Despite the “noise” of tariff policy, shipping markets sit in a stronger position today than they did six months ago (our cross sector ClarkSea $29,000/day vs $23,000/day). Sentiment seems improved post-summer, especially in the tanker segment, although strategic uncertainties around the geo-political impacts on long term trade and the pace and direction of decarbonisation remain.
We expect seaborne trade growth to slow to just 0.5% in 2025, reaching 12.8bn tonnes (2024: 2.4% y-o-y). After a soft start, more positive signals are emerging and tonne-mile trends are outperforming at 1.0% (2024: 6.1%). US trade policy has dominated the news agenda, and while there have been clear impacts on sentiment and investment levels, only 4% of global seaborne trade has been freshly tariffed this year (NB: ~90% of trade does not involve the US). Initial volatility aside (e.g. “front loading” on “transpacific” followed by weakness), volumes have generally been resilient (watch US grain export trends) and there are now “deals” in place for 65% of the impacted volumes. Other factors have been more significant drivers of trade: e.g. weaker Chinese imports (-3% y-o-y after strong inventory building in 2023-24) and now increasing OPEC volumes. Disruption events continue to drive distance; Red Sea transits remain 70% down (re-routing adds ~2.5% extra demand overall, +11% container) while Russian sanctions continue to support oil tonne-miles. So growth and complexities offering risk and opportunities ahead.
Across the segments, container markets have seen divergent trends; charter rates have edged higher and remain at the highest levels outside of the Covid era (3x late 2023) with supply tight, while freight rates have been volatile and now sit below 2024 levels. Tanker earnings are firm and improving into the winter (VLCCs now >$90,000 / day!), supported by limited fleet growth (+0.6% ytd on crude), growing OPEC+ output and a heightened sanction regime (15% of tanker fleet capacity now listed as sanctioned). The bulker market has generally remained “moderate” (ytd earnings $13,000/day), though charter rates have improved through 2025 and Capesizes have outperformed (ytd $25,000/day, supported by rapid growth in Guinean bauxite exports). LPG earnings have been firm, with US export gains amplified by US-China trade tensions driving longer-haul flows, while LNG carriers are seeing “tough” short term conditions with strong newbuild deliveries coming before the major ramp-up in export capacity expected in the next few years. Offshore oil and gas markets have softened y-o-y though remain in a reasonable position. The car carrier market continues to weaken after the heights of 2022-24, with rapid fleet growth the key driver. Cruise sector conditions remain strong, a remarkable position after the Covid stress.
On the supply side, steady fleet expansion continues, with 4% growth projected in 2025 and 2026 (but uneven across segments in 2025: LNG (9.0%) and container (6.6%) outpacing bulkers (3%) and tankers (2.4%)). Yard output is edging higher, while recycling remains very low (ageing fleets will support increased demolition and fleet renewal in the coming decade). Newbuild order volumes are lower y-o-y (after a very strong 2024 and still with “hot” container activity) but are running close to 10 year trends. Yard capacity is expanding (no ‘greenfield’ yards unlike the last cycle), led by China, and utilisation remains elevated for now with long lead times, though pricing has eased a little (index -2% ytd still +50% on 2020). China retains its leading market position (c.55% of orders ytd, below 2024), with other countries looking at expansion (but shipbuilding is “long cycle”). US port fee measures (due in October) have been scaled back from initial plans, reducing some of the impacts on newbuild sentiment (but there are emerging shifts in deployment and some US shipyards are seeing new investment). S&P markets are seeing lower activity (-10%), with pricing in some segments elevated relative to charter rates. Ship repair has been active.
Consensus around decarbonisation has “stalled” but green regulations and investment remain underlying trends. The IMO’s ‘mid-term measures’ have seen a “mixed” reception, with a vote planned for October. GHG emissions from shipping are rising, but uptake of green technologies continues (9% of fleet is alternative fuel capable (2030f: 20%), 36% of tonnage is “eco” (2030f: 50%), 44% of fleet tonnage now fitted with an EST). Significant investment in production of alternative fuels and port infrastructure is still required. Vessel speeds have edged lower.
Most segments of shipping today are maintaining a very healthy cash flow, but complexities ahead are building. Alongside underlying (and often supportive) existing trends and “traditional” supply / demand “fundamentals”, navigating the complexities from geopolitics, disruption events, tariffs, sanctions, energy transition (and energy security) are becoming increasingly important in weighing up the opportunities and risks ahead.
The author of this feature article is Stephen Gordon. Any views or opinions presented are solely those of the author and do not necessarily represent those of the Clarksons group.
