Troubled waters:shipping feels the heat of geopolitical crises

Troubled waters:shipping feels the heat of geopolitical crises
July 2018
As an international sector, shipping is often vulnerable to volatile political and economic forces that can threaten vital access points, shift the volume and direction of trade flows,or send fuel prices surging. Eva Grey maps the world’s most volatile regions for shipping

The international shipping sector has been under intense pressure over the past few years, impacted by concerns about overcapacity, volatile fuel prices, the enforcement of new environmental regulations and the challenges of digitalisation. Now, an array of geopolitical crises are looming over the industry, threatening to impact trade flows and leaving shippers uncertain of their next move.

A much-welcomed industry redress was observed in the second half of last year, after the Baltic Dry Index rose by 50% over the six-month period, and overall industry confidence hit a three-year, as analysts from the Moore Stephens shipping industry group observed.

But both old unresolved international disputes and new conflicts are contributing to an uncertain geopolitical climate, and much like a stormy sea, such forces can quickly destabilise shipping and alter trade flows.

As the London School of Economics notes, entrepreneurs, market participants and central bank officials view geopolitical risks as a key determinant of investment decisions. In 2016, 74% of CEOs of the world’s largest companies polled by PwC cited ‘geopolitical uncertainty’ as their second most important concern.

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