Shipping industry struggles amid shortages and geopolitical tensions

In recent months, geopolitical tensions between the United States and China have been exacerbated, significantly impacting the shipping industry. As of mid-April 2025, around 18% of global maritime trade is subject to tariffs, up from only 4% in early March. This increased protectionism has led to concern among importers who are trying to expedite shipments amidst Washington's 90-day tariff pause with China. Labor shortages and low water levels at major Northern European ports have compounded these issues, preventing ships from sufficiently berthing and leading to extended transit times. Simultaneously, the rerouting of vessels due to trade conflicts has resulted in higher shipping costs. For example, transit costs between China and Europe have surged, adding approximately $1 million in expenses and extending transit times by at least ten days. In response to a growing demand for shipping capacity, some shipowners have turned to acquiring older and potentially less reliable vessels, risking safety and operational efficiency, especially under adverse weather conditions. This situation places further strain on an already burdened industry. The Allianz Safety and Shipping Review 2025 documents these challenges, underscoring a shift in focus from traditional shipping risks, such as fires and collisions, to emerging geopolitical threats. While historical loss rates from traditional causes have declined—to 27 total losses reported in 2024—new risks, especially those posed by the so-called shadow fleet, have emerged. These vessels, often older and inadequately maintained, have been linked to numerous maritime incidents and continue to present a risk to safety and environmental standards. Cleanup costs in the event of incidents involving these vessels can escalate drastically, potentially reaching $1.6 billion. As maritime trade becomes increasingly complicated by these overlapping crises, importers must now navigate a landscape shaped by tariffs, labor shortages, and aging vessels. The pressure is on industry leaders to adapt swiftly to ensure the safe and efficient flow of goods, as ongoing geopolitical unrest and a growing shadow fleet continue to threaten maritime safety, the environment, and the broader global trade landscape.