Question

4.with the aid of the suitable sketch explain the stages of the shipping market cycles.

Answer 1

The stages of the shipping market cycles-

The shipping market cycle is a special type of economic cycle. These cycles correct the market when supply and demand are unbalanced. The shipping market is dominated by tariffs for goods that can fluctuate, move down, or remain intact. Thus, the distribution cycle is determined by the variability of these tariffs.

The shipping market cycles are classified according to the interval during which alternating movements of the customs duties are observed:

The actual lengths of the short and long cycles are not constant and the duration is given approx. The transportation market is highly volatile and involves a high degree of uncertainty compared to the global economy as a whole.

Menstrual cycle

The menstrual cycle occurs over a year and usually corresponds to seasonal changes in supply and demand of the product. These changes caused changes in the supply and demand for ship charters, which in turn affected freight taxes.

Short cycle

Short cycles occur at different intervals of 3 to 12 years. The short distribution cycle usually has four different stages:

Level (lower tariffs on freight reduced, less efficient ship operating costs, lower demand and oversupply)
Recovery (increase in freight rates; increased demand, change in supply and demand for stabilization)
Top (high tariffs on cargo, up to 2-3 times the operating value of the ship, supply and demand or close to equilibrium)
Shrinkage (reduction of freight tax; oversupply)

Each stage corresponds to different freight taxes and changes in supply and demand levels. The pattern of these four phases in the short cycle is erratic and unpredictable: the duration of one phase can vary from one month to one year. The freight tariff range (from the lowest to the highest level of a cycle) also varies between cycles.