Description of the 4 steps of shipping cycle

1. Topic: SHIPPING CYCLE
Subject: LOGISTICS ll
Teacher: Max Galarza
MEMBERS:
Noemi Jaramillo, Cynthia Ortega, Diego Martínez, Gary
Ruilova, Nathaly Ordoñez,Josue Sabando grade 10
LECTURER: Max Galarza MSc

2. WHAT IS SHIPPING CYCLE?
The shipping cycle is an economic concept
that explains how shipping companies and
freight charges respond to supply and
demand.

3. THE 4
STEPS OF
SHIPPING

4. 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.

5. 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.

6. 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.

7. 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.

8. • http://www.ehow.com/info_8466520_four-
stages-shipping-cycle.html
• https://www.slideshare.net/maxgalarza/shi
pping-cycles-63269677