Global Shipping Faces Uncertain Future Amid Rising Costs
The latest report from the United Nations Conference on Trade and Development (UNCTAD) reveals that global shipping is entering a challenging phase characterized by fragile growth and increasing costs. The Review of Maritime Transport 2025, released yesterday, predicts that after a year of robust growth, seaborne trade will experience minimal increases, with Global Shipping volumes expected to rise by only 0.5% in 2025. Geopolitical tensions and shifting trade patterns are reshaping the landscape of maritime trade, leading to longer shipping routes and heightened operational costs.
Geopolitical Tensions Reshape Maritime Trade
According to UNCTAD, the dynamics of global shipping are being transformed by various factors, including political tensions, new tariffs, and reconfigured shipping lanes. These changes have resulted in more frequent rerouting of vessels, skipped port calls, and extended journey times. Last year, geopolitical issues kept ships busier than ever, contributing to a record growth of nearly 6% in ton-miles. However, this trend is not expected to continue, as the report forecasts a stagnation in seaborne trade volumes for 2025.
Energy shipping is also undergoing significant changes. The demand for coal and oil is declining due to global decarbonization efforts, while the trade of natural gas is on the rise. Additionally, critical minerals essential for renewable energy and the digital economy are becoming increasingly important in global trade. Competition for these resources is intensifying, leading to a surge in their seaborne trade volumes. UNCTAD highlights that this competition could create new tensions in the market as countries strive to secure supplies and enhance domestic value.
Freight rates have become more unpredictable, influenced by disruptions such as the anticipated 2024 Red Sea crisis. Ongoing geopolitical tensions, particularly in the Strait of Hormuz, raise concerns about potential disruptions to shipping activities. UNCTAD warns that the persistent high costs of transportation could disproportionately affect developing nations, especially small island states and least developed countries.
Environmental Compliance and Port Challenges
The report also emphasizes the impact of environmental compliance costs on shipping economics. As the industry grapples with emissions pricing and other regulatory measures, the financial burden is expected to grow. UNCTAD notes that shipping’s greenhouse gas emissions rose by 5% in 2024, with only 8% of the global fleet currently equipped to utilize alternative fuels. Furthermore, ship recycling rates remain low, posing additional environmental challenges.
Ports worldwide are experiencing strain due to these disruptions, leading to congestion and longer waiting times for vessels. UNCTAD urges governments to adhere to global commitments on trade facilitation and automation, while also advocating for expanded public-private partnerships in port operations. As digitalization progresses, the importance of cybersecurity in shipping operations is becoming increasingly critical.
UNCTAD Secretary-General Rebeca Grynspan emphasizes the need for equitable transitions in the shipping industry. She states, “The transitions ahead – to zero carbon, to digital systems, to new trade routes – must be just transitions. They must empower, not exclude. They must build resilience, not deepen vulnerability.” The call for a balanced approach underscores the urgency of addressing the challenges facing global shipping as it navigates an uncertain future.
