Liquidity refers to the ease with which an item may be purchased or traded in the market at a cost that represents its true worth. Cash is usually regarded as the most liquid resource since it can be transformed into other assets rapidly and effortlessly (Scott, 2022). The degree to which a market permits items to be purchased and sold at steady, predictable prices is referred to as market liquidity. This gets hard to buy or transform assets or shares into cash if marketplaces are not liquid. Hence, it would be reasonable to consider liquidity as a significant phenomenon within the scope of the shipping industry.
An important point here is that ships are tangible assets, and their liquidity does not tend to be stable in the long run. This results from fluctuating prices for various details, services, and construction under the current economic conditions (Stopford, 2009). However, ships are essential for the world’s economy today, as the indicators of different marine shipments – starting from goods and ending with passengers – contribute to it considerably. When there are opportunities for debt finance, this condition makes it easier for buyers to adapt to the prices of the shipping market, ensuring continuous demand (Parker, 2022). These prices become quite predictable and reflect the value appropriately. Such a state of affairs, in turn, stimulates competition within the industry. The actors start to adjust their policies, construction processes, and even prices to the described circumstances. The quality of offers increases, and there are options for new agents to enter the new building market. The conditions of high liquidity and constant demand are great and favorable factors in the framework of the issue given.
References
Parker, T. (2022). The basics of financing a business. Investopedia.
Scott, G. (2022). Liquidity. Investopedia.
Stopford, M. (2009). Maritime economics (3rd ed.). Routledge.