Answer to Question #56826 in Economics for George

Question

In addition to the freight rate, examine other economic factors that shape the derived demand for container shipping.

Answer 1

The most important factors generally affecting demand for container shipping market are:
1. The global economy generates the bulk of demand, either through imports of raw materials or trade in finished products.
2. Raw materials available: some raw materials such as agricultural products, are subject to seasonal fluctuations. Raw materials trading is significantly affected by overall demand and availability.
3. Average haul - the distance traveled by a ship before it reaches its final destination.
4. Random shocks that affect the stability of the economic system, for example natural disasters, wars, economic crises.
5. Transport costs are still comparatively high, raw materials can be transported with the acceptable level of transporting costs.