For at least 30 years, the container shipping industry has been in a recurring boom-and-bust loop. During times of strong macroeconomic growth, shipping rates skyrocketed.
Using these profits, container ship operators would invest in new, ever-larger vessels. With each boom comes a bust, and without fail, the economy would slide into a downturn, demand would plunge, rates would tumble, and operators would find themselves burdened with heavy debt and idle vessels. During these times, overcapacity kept a rates low, leverage would expand, revenues would fall, and ship operators would tumble into bankruptcy—or stay out of court thanks only to amend-and-extend agreements with their creditors.
Today, however, the fundamentals that would support a break away from that cycle are in place. But will carriers take their chance to break the cycle?