The shipping markets have been among the most active among markets over the last couple of years. This significant growth in shipping markets has been influenced by changes in import policies, globalization and changing freight rates. Globalization and changes in the import policies across states and continents have positively influenced the growth of the shipping markets, with marginalized and developing countries having an opportunity to venture into the global arena.
Freight rates are however proportionate to growth of shipping markets and their contribution to the development of shipping markets has been influenced by several factors, some of which lead to negative growth and increase the shipping risks that freight companies are exposed to (Kavussanos & Nomikos 2000). Some of the issues that affect freight rates are economic growth and demand for specific goods, which is derived from the shipping industry forces. The contribution of the economic growth is significantly associated with a reduction and stabilized freight rates and this leads to fewer risks as compared to harsh economic conditions.
Economic developments lead to a change in the status of the shipping industry. In most countries, change in economic growth leads to stabilization of all transport services, including those offered in the shipping industry (Kavussanos & Visvikis 2006). For this reason, most of the freight rates are favored by a stable economy, making it possible for freight owners to diversify their products and services for increased profits. In a stable economy, there is increased trade and investment in local and international goods.
This means that when the demand for commodities is high, there is an associated increase in demand for shippin...
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