Shipping is vulnerable to more severe disruption ahead

Significance

Shippers are being forced to take longer routes or pay higher insurance premiums, increasing costs, disrupting supply chains and absorbing the post-pandemic increase in shipping capacity as vessels stay longer on the water.

Impacts

• The heightened insecurity has created an opportunity for Somali pirates to re-emerge as a threat.
• More 'dark fleet' operation and use of older ships, particularly in Russian oil trade, represent large, likely inadequately insured, risks.
• The need to take longer routes will increase maritime fuel consumption and reduce its efficiency.
• The requirement for more shipping capacity will support new building, leading to overcapacity when shipping risk declines.
• Although eclipsed by more immediate fears, Chinese assertiveness in the East and South China Seas may disrupt Asian maritime trade routes.