How does shipping forecast its future?
The shipping industry (as Seascapes has constantly repeated) is an industry of derived demand, reacting to the requirements of those who use its ships, and (with the exception of passenger ships) largely unable to stimulate demand for its services by pricing mechanisms. Its investment decisions, about when to buy new ships are thus very crucial, especially when the average life of a ship is so long and the market is traditionally one of great volatility, with great swings in the prices of ships, and the demand for them. The situation is also complicated by the demand upon the suppliers of ship – the shipyards – which may make the lead time between ordering a ship and its delivery enormously long; sometimes four or five years. This makes the timing of any decision by shipowners about when to buy or when to sell absolutely crucial. Get it wrong and it could be that a new ship is delivered after the demand for its services have evaporated and the owner will have to scratch around with poo
