Freight rates link supply and demand. When supply is tight, freight rates rise, stimulating shipowners to provide more transport. When they fall, it has the opposite effect. We looked in detail at the dynamics of the mechanism by which freight rates are determined and found that time-scale is important in reaching an equilibrium price. Momentary equilibrium describes the day--to-day position as ‘prompt’ ships in a particular loading area compete for the available cargoes. Short-run equilibrium describes what happens when ships have time to move around the world, adjust their operating speed or spend time in lay--up. In shipping the long-term is set by the time taken to deliver new ships - say, 2-3 years. This characteristic certainly influences the 7-8 year duration of freight cycles