MARKET INSIGHTS

The Anatomy of
Shipping Cycles:
What History Can Tell Us About
Tomorrow’s Market

by Matt Freeman - VP Valuation & Analytics

& Felix Tordoff - Junior Valuation Analyst
May 2025
The adage that ‘history doesn’t repeat itself, but it certainly rhymes’ finds no better home than
in the shipping industry. Any market veteran knows the rhythm of booms, peaks, collapses, and
troughs – a Darwinian force that rewards prudence and discipline while punishing complacency
and hubris. Yet familiarity brings little foresight and shipping cycles remain notoriously difficult to
predict, with no two exactly alike in duration, scale, or trigger.

At their core, shipping cycles are driven by the market’s constant struggle to balance vessel
supply with global cargo demand – an equilibrium that is rarely sustained. This imbalance stems
from a structural mismatch: global trade patterns can shift rapidly, while fleet expansion typically
takes years from order to delivery.

This analogy highlights a structural challenge for shipowners, operators, and financiers: the
persistent lag in fleet supply relative to demand. When trade surges – as during China’s post-WTO
industrial expansion in the early 2000s – the existing fleet is quickly exhausted, pushing freight
rates sharply higher. Only after the market tightens do newbuilding orders begin in earnest. Yet
with construction lead times often exceeding two years, new tonnage typically enters the market
after conditions have already shifted due to macroeconomic slowdowns, shifting trade flows, or
geopolitical shocks. This structural delay is what reinforces shipping’s deeply cyclical character.

The Dance of Boom & Bust (2003-2008)

Understanding how this pattern plays out in practice requires Shipyards across Asia operated at full capacity, and the global
a closer look at past cycles, and few illustrate the mechanics orderbook swelled to 60% of the existing fleet – a remarkable
of boom and bust as vividly as the 2003–2008 ‘Champagne capital commitment based on the assumption that China’s
Supercycle’. In the years following China’s WTO accession, growth would remain uninterrupted. As demand for new
Asia’s appetite for raw materials grew at a staggering pace, tonnage intensified, delivery slots were pushed further out,
driven by booming inward investment, a newly liberalised with late movers forced to accept delivery dates years into the
banking system, and optimistic long-term export growth. future.
Between 2001 and 2011, China’s iron ore imports ballooned
from 92 mil tons to over 686 mill tons, an increase of over But as with all cycles, the upswing carried the seeds of its
152%. By 2009, China had become a net coal importer for own reversal. The collapse of Lehman Brothers in September
the first time in over two decades –and by 2011, the world’s 2008 marked the beginning of a sharp correction and,
second largest behind Japan. within months, the same Capesize vessels commanding
astronomical rates were struggling to cover operating
This infrastructure-driven growth drove freight rates to expenses. By December 1-Year Time-Charter rates had
unprecedented highs. Capesize vessels that earned 20,000 collapsed 94%. As global credit markets froze, cargoes were
USD/Day in January 2003 were suddenly commanding up to cancelled en masse and freight markets entered free fall.
193,000 USD/Day by mid-2008, an increase of 875%. Faced
with such extraordinary returns, owners rushed to capitalise
and, predictably, this surge in earnings sparked an ordering
boom of unprecedented scale.

2 [Link]
 Capesize Fleet Growth vs Time Charter Rates (2000 - 2025)
Live On Order Additions Removals 1yr TC Rate (USDk/Day)
2,000 175

Rational market
expansion
1,750 155

1,500 135

Vessel Additions/Removals | TC Rate USDk/Day

1,250 115
Fleet Size by Number of Vessels

Structural
overordering

1,000 95

750 Stable ordering 75

(despite surging rates)

500 55
Rates peak

250 35

0 15

-5

Minimal demos as supply tightens Demos slow as fleet absorbs demand

-25
2018
2017
2000

2002

2004

2010

2012
2005

2014

2020

2022
2015

2024
2025
2001

2003

2011

2013

2021

2023
2006

2009

2016

2019
2008
2007

Demos increase as NB
Source: VesselsValue, a Veson Nautical solution, April 2025 deliveries overwhelm demand

Figure 1.0

Crucially, even as demand evaporated, shipyards continued short by the Asian Financial Crisis in 1997. In each case, bullish
working through their bulging orderbooks: Between 2008 sentiment, lagging supply chains, and delayed responses led
and 2011, yards continued to deliver on pre-crisis orders, to dramatic reversals.
inflating supply just as trade stagnated – a textbook case
of supply and demand moving in opposite directions (See What makes shipping cycles so fascinating – and so
Figure 1.0). treacherous – is this mixture of unpredictability and
inevitability. Every boom contains the seeds of its own
This pattern is far from unique to 2008. Similar dynamics undoing: high earnings fuel ordering sprees, which flood the
have played out across decades of maritime history. In the market with tonnage just as demand falters. Likewise, every
early 1970s, the oil shock drove Tanker rates to record highs, bust lays the groundwork for eventual recovery as scrapping
prompting a surge in VLCC orders – just as oil demand accelerates, ordering dries up, and the oversupply begins to
collapsed and new deliveries arrived into a market already clear. The rhythm is familiar, yet maddeningly hard to time.
turning. Similarly, in the 1980s, excessive ordering during a Still, while history doesn’t offer a blueprint for prediction, it
brief recovery exacerbated a prolonged downturn, while the can provide valuable instruments for navigation.
steady rise in rates through the mid-1990s was abruptly cut

3 [Link]
Navigating Cycle Indicators
If we cannot predict the exact timing of a cycle, we can at least urgency routinely trumps logic. When five-year-old vessels
observe the signals that suggest where we are within a cycle. begin trading at or above newbuild prices – a condition
Over time, economists, analysts, and market participants have known as newbuild parity – it signals a market gripped by
identified several indicators, both quantitative and qualitative, urgency. The premium reflects the time value of immediate
to gauge the market’s temperature. These indicators serve delivery rather than the underlying quality of the asset: owners
as warning lights on the industry dashboard, signalling are prepared to pay more to access earnings now, rather than
when conditions may be approaching inflection points and wait years for a newbuild. Historically, extended periods of
informing how best to approach investment decisions. newbuild parity have often signalled overheated markets and
preceded significant downturns. As Figure 1.1 illustrates, such
One of the most reliable is the relationship between conditions were evident ahead of the 2008 crash, the short-
secondhand and newbuilding prices. In rational markets, lived 2010–12 rebound, the 2014–15 oil price collapse, and
newer vessels should command a premium due to superior again in the volatile aftermath of COVID-19.
fuel efficiency and longer lifespan. But in overheated markets,

Newbuild vs Secondhand Asset Prices – Handysize (1992 - 2025)

75
Asian September Global Financial 2014 Oil COVID-19
Financial Crisis 11 Attacks Crisis Price Crash Pandemic
65

Russia Invades
Ukraine
55

45
USD (Mil)

35

25

15

5 COVID-19 Volatility

1990s ‘Recovery’ Cycle 2003-08 ‘Champagne Supercycle’ Post-2008 Trough

-5
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

NB 0YO 5YO
Source: VesselsValue, a Veson Nautical solution, April 2025

Figure 1.1

Market psychology provides another valuable, if hard to At cycle peaks, conferences fill with new entrants and
quantify, barometer of where we are in the cycle – and private equity representatives, and the air is thick with talk of
shipping conferences often capture this sentiment in real ‘paradigm shifts’ and or a ‘new era’ within the industry. Such
time. During downturns, attendance thins, discussions focus language can be a sign that confidence has reached its height
on cost control, layups, and debt management, and the tone and can serve as a ‘warning light’ for observant investors.
is cautious, even grim. As markets recover, attendance swells, Conversely, when experienced executives express extreme
optimism returns, and conversations shift toward growth pessimism, claiming they wouldn’t take a ship ‘even if it were
strategies, fleet renewal, and new trade patterns. free,’ it typically signals that sentiment has bottomed out,
prompting contrarians to consider re-entering the market as
opportunities begin to emerge.

4 [Link]
Three Cycles, Three Lessons
Looking back at three recent cycles offers instructive contrasts capacity, creating explosive conditions for rates. The market’s
in how these behavioural and market patterns manifest over response was equally dramatic – owners ordered at historic
time—each driven by different macro forces but sharing the rates, eventually committing USD 500 bn to new vessels.
same structural DNA. The orderbook reached 47% of the global fleet, reflecting
collective belief that China’s growth would continue
1. The 1990s Recovery Cycle: Recoveries are rarely unabated.
linear - external shocks and fragile demand can
delay a return to market strength. When the Global Financial Crisis struck in 2008, the
correction was brutal. Rates collapsed overnight as credit
The 1990s ‘Recovery Cycle’ followed the 1980s crash and for cargo finance evaporated, but vessels ordered during
preceded the China boom, representing a classic example of the boom continued arriving for years, creating a structural
gradual rebuilding after excess. The decade began with the oversupply that suppressed rates well into the 2010s. This
market in disarray – overordering in the late 1980s had created cycle illustrates how extreme sentiment can amplify market
significant surplus capacity just as the 1990-91 recession movements far beyond fundamental justification, extending
dampened global trade volumes and fixed age values from troughs well beyond their ‘typical’ timeframes.
newbuilds to five-year-olds languished near historical lows.
3. COVID-19 Disruption: Disciplined fleet
What followed was a halting, inconsistent recovery that tested management during a temporary shock can
owners’ patience. Capesize values climbed from their 1992 prevent long-term structural oversupply
lows as China’s early industrialisation and India’s ore export
liberalisation created cautious optimism. By 1995-96, the The COVID-19 disruption challenged traditional cycle analysis
market entered an expansion phase with growing confidence. by delivering freight rate spikes without triggering the
Then came the Asian Financial Crisis in late 1997, delivering structural imbalances typically seen in full shipping cycles.
another external shock that dragged values sharply lower. This was not a boom born of sustained commodity demand
By 1999, however, the market had found its footing again or broad economic expansion, but an exogenous shock. In
as Chinese infrastructural stimulus supported commodity 2020, global GDP shrank by -3.5% as pandemic restrictions
demand. This cycle indicates how recoveries rarely continue stalled trade, only to rebound sharply in 2021 with +5-
in a completely linear fashion – they advance, retreat, and test 6% growth, fuelled by fiscal stimulus and a surge in goods
conviction repeatedly before establishing durable trends: consumption.
The ‘shape’ of any one cycle rarely becomes clear without the
luxury of hindsight. Freight markets reacted with whiplash volatility: Capesize
rates collapsed to 3,000 USD/Day before surging back above
2. The Champagne Supercycle: Unchecked optimism 35,000 USD/Day within months, propelled by recovering
and aggressive boom ordering often sow the Chinese steel demand and iron ore exports. Meanwhile,
seeds of prolonged downturns supply-side constraints – quarantine delays, crew change
disruptions, and severe port congestion – choked effective
Compare this with the ‘Champagne Supercycle’ of the mid- capacity. Notably, acute equipment shortages and logistics
2000s. As we have seen, China’s economic transformation breakdowns sent rates in the Container sector to record
created unprecedented demand growth: From 1998 to highs. However, these disruptions were logistical in nature,
2008, dry bulk imports rose fivefold, while global seaborne not structural, arising from temporary dislocations rather
trade grew at 5% annually, well above the historical trend than a fundamental mismatch between fleet size and cargo
of 3.3%. This demand surge collided with limited shipyard demand.

Container Period Time Charter Rates (2019 - 2025)

160
140 Feedermax
120 Handy Container
USDk/day

100 Panamax Container

80 Post Panamax Container
60 Sub Panamax Container

40
20
0
2019 2020 2021 2022 2023 2024 2025
Source: VesselsValue, a Veson Nautical solution, April 2025

Figure 1.2

5 [Link]
What set this period apart was the industry’s collective restraint. Unlike the exuberant ordering of the 2003–2008 Supercycle,
owners of Bulker and Tanker vessels largely resisted speculative newbuilds. While Container orders surged, Bulker and Tanker
orderbooks remained historically low through mid-2022, despite robust cash flows. Some credit painful lessons from past
overcapacity cycles, while others cite the growing influence of public shareholders and lenders enforcing tighter capital discipline.
Whatever the driver, the result was a fleet that remained balanced even as earnings soared.

This dynamic represents a stark contrast to previous cycles, where market sentiment often amplified the peaks and deepened the
troughs. In this case, COVID-19 exposed a different pattern: volatile freight markets were met by a disciplined fleet strategy. Owners
treated the shock as transitory, not as justification for long-term expansion, making COVID more representative of a freight ‘ripple’
than a full structural ‘wave’. The key takeaway here is that disciplined fleet management during a temporary shock can blunt the
amplitude of future downturns.

Today’s Fragile Equilibrium

So, where do we stand now in the shipping cycle? We are investment. Inflation remains persistent, with G20 headline
likely in the mid-phase of the post-COVID recovery, with inflation expected at 3.8% in 2025, easing slightly to 3.2% by
global GDP growth projected to slow to 2.2% in 2025, 2026. In most advanced economies, core inflation exceeds
according to the WTO’s latest Global Trade Outlook – a targets, limiting central bank flexibility and keeping borrowing
downward revision from the previous estimate of 2.7%. costs elevated.
Notably, this forecast is below the 2010-2023 average of
2.7%, signalling weaker macroeconomic tailwinds for global Of particular concern for shipping’s long-term outlook is
trade. the fragmentation of global trade. Tariff adjustments and
retaliatory measures, particularly between the U.S. and China,
Growth continues to diverge across regions: U.S. expansion have disrupted established supply chains, introducing new
is decelerating due to tight monetary policy, Europe is uncertainties that will likely persist as the industry adapts to
stabilising modestly, and China faces mounting pressure new regional trade patterns.
from both weak external demand and sluggish domestic

Global GDP Growth Forecast (2019 – 2026)

8.0
6.4
6.0
Annual % Change

4.0 3.3 2.8 2.8 2.8

2.7 2.6 2.2 2.4
2.0

0.0

-2.0

-4.0 -2.9
2019 2020 2021 2022 2023 2024 2025 2026 2025 2026
Historical Baseline Forecast Adjusted Forecast
Source: WTO, Global Trade Outlook & Statistics (April, 2025)

Figure 1.3

On the supply side, the outlook for the Bulker fleet through This convergence of expanding fleet capacity, regulatory
to 2029 shows a rise in scheduled deliveries, peaking at constraints, and global trade uncertainty creates what might
approximately 45 mil DWT in both 2027 and 2028. This be called a ‘fragile equilibrium’ – a market poised between
expansion is driven by the need to replace aging vessels supply-side growth and weakening macroeconomic demand.
and meet environmental standards, however, regulatory It recalls past cycles, where growth was often followed by
pressures such as the Energy Efficiency Existing Ship Index downturns triggered by overcapacity, geopolitical disruption,
(EEXI) and the Carbon Intensity Indicator (CII) are likely to and regulatory shifts, as seen in the 1990s ‘Recovery
temper effective fleet capacity. These regulations will slow Cycle’ and the 2003-08 boom. While we are not facing an
operational speeds and reduce efficiency, though they are immediate crisis, the current balance is delicate, and coming
unlikely to fully offset the increase in supply. years will test how effectively the industry adapts to regulatory
changes, manages fleet capacity, and responds to shifting
trade patterns.

6 [Link]
The Veson Decision Advantage
It is important to note that cycles are rarely synchronised trend, visible in long-term data, provides owners with the
across vessel classes. Each has its own supply-demand foresight to anticipate changes in demand and adjust fleet
dynamics, and recognising these nuances allows for more exposure ahead of cyclical market movements. Conversely,
targeted, segment-specific opportunities. Handysize and a plateau in bauxite shipments, coupled with declining
Supramax vessels, for example, are driven by regional trades, coal and softening steel flows, could signal broader market
infrastructure investments, and agricultural flows, while corrections.
Capesizes are more closely tied to industrial production.
Historical trade data and tools like Oceanbolt can help By combining historical trade flow analysis and asset
uncover these distinctions, providing insights into long-term valuations, owners can more effectively time fleet rotations,
commodity flow shifts. avoid overexposure to weakening trades, and position
themselves to capitalise when conditions begin to firm. This
Take bauxite: Driven by Chinese refinery demand and shifting data-driven approach offers a distinct risk management
supply chains from Indonesia to West Africa, Guinea’s bauxite advantage, enabling operators to navigate cycles with a
exports have surged over 180% since 2020. This structural greater degree of foresight and strategic flexibility.

Global Capesize Coal & Bauxite Exports (2015 – 2025)

350
Billions

300

250
Ton-Miles

200

150

100

50

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Source: Oceanbolt, May 2025

Coal Bauxite

Figure 1.4

Conclusion: The Practical Relevance of Cycles

Shipping cycles are not merely economic theories – they are At the same time, historical datasets - fixed age asset prices,
the heartbeat of the industry. Those who can understand and commodity flow trends, and patterns in scrapping and
navigate these cycles can avoid the pitfalls of market timing and, deliveries - are critical to understanding where we are in
instead, capitalise on opportunities as they arise. Historical the cycle. They provide the structural context necessary to
trends show that acquiring vessels during market troughs or interpret current demand signals and judge the durability of
early recovery stages tends to yield better long-term returns, emerging trends.
while acquisitions at market peaks often underperform.
Ultimately, shipping cycles should not be avoided but
Equally, firms that maintain financial discipline—balancing understood. While predicting their precise timing remains
liquidity with the agility to act—are better equipped to challenging, their underlying structure offers a reliable
capitalise when others falter. But identifying those moments foundation for informed decision-making. The most successful
requires more than monitoring spot rates, which offer only a firms are not those that simply try to time the market, but those
backward-looking snapshot. The real value lies in forward- that combine data and historical context to accurately assess
looking indicators, such as newbuild parity, orderbook shifts, where we are in the broader cycle - and act decisively when
and behavioural inflections in sentiment, that often signal the direction becomes clearer.
turning points before they appear in price action.

7 [Link]
Figure 2: Stages in a ‘Typical’ Shipping Cycle

Name Characteristics Notes

• Queueing at loading points
1. Clear Signs of Surplus
• Sea slow-steaming to reduce fuel consumption (Often used during
Shipping Capacity
periods of depressed market conditions or high fuel prices)

2. Freight Rates Fall to

• Least efficient ships move into lay-up (i.e., temp withdrawal from service
Operating Cost of
due to low rates making ops unprofitable. Idling > Operating at loss)
Least Efficient Ships
Trough
• Tight credit market/low rates create negative cashflow
• Tough decisions put off = Stagnation
3. Financial • In extremis: banks close & owners forced to sell at distress prices
Pressures Build below book value to raise cash.
• Old ship values fall to scrap price = active demo market
• Market correction starts, quiescence sets in

• FRs edge abover operating costs

1. Supply/Demand • Laid up tonnage falls
Balance • General uncertainty, but confidence grows
Recovery • False recovery possible (alternating spells of optimism/pessimism)

• 2HD values increase

2. Liquidity Improves
• As sentiment firms, market becomes prosperous

• Supply/demand tighted
• Fleet operates at full speed
1. Surplus Absorbed
• FRs rise (c 2x/3x operating costs, sometimes more)
• Peak duration varies, depending on S/D pressures.

• High earning = excitement increase

• Banks keen to lend against strong asset value
Peak / 2. Earnings Increase
• Press reports strong ‘new era’
Plateau • Shipping companies floated on stock market

• SH values move far above replacement cost (modern ships sell for more
than NB price)
3. Eventual Overtrading • Older ships bough without inspection
• NB orders increase (slowly at first, then rapidly until the only berths left
are 3-4yrs ahead/in unattractive yards)

1. Supply Overtakes
• As NB orders from peak/plateau go live, there is a rapid supply injection.
Demand

• S/D imbalance causes FR to go into collapse/convulsion phase of the

2. Freight Rates Fall cycle.
Precipitately • Often reinforced by business/macroeconomic business cycle downturn/
shock, but other factors (e.g. clearing of port congestion)
Collapse
• Ships reduce operating speed
• Least attractive vessels must wait for cargo
• Liquidity remains high
3. Reduced Activity • S&P market weak as owners unqilling to sell ships at discount to recent
peak prices.
• Markets initially confused and sensitive to each rally, with reluctance to
accept that the peak is over

8 [Link]
 About the Authors

Matt Freeman, VP Valuation & Analytics Felix Tordoff, Junior Valuation Analyst

Matthew leads a dynamic team of experts with Felix Tordoff is a Junior Maritime Analyst within the
oversight of the automated valuation model and the Valuation & Analytics team at Veson Nautical. He holds
commercial data set that underpins it. The team is a BA (Hons) in Politics & International Relations from
responsible for the handling of client queries as well as Newcastle University, UK.
the production of bespoke and automated reports.
Before joining Veson, Felix spent four years in
Matthew is a founding VesselsValue employee and prior the security sector, focusing on maritime risk and
to the acquisition of VessleValue by Veson Nautical in geopolitical analysis in African markets.
2022, was the Chief Commercial Officer. He is a co-
director of Seasure Shipbroking and has been an active
shipbroker since 2007, bringing deep expertise in
maritime asset valuation.

References
1
UNCTAD. (2012, March 19). Iron ore production and trade set new records 3
International Monetary Fund (2021). IMF World Economic Outlook
in 2011, UNCTAD report says. United Nations Conference on Trade and Update, January 2021.
Development.
Retrieved from: [Link]
Retrieved from [Link] Issues/2021/01/26/2021-world-economic-outlook-update
new-records-2011-unctad-report-says
4
IMF. (2025, April 22). International Monetary Fund World Economic
2
U.S. Energy Information Administration. (2011). Economic growth Outlook, April 2025: A Critical Juncture amid Policy Shifts. International
continues to drive China’s growing need for energy. U.S. Department of Monetary Fund.
Energy.
Retrieved from [Link]
Retrieved from [Link]

All information provided is for informational purposes only. To the extent that any provided information is based on Veson Data, Veson excludes to the extent permitted by law
all implied warranties relating to fitness for a particular purpose, including any implied warranty that Veson Data is accurate, complete, or error free. Veson Data are collated
and processed by and on behalf of Veson in accordance with methodologies and assumptions published and updated by Veson from time to time which do not take into
account particular circumstances applicable to individuals and therefore; (i) are made available on an ‘as is’ basis; (ii) are not intended as a substitute for formal valuations; (iii)
should not be used solely as trading, investment, or other advice; and (iv) are not intended as a substitute for professional judgement. To the extent permitted by applicable
law, Veson shall have no liability to party for any errors or omissions in the content of the information provided.

9 [Link]
Veson Nautical delivers maritime freight management solutions that propel the global shipping
economy. Trusted by buyers and sellers of bulk marine freight in every region of the world, Veson
solutions are responsible for managing $122 billion in freight traded and moving 6 billion tons in
annual trade each year.

With a suite of offerings in marine freight trading and operations, voyage documentation, and data
and analytics, Veson’s products are widely recognized for their strong utility, sustained innovation, and
measurable business impact. More than a provider of solutions, Veson is a champion of progress that
actively supports its clients, partners, and broader community in navigating change while shaping the
best practice workflows and standards of tomorrow’s connected maritime shipping ecosystem.

Learn more about how Veson can help enhance your

trading and operations decisions at [Link]

Since launching in 2011, VesselsValue has been committed to providing transparent,

validated data intelligence to the maritime industry. Now a part of Veson Nautical,
VesselsValue is integral to our mission to provide maritime freight management
solutions that propel the global shipping economy.

Oceanbolt delivers port, tonnage, and commodity analytics. With Oceanbolt, you
can integrate high-integrity market data into your workflows, giving you the power
to inform your market strategies, trade decisions, turnaround projections, freight
assumptions, and more. Specialized in the requirements of bulk commodities,
Oceanbolt’s dynamic data intelligence platform delivers accurate, timely data to
help navigate port congestion and elevate turnaround analysis.

10 [Link]