In the years that followed the global financial crisis that began in 2008-2009, the international container shipping industry experienced obstacles that challenged even the world’s shipping leaders. These included overcapacity concerns, historically low freight rates, and falling consumer demand.
Perhaps the greatest of the industry’s challenges was vessel overcapacity. In layman’s terms, there were too many ships for the existing demand. The container shipping industry’s overcapacity issue has since been corrected through partnerships and alliances – including vessel sharing agreements, aggressive vessel scrapping, and the untimely demise of South Korea’s Hanjin Shipping.
Historically low freight rates came as a result of the increased competition brought on by vessel overcapacity. Over the years, mergers and acquisitions have removed competitors from the container shipping industry, and worked to restore freight rates to more acceptable levels. Rising rates, coupled with a strengthening global economy, have helped to propel industry leaders back into profitability. In fact, many are not only making more money, they are making additional investments too.
One of the obvious consequences of the global financial crisis was that a great number of investors’ portfolios were negatively affected. The caused a retraction in household spending, lowered consumer demand, and adversely affected the growth of the global economy. Since that time, the leading economies around the world have recovered and are maintaining growth momentum. This has restored investor confidence across the globe and encouraged consumer spending around the world. This has meant an increase in demand for container shipping services.
Over the last decade, amid included overcapacity concerns, historically low freight rates, and falling consumer demand, the container shipping industry has proven its resilience and demonstrated to investors that it can still perform well in adverse economic conditions. This makes it an ideal investment option for investors seeking a low risk, high return alternative to risky traditional investments.