SINCE the financial crisis, the tide of recovery has not lifted all boats equally. But in few industries is that more true than in shipping. Demand for oil tankers has boomed: a combination of weak spot prices and higher futures prices, driven by the assumption that supply and demand for crude will eventually rebalance, has encouraged traders to hire tankers to store oil at sea and cash in on the price gap. Meanwhile, bulk carriers, which carry such things as iron ore and coal, have been hit by massive overcapacity, as Chinese demand for such commodities has collapsed (see article).

Until the start of this year, the container-shipping business—which carries around 60% by value of all seaborne trade in goods—looked more like that for oil tankers. Rising global trade volumes, and firm steel prices that made it worthwhile for owners to scrap old ships, had kept capacity in check, and container-freight rates seemed to be steadying. As recently as August last year, demand for container shipping was so high that BIMCO, an industry...Continue reading