In a survey conducted by Danish Shipping among CEOs of its largest member companies, almost half of respondents assess that overall market conditions in the shipping industry will deteriorate over the next 12 months. Fewer than one in four expect improvements in the year ahead.

“We have been through a year of enormous uncertainty for shipping. Russia’s invasion of Ukraine four years ago sent shockwaves, and it seems to have triggered a domino effect. Attacks on merchant vessels in the Red Sea, tariff threats from the US President, and now war in the Middle East, which has closed the Strait of Hormuz. The world is a volatile and unpredictable place, and shipping is on the front line in feeling the impact,” said Anne H. Steffensen, CEO of Danish Shipping.

The survey also paints a clear picture that operating costs have increased over the past year as a result of geopolitical instability. Four out of five respondents believe operating costs have risen. Half say the increase has been “to a lesser extent”, while one third report it has been “to a great extent”.

“In shipping, we are used to un­pre­di­cta­bi­li­ty. It is part of operating globally. But the current geopolitical tensions are so numerous and span so many fronts that they are harder than usual to navigate. This is clearly reflected in operating costs when supply chains, transport routes, duties, tariffs and the closure of key passages – as we have seen in Hormuz in recent weeks – are affected within a short period. The higher costs naturally have financial implications for shipping companies, but also for consumers, who may end up paying more for their goods,” said Anne H. Steffensen.

A knock-on effect of the situation in the Middle East can be seen in rising freight rates, particularly for tanker companies. However, despite strong short-term earnings opportunities in oil shipping, Anne H. Steffensen emphasises that predictability is far preferable:

“Even if it means higher freight rates, greater predictability in the market is clearly preferable. The situation reflects a global economy under strain. It is in no way in the interest of either consumers or shipping companies.”