Veson Warns of Mid-Cycle Risks as Shipping Appears Stable

The shipping industry is possibly entering a fragile mid-cycle phase, where surface stability hides growing risks of overcapacity. File Image / Pixabay

The global shipping industry appears to be in a mid-cycle transition - a phase that "appears stable on the surface, but underlying pressures are quietly building," according to freight management firm Veson Nautical's latest white paper.

A mid-cycle transition typically occurs between the market peak and a downturn. Demand softens, vessel orders rise, and optimism often masks signs of overcapacity.

"Looking back at the history of previous shipping cycles, we're likely in the mid-phase of the transition from the high point to the low, Matt Freeman, VP of Valuation & Analytics at Veson Nautical, said.

"To navigate this fragile equilibrium successfully will require not only operational discipline, but a deep understanding of the structural patterns that have shaped previous cycles."

Among those signals is newbuild parity- "a condition where five-year-old or zero-year-old vessels begin trading at or above the cost of newbuilds."

"Today, the return of newbuild parity in several market segments is a warning sign," Felix Tordoff, co-author of the report, said.

"It suggests a market where urgency is outweighing discipline, and an environment where short-term opportunity may cloud long-term judgment," Tordoff noted.

With global trade growth slowing - the WTO forecasts just 2.2% for 2025 - and fleet deliveries rising,
Veson warns "the next shift could come without warning."

"The ability to step back, assess the full cycle, and make informed decisions isn't just smart," Freeman added.

Veson Nautical white paper urges industry to study the past to prepare for the future.