Veson Nautical find that current market conditions in the shipping resemble the mid-cycle transition seen in previous cycles – a phase where the market appears stable on the surface, but underlying pressures are quietly building.
In its new white paper titled ‘The Anatomy of Shipping Cycles: What History Can Tell Us About Tomorrow’s Market’, Veson Nautical argues that as fleet deliveries increase, global trade slows, and regulatory constraints tighten, the risk of tipping into overcapacity is mounting. Matt Freeman, co-author of the white paper and Vice President of Valuation & Analytics at Veson Nautical, noted that, based on the history of previous shipping cycles, the industry was likely in the mid-phase of the transition from a high point to a low.
He emphasized that successfully navigating this delicate stage would require not just operational discipline, but also a deep understanding of the structural patterns that had shaped past cycles.
What past shipping cycles reveal
Veson Nautical explores how cyclical patterns have repeated across decades of maritime history, shaped by different macroeconomic forces, yet following a familiar arc:
- overconfidence,
- overcapacity,
- and correction.
It cites the 2003–2008 “Champagne Supercycle,” driven by China’s industrial boom. At its peak, Capesize rates surged from $20,000 to nearly $200,000 per day in just five years. This spike triggered a global ordering frenzy, with the orderbook swelling to 60% of the active fleet.
“When the world was engulfed by the 2008 financial crisis, earnings collapsed almost overnight, but deliveries continued for years, compounding the downturn,” says Freeman. “If you look at examples like this, you start to see patterns that can help companies prepare for when the market inevitably turns.”
The paper also examines the COVID-19 disruption in 2020, noting that although freight rates soared, most vessel owners resisted over-ordering. The result was temporary volatility – not a full structural cycle – thanks to a more measured, disciplined response.
Reading the current signals
While no two cycles unfold in exactly the same way, the paper identifies a set of recurring markers that often precede inflection points. One of the clearest is newbuild parity – a condition where five-year-old or zero-year-old vessels begin trading at or above the cost of newbuilds.
This signal, which reflects urgency outweighing asset fundamentals, has historically appeared at market peaks, including before the 2008 crash, the 2014 oil price collapse, and the post-COVID container rate spike.
Today, the return of newbuild parity in several market segments is a warning sign. It suggests a market where urgency is outweighing discipline, and an environment where short-term opportunity may cloud long-term judgment
… commented Felix Tordoff, co-author and Junior Valuation Analyst at Veson Nautical.
The white paper notes that scheduled fleet deliveries are rising, particularly in the bulker segment, peaking in 2027–2028. At the same time, global trade growth is slowing, with the WTO revising its 2025 forecast down to 2.2%, well below the post-2010 average.
While new environmental regulations such as EEXI and CII may reduce effective fleet capacity, the authors argue this will not be enough to counterbalance incoming tonnage.
“Taken together, these signals suggest the industry is at an inflection point, where the next shift could come without warning,” Tordoff says. “As in previous cycles, the balance may hold for a time before tipping suddenly.”
Key conclusions
The white paper concludes that shipping cycles are not anomalies to be feared, but recurring patterns that can be understood and strategically managed. While predicting their exact timing remains elusive, recognizing their structure and signals offers operators a powerful decision advantage.
- Shipping cycles are fundamental to the industry, not just abstract economic concepts.
- Understanding and navigating these cycles helps avoid poor market timing and enables seizing emerging opportunities.
- Historical trends indicate that vessel acquisitions during market troughs or early recovery stages yield better long-term returns than those at market peaks.
- Firms that maintain financial discipline, balancing liquidity with flexibility, are better positioned to act when competitors hesitate.
- Spot rates offer limited insights; real foresight comes from forward-looking indicators such as newbuild parity, shifts in the orderbook, and changes in market sentiment.
- Historical datasets (e.g., fixed age asset prices, commodity flows, scrapping and delivery patterns) are essential to gauge the current cycle phase and assess the sustainability of trends.
- The key is not to avoid cycles but to understand them—while exact timing is difficult, their structure supports informed decisions.
- The most successful firms combine real-time data with historical context to evaluate the cycle position and act decisively when directional clarity emerges.
