<div class="phx-topic abstract-wrapper"><p>It would be an understatement to say 2008 was marked by a much higher level of uncertainty and risk than usual. 
 
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It would be an understatement to say 2008 was marked by a much higher level of uncertainty and risk than usual.

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<div class="phx-topic"><p>It would be an understatement to say 2008 was marked by a much higher level of uncertainty and risk than usual. It is ironic that 2008 saw the end of liner shipping conferences in Europe, virtually their last bastion. One of the key factors leading to the creation of the conference system in the 19th century was the perceived need to mitigate uncertainty and risk in shipping markets. Shippers wanted regular dependable sailings on major lanes and were prepared for carriers to share a common tariff that paid the owner of a vessel carrying tea from China to England four weeks into the tea-shipping season the same rate as that of a vessel departing at the start of the season.  This system ensured that the whole supply chain worked effectively. We lost the glamour and excitement of the great clipper races but gained a regular, reliable means to put goods on shelves worldwide. The conference system became an anachronism because carriers achieved sufficient scale that enabled them, either on their own or through vessel-sharing alliances, to provide high-frequency, reliable sailings without a shipping conference. In Economics 101 we learned that uncertainty and risk typically raise the cost of capital and required level of financial return from a project. It will be interesting to watch what impact this will have on shipping investments — particularly when coupled with the impact that economic uncertainty is having on trade. Although there may be a surplus of shipping capacity on major trade lanes in the near term, that could shift dramatically if shipping investment is cut off by uncertainty and risk, and global trade returns to its normal growth path. Carriers and shippers have a major stake in ensuring that an effective global maritime supply chain is maintained. Perhaps we don’t want to return to the implicit partnership of the shipping conferences, but certainly we need an ongoing dialogue between carriers and shippers on the future state of the global supply chain and a sharing of risks and, yes, rewards between the two parties. </p></div>

It would be an understatement to say 2008 was marked by a much higher level of uncertainty and risk than usual. It is ironic that 2008 saw the end of liner shipping conferences in Europe, virtually their last bastion. One of the key factors leading to the creation of the conference system in the 19th century was the perceived need to mitigate uncertainty and risk in shipping markets. Shippers wanted regular dependable sailings on major lanes and were prepared for carriers to share a common tariff that paid the owner of a vessel carrying tea from China to England four weeks into the tea-shipping season the same rate as that of a vessel departing at the start of the season. This system ensured that the whole supply chain worked effectively. We lost the glamour and excitement of the great clipper races but gained a regular, reliable means to put goods on shelves worldwide. The conference system became an anachronism because carriers achieved sufficient scale that enabled them, either on their own or through vessel-sharing alliances, to provide high-frequency, reliable sailings without a shipping conference. In Economics 101 we learned that uncertainty and risk typically raise the cost of capital and required level of financial return from a project. It will be interesting to watch what impact this will have on shipping investments — particularly when coupled with the impact that economic uncertainty is having on trade. Although there may be a surplus of shipping capacity on major trade lanes in the near term, that could shift dramatically if shipping investment is cut off by uncertainty and risk, and global trade returns to its normal growth path. Carriers and shippers have a major stake in ensuring that an effective global maritime supply chain is maintained. Perhaps we don’t want to return to the implicit partnership of the shipping conferences, but certainly we need an ongoing dialogue between carriers and shippers on the future state of the global supply chain and a sharing of risks and, yes, rewards between the two parties.

<topic id="b065f69f-6a4f-4f93-934f-bc1f4474d6fa"><title>Reeve and Associates</title><summary><p ID="IDfe89ef89-9e7a-4567-af9e-05f5d8f9d0e6">It would be an understatement to say 2008 was marked by a much higher level of uncertainty and risk than usual. 
 
</p></summary><body><p ID="ID3dce2458-f02a-44cd-8322-b0ae79ef81d6">It would be an understatement to say 2008 was marked by a much higher level of uncertainty and risk than usual. It is ironic that 2008 saw the end of liner shipping conferences in Europe, virtually their last bastion. One of the key factors leading to the creation of the conference system in the 19th century was the perceived need to mitigate uncertainty and risk in shipping markets. Shippers wanted regular dependable sailings on major lanes and were prepared for carriers to share a common tariff that paid the owner of a vessel carrying tea from China to England four weeks into the tea-shipping season the same rate as that of a vessel departing at the start of the season.  This system ensured that the whole supply chain worked effectively. We lost the glamour and excitement of the great clipper races but gained a regular, reliable means to put goods on shelves worldwide. The conference system became an anachronism because carriers achieved sufficient scale that enabled them, either on their own or through vessel-sharing alliances, to provide high-frequency, reliable sailings without a shipping conference. In Economics 101 we learned that uncertainty and risk typically raise the cost of capital and required level of financial return from a project. It will be interesting to watch what impact this will have on shipping investments — particularly when coupled with the impact that economic uncertainty is having on trade. Although there may be a surplus of shipping capacity on major trade lanes in the near term, that could shift dramatically if shipping investment is cut off by uncertainty and risk, and global trade returns to its normal growth path. Carriers and shippers have a major stake in ensuring that an effective global maritime supply chain is maintained. Perhaps we don’t want to return to the implicit partnership of the shipping conferences, but certainly we need an ongoing dialogue between carriers and shippers on the future state of the global supply chain and a sharing of risks and, yes, rewards between the two parties. </p></body></topic>