Are we there yet?

Anyone looking for an end to the oversupply position in shipping has a long wait. Economic anticipation of a shift in the boom-bust cycle also has some time to wait.

Let’s start with the oversupply situation. Shipowners and carriers alike seem to love to wallow in their self-made crisis. Rather than getting rid of excess capacity to deal with uneconomic rates of return, they fool themselves into thinking that cutting costs via economies of scale (much larger ships) is the only way to go. Instead they are making the situation worse.

This is true for the both the container and the bulk industries and it seems to have infected terminal operators as well who have created so much capacity that the ports are now complaining about having to fight for market share.

Asia is offering cheap finance and everyone is jumping on the money bandwagon. How can we feel any sympathy for shipping CEOs when they complain about lack of profitability? You make your bed and you lie in it!

And what are we economists waiting for? Depending on whether you are in North America or in Europe, we are waiting for a return to a slowdown or finally an upsurge. We are in that strange situation where the US has been on an upswing, albeit a slow one, since 2010.

Despite all the efforts of the Tea Party, growth has manifested itself for over four years and in a cyclical world it is about time for things to slow down. Let us hope that this too takes its time. In Europe, after having been driven into a second deep recession by German-led austerity policies, there are signs that growth is on the way, again very slowly except for the UK.

Geopolitics being what they are, perhaps Mr Putin in his desire to recreate the Soviet bloc will bring the economic cycles back into sync by creating an atmosphere of fear, economic sanctions and maybe even a war. This will certainly encourage a recession in the first instance across the world.