The Four Stages of the Shipping Cycle
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. Ships still carrying goods also slow down to save on fuel costs. In a trough, freight costs tend to start falling. Freight costs will typically decrease to the equivalent of vessel operating costs. Shipping companies start to experience a negative cash flow, which prompts the selling of inefficient fleet. Selling prices for ships tend to be lower, with some fleet exchanged at salvage rates.
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. Shipping containers begin to move out of the trading ports, as demand stimulates new orders. During this stage, optimism about the market remains shaky. The opinion pendulum swings back and forth between optimism and pessimism, resulting in volatility for trade volume. Cash flow tends to improve steadily during the recovery stage.
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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. Quite a bit of market pressure occurs between supply and demand levels, which could cause the peak to fall at any time. Most of the shipping fleet is in operation, with only the most inefficient ships left to idle in trading ports. Cash flow for shipping companies is quite high.
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. Although the cash flow of shipping companies may remain at high levels, ships begin to slow down their operations. They may take longer to deliver goods, and inefficient fleets may not ship goods for some time.
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ISN'T NOW THE TROUGH IN THE SHIPPING CYCLE??MANY SHIPPING COMPANIES WENT BANKRUPT EG. STX PANOCEAN,EXCEL MARITIME,ETC.IF NOW,DONT INVEST IN THE BETTER SHIPPING COMPANIES,THEN WHEN TO INVEST???
WARREN BUFFETT "BUY LOW,SELL HIGH" POLICY IS ALWAYS HARD TO FOLLOW BECAUSE MAJORITY ALWAYS HAS A 1001 EXCUSES TO JUSTIFY THEMSELVES NOT TO ENTER AT LOWS,BUT WHEN STOCK/PROPERTY PRICES SURGE EVERYDAY,THESE MAJORITY IDIOTS WILL THEN HAVE AMNESIA,FORGOT ALL THESE WORRIES AND EXCUSES.
SMART PEOPLE ENTER THE SHIPPING CYCLE NOW.I HATE IT WHEN PEOPLE I SPOKE TO TELL ME I CAN AFFORD TO BE TIED UP.THIS IS A FUCKING FALLACY.RICH PEOPLE ARE NO DIFFERENT FROM MAJORITY PEOPLE.THEY ALSO HAVE COMMITMENTS.
I AM A FULLTIME TRADER AND INVESTOR.I ALSO HAVE COMMITMENTS AS THE REST.I AM A NUS,ONE OF THE WORLD'S TOP UNIVERSITY'S GRADUATE IN ECONOMICS AND MATHEMATICS.I SO CALLED "PUNISH" MYSELF TO BE "JOBLESS" IS BECAUSE I WANT TO DISTANCE MYSELF FROM THE MAJORITY WORKING CLASS WHO CANNOT SEEM TO THINK PROPERLY WHEN IT COMES TO INVESTING AT LOWS.
THESE ARE THE SAME PEOPLE WHO ASK ME WHY I BOUGHT MY COMMERCIAL PROPERTY IN 2005 WHEN SINGAPORE INTEREST RATES ARE MUCH HIGHER THAN NOW.IN THE END,THEY WERE THE ONES WHO RUSH IN TO BUY IN 2011,2012 AFTER SINGAPORE PROPERTIES SURGE UP.THESE SO CALLED "INVESTORS" REALLY PUT THE SANCTITY OF INVESTING TO SHAME.WHEN 1 BUYS AFTER THINGS WENT HIGHER BY 50%,HE IS NOT CALLED AN INVESTOR.HE IS CALLED AN IDIOT.
I "PUNISH" MYSELF TO BE JOBLESS AS I DO NOT NEED A JOB TO PROTECT ME WHEN MY INVESTMENTS GO TERRIBLY WRONG.WHY?BECAUSE I AM NEVER TERRIBLY WRONG AS I ALWAYS BUY AT LOWS.AT THE MOST,I WILL BE TIED TO THAT ASSET FOR 1-2YEARS BEFORE A HUGE SURGE.
BUYING AT LOWS IS ALWAYS SAFER AND GET TIED TO IT FOR MUCH SHORTER PERIOD OF TIME.
IDIOTS CAN NEVER LEARN.THEY DO NOT NEED TO LEARN AS THEY HAVE JOBS TO PROTECT THEM.THAT IS WHY MAJORITY TREAT STOCKS AND PROPERTY INVESTMENTS AS PART TIME MONEY.
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