ABSTRACT
The extraordinary twists and turns of the world economy since the start of the twentyfi rst century could not be more revealing or instructive of the inner workings of shipping investment. Shipping economics exist as a separate branch of economics for two reasons: the one is the cyclicality of the shipping markets; the other is the idiosyncratic nature of shipping investment. The two are inextricably linked: Investing in ships could be classifi ed as an astute, a brave or an irrational decision depending on the state and the prospects of the shipping markets which rarely – if ever – fulfi l the promises they seem to give. Yet the fi rst decade of the current century unfolded as if this latter element of uncertainty had been removed as investors proceeded euphorically into taking the world fl eet well over the one billion dwt mark.1 However, by the end of 2008 any doubts whether the “endemic tendency to over-invest”, as astutely described by the late B.N. Metaxas,2 stills holds in shipping had dissolved as freight rate lows - not seen since the dry-bulk crisis of the 1980s – succeeded the records the market had kept breaking since 2003. Late 2008 developments were not, however, the result of investors’ great expectations. As the fi rst decade of the new century is drawing to a close pending massive future deliveries have yet to hit the market in order to be measured against future demand which remains an unknown quantity, literally. Nevertheless, the prospect of supply developments coinciding with an eventually protracted world trade recession have revived investors’ worst basic fears while painfully inviting a return to well-known basics of shipping economics.
