Studies on Supply and Demand Paradox in Shipping Market

Abstract

Purpose – The purpose of the paper is to examine disconnection between supply and demand shipping market, which means shipowner has determined to raise capacity in bust period. Research design, data, and methodology – The research method to be applied is first to look into conceptual theory about shipping market, and then to study imbalance of supply and demand situations in shipping on crisis, and next, to analyses paradoxical aspects traced. Results – Shipping market is a volatile and cyclic characteristics, and its situations have to be examined very carefully. Since financial crisis has broken up in 2008, it is natural to think that world trade volumes has reduced rapidly, which means demand for shipping service has fallen, and accordingly, tonnage should be stagnated as well. However, shipping companies have put capacity into market as unexpectedly. This is because of economy of scale and time lag. Here, this can be explained in terms of paradox that is proved in this paper. Conclusions – From careful research in this paper, it is found that supply and demand are not always got along with market situations, in other words supply side could be working well, in spite of depression time of demand situations in world shipping markets.