipping
investment and chartering. They are the heartbeat of the
shipping market, pumping cash in and out of the business.

8. Year of publication: 2011
Authors: Kent, Paul; Fox, Alan K.
Published: International handbook of maritime economics
Language: English
Type of Publication: Article

9.  This paper presents a comparative analysis of the
inefficient Puerto Limon in Costa Rica and the efficient
port of Cartagena in Colombia, illustrating the
influence of port efficiency on the costs of maritime
transport and the damaging impact this has upon
trade.
 An attempt is made to identify the underlying causes
of disaggregated disparities in cost efficiency and to
arrive at an aggregate cost of inefficiency. This is then
treated as a tax in the Global Trade Analysis Project
(GTAP) model to quantify the impact that port
inefficiency has had on trade and welfare.

10.  The conclusions reveal that Central America's high
freight rates cannot be solely attributed to low cargo
volumes, as is sometimes claimed; port inefficiencies
are also a culprit in that they exert a significant influence
in terms of additional fuel costs, as well as the number
of ships which carriers deploy, through overly long
loading and discharging times.
 While the difficulties in doing so are acknowledged, the
authors propose that inducing competition, particularly
port privatization, is the way towards port reform that will
advance Central American nations, such as Costa Rica,
whose economies are suffering as a result of an
inefficient port sector.

11.  http://www.ehow.com/info_8466520_four-stages-
shipping-cycle.html
 http://lawexplores.com/shipping-market-cycles/
 http://marketrealist.com/2014/06/ship-order-
strength-a-must-follow-for-dry-bulk-shipping-
investors/
 https://www.youtube.com/watch?v=xMa1vevj1kA
 https://trid.trb.org/view/1118972
 https://www.econbiz.de/Record/is-puerto-limon-a-
real-lemon-port-inefficiency-and-its-impact-paul-
kent/10011179476
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