Will we see a downturn like during the 2008 shipping crisis?

Today we take a comparative look at the 2008 shipping crisis and the 2020-2022 shipping crisis.

Sea trading throughout history has had its ups and downs due to product cycles. In modern times, these cycles have changed in nature, but their existence has survived these changes. Today we see macroeconomic and political factors affecting the shipping cycle much more than in the recent past. There are many parallels with the 1930s cycle.

We can divide the shipping market into four categories:

1. Shipbuilding Market
2. Sale and purchase market
3. Cargo Market
4. Demolition/Scrapping Market

The shipbuilding crisis

With the shipping industry going against the Soy Law, which states that supply creates demand, building ships is a risky decision and a volatile, cyclical market that adds significant risk. Therefore, we see no free entry or exit opportunities in the market. This makes the shipbuilding sales and rentals market very stable and reliable apart from the major crises that create opportunities or exit points to avoid further complications. With over 80% of traded goods being transported by sea (UNCTAD; Review of Maritime Transport 2021), we can confidently say that the entire developed world depends on maritime transport for survival.

When the crisis hit in 2008, one could argue that it was the result of China’s open-door policy initiated by Deng Xiaoping. Since the start of this reform in 1978, the volume of world trade has increased sharply, and China’s strategy of being the world’s factory has changed the world’s view of manufacturing. Formerly independent countries moved their means of production to a new home, where goods were produced at a tenth of their previous cost. This era and its prosperity encouraged people to invest in the shipping market, resulting in more and more ships being built to meet the extreme demand. At its peak, the Baltic Dry Index (BDI) was over 11,000 points and daily earnings peaked at $157,000 (Danish Ship Finance, Shipping Market Review H2 2007).

reference to the past

This was considered the new gold rush. But as I said, the shipping market works in cycles and those rich years were just over. In the second half of 2008 the market was so low that newly built ships were scrapped just to cut losses.

Luckily, it seems like shipping magnates have learned from their mistakes and taken every new opportunity with a grain of salt. Although supply did not meet demand, they took a much more conservative approach to adding new ships to their inventory. Naturally, with Covid-19 restricting ports around the world to keep things from spiraling out of control, freight rates skyrocketed. Here the actors felt the heat of the current crisis. Freight rates for import containers quadrupled on average in the US, and prices were even higher for certain destinations. For other countries, the Peak Season Surcharge (PSS) became a regular year-round fee due to the high demand.

New opportunities

So what have shipping companies done this time to create more opportunities? If we look at recent purchases, we can see that they are trying to expand into the sky. Maersk bought Senator International to strengthen its Star Air cargo airline, which Maersk founded in 1987. MSC formed a new company called MSC Air Cargo, which is expected to start operations in early 2023. Its first aircraft is a Boeing 777-200 Freighter, to be operated by Atlas Air.

MSC CEO Soren Toft said: “This is our first step into this market and we plan to continue exploring different avenues to develop air freight in a way that complements our core container shipping business” (Aerotime Hub, author Vyte Klisauskatie ).

There are also talks of MSC and Lufthansa competing for Italy’s ITA Airways with a Certares-led consortium backed by Air France-KLM and Delta Air Lines. This of course means that the shipping market will be stable and strong compared to the 2008 crisis because the people at the top have learned from their mistakes and not repeated them. New orders are coming in from all shipping companies around the world to increase their fleets, but with almost every player who owned even a single ship reporting 3-4 times more profit than in recent years, it’s safe to say that each has significant liquidity have been supporting their expansion policy for several years.


In conclusion, if we compare the crisis of 2008 and the current crisis of 2020-2022 in the cargo market, we can easily say that the landing in 2022 will be much slower than it was in 2008. With all the supply and demand fluctuations, the Market finds its balance which may take some time as vendors are ready for it. Let’s hope this attempt will be answered with the right answers from the side of the seaports to meet the flow of the cargo market.

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