Action by the ship-owners: negative

Effect: negative

Action: positive

Effect: positive

T0 order ships on a favorable freight rate, when D > S; time needed for ships’ delivery: from 2 years on

Supply increases upon delivery; a diminishing freight rate appears as a result (ceteris paribus; especially for distances)

They lay-up temporarily unprofitable ships up; time needed to decide to lay ships-up: say = 3 months

Freight rates temporarily improve—slightly—as laid-up ships rise, depending on the gap between supply & demand & distances

Positive: if the freight rate continues to fall, & the laid-up tonnage is absorbed & the new supply is stopped, recovery then starts

Positive but long term: Scrapping the long-term unprofitable ships (improving also company’s liquidity by the scrap money) restores the D/S balance; but the time needed for this is: say 3 years

Positive: Freight rates begin to rise, because D > S & a boom starts

Positive: The longer the delivery time of the new ships, the longer the boom, if D > S; the faster the scrapping, the shorter the slump