Report for MAERSK Essay Example | Topics and Well Written Essays - 1500 words

Report for MAERSK - Essay Example Understanding of these basic economic principles is to play a pivotal role in the defining future customer oriented successful strategy. In a similar context, the underlying report will shed light on the basic demand and supply and related factors for the shipping industry. The report will also make recommendations with respect to the pricing strategies of Maersk. Despite this growth of the world trade, the shipping industry remained under pressure due to oversupply. According to the DSF (2013) report, year of 2012 continues to expand crises in the shipping. The fleet has grown by 45% since 2008 while the demand growth has remained only at the 15%. The similar condition has left the industry with the oversupply of vessels, yard capacity, and container and consequently has taken down the earnings. Despite this oversupply, the industry is continuing the order books. This is also putting downside pressure on the asset value of a vessel in the long term, further, are expected to the increase the value of scrap on the industry (DSF, 2013). The world trade had considerably positive outlook of 19% growth for the year 2011 to 2014. The growth in world trade has a positive impact on the demand of the shipping industry. Therefore, increase in demand have balancing impact on the imbalance between the demand and supply of the shipping industry. Therefore, graphically it will be reflected as follows: Hence, current prices of the shipping industry which are under pressure (P0) due to limited demand will gain certain support (to P1) as the demand revives from D0 to D1. Important to note that increase in world trade of 19% has resulted in increase in demand that has shifted the curve from D0 to D1: As noted above, the supply is also constantly increasing as the constant growth in contracting shipping industry supply development. It is noted the increase in supply is has been at a higher percentage as compared to