Randers, Jorgen with Ulrich Goluke, "Forecasting Turning Points in Shipping Freight Rates – Lessons from 30 Years of Practical Effort", 2007 July 29-2007 August 2
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We argue that it is possible to explain much of the history of the worlds shipping markets since 1950 as the interaction of two balancing feedback loops: a capacity adjustment loop which creates a 20-year wave, and a capacity utilization adjustment loop which generates a 4-year cycle. We show how this insight has been used rather successfully since the early 1980s for practical forecasting of turning points in the shipping market 1 - 4 years ahead of time. The basic mechanisms in the shipping system create a strong deterministic backbone which is visible through the exogenous noise, and hence predictable with useful precision. Our experience leads to a number of questions concerning system dynamics best practice, for future research.