The Financial and Economic Crisis, Its Impacts on the Shipping Industry, Lessons to Learn: The Container-Ships Market Analysis

Abstract

The container shipping, the important beneficiary and the major element of globalization, has remained a way of moving goods all over the world at an ever-increasing pace since not long ago. With China becoming the world's factory, the industry has known a sustained and rapid growth from year to year. Many among ship owners, bankers, and investors during this period of boom in the shipping industry, become very rich. The availability of cash, with the construction of more technologically advanced ships, with the expansion of ports and the introduction of new shipping services, the cargo capacity in terms of twenty-foot equivalent units (TEU) of the world container fleet, had more than tripled between the years 2000-2009, reaching 12.5 million. But now, the well-known global financial and economic crisis of 2009 had almost overnight suppressed the growth of the container-ships market. In fact, for the first time in the history of the maritime industry, growth has stopped and there is even a steady decline in the rate of containers shipped around the world. In the first six months of the year of the crisis alone, the shipping industry declined by close to 16% causing huge losses.

Investors' reactions to COVID-19 related announcements: evidence from the cargo shipping industry

“…During the global financial crisis of 2008, the industry experienced a severe decline in freight rates and volumes resulting into cash flow shortages (Kalgora and Christian, 2016). On the other case, the container shipping sub sector in the South East Asia region experienced a downward spiral due to the disruptions in supply chains due to the economic shocks caused by the Asian financial crisis of 1997 (Monie et al , 2009).…”

“…Stock behavior of the cargo shipping companies comprised of container, dry bulk and tankers during COVID-19 is a topic worth investigating. Shipping stocks have been known to react to crises such as the 2008's global financial crisis which saw a steep decline in freight rates due to low demand for vessels (Kalgora and Christian, 2016). The industry is unique due to the fact that its business cycle is half that of the overall economy which averages at 14 years (Stopford, 2013).…”

Fuzzy Time Series Theory Application for the China Containerized Freight Index

“…According to the structure of shipping companies, fuel accounts for about 40-50% of operating costs. Under the combination of these conditions, it is easy to see that China's export situation still has a strong competitive advantage when compared to other countries (Kalgora and Christian, 2016). The CCFI is indeed influenced by the global economy; it is not only influenced by the reduction of international crude oil prices.…”

Incorporating Sulfur and CO2 Emission Reduction Options into the Container Fleet Capacity Renewal Alternatives for a Shipping Operator in the Post-COVID-19 Era

“…Extra investment in new ships can lead to economic losses and loss of market share and jeopardize the long-term competitive position of shipping companies. Over investment on new ships may lead to negative cash flows, due to extreme financial costs [23].…”