The current state of global trade is presenting a profound efficiency challenge for the shipping industry, which goes well beyond the uncertainties of the International Maritime Organization’s decarbonisation efforts. Geopolitical shifts are acting as major frictional forces, fundamentally altering how seaborne trade operates.
Geopolitical Drivers of Inefficiency
The core problem for global shipping efficiency is that the emerging world order prioritizes national affiliations and security over traditional supply-and-demand logic, making trade more costly and complex.
- Trade Wars and Tariffs: The latest rounds of retaliatory trade showdowns, such as the one between the US and China, directly increase the cost and complication of moving goods by sea.
- Market Fragmentation: Sanctions and political divisions have already created a ‘shadow fleet,’ estimated at around 20% of the tanker fleet, where trade lanes are determined by geopolitical alignment rather than optimal efficiency. This fragmentation is expected to increase as the market rushes to align with US and Chinese national ownership.
- Redrawn Trade Lanes: As major economies reposition themselves, the traditional, most efficient trade routes are being replaced by politically determined and often longer, costlier ones.
The Decarbonisation and Regulatory Challenge
While geopolitics creates external friction, internal industry issues also hinder efficiency.
- IMO Uncertainty: The chaos and lack of clarity within the IMO-led decarbonisation plans make long-term investment and planning for future fleets highly uncertain.
- Cost of Transition: The necessary shift to expensive, carbon-neutral fuels and the associated fleet renewal costs are a major financial burden that is difficult to pass along the supply chain.
- Operational Optimization: Beyond capital-intensive clean fuel technology, the industry struggles with a lack of standardized data collection and transparency, hindering the full potential of operational efficiency measures like voyage optimization.
Experts on Shipping’s Conundrum
This complex issue was the focus of a recent discussion on the Lloyd’s List Podcast, which featured leading figures from across the maritime and energy sectors:
- Johannah Christensen, chief executive, Global Maritime Forum
- Lara Naqushbandi, co-founder and chief executive, ET Fuels
- Jan Dieleman, president, Cargill Ocean Transportation
- Bernice Lee, distinguished fellow and senior adviser at Chatham House, the Royal Institute of International Affairs
- Alexander Saverys, chief executive, CMB.Tech
- Lynn Loo, chief executive, Global Centre for Maritime Decarbonisation (GCMD)
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Source: Lloyd’s List
