-
The global shipping industry is facing greater risks due to geopolitical tensions, according to Allianz Commercial’s Safety and Shipping Review 2025
-
The fast-changing geopolitical landscape is creating new risks for the industry already juggling the energy transition and the legacy of the Covid-19 pandemic
-
Attacks against shipping, vessel detentions and sanctions mark the increasingly volatile and complex operating environment
-
The ripple effect of increasing protectionism and tariffs also threatens to remake supply chains and shake up established trade relations
The global shipping industry is facing greater risks due to geopolitical tensions, according to Allianz Commercial’s Safety and Shipping Review 2025. The fast-changing geopolitical landscape is creating new risks and challenges for a shipping industry already juggling the energy transition and the legacy of the Covid-19 pandemic, the report said.
Attacks against shipping, vessel detentions, sanctions, as well as the fall-out from incidents involving damage to critical sub-sea cables mark the increasingly volatile and complex operating environment.
The ripple effect of increasing protectionism and tariffs also threatens to remake supply chains and shake up established trade relations, said the report.
Given 90% of international trade is transported across oceans, these developments are concerning, especially as the industry continues to see the potential for large claims from traditional risks such as fires, collisions and groundings, which are still the main drivers for total losses of large vessels, it added.
It’s not all bad news, however.
For one, the shipping industry has made significant strides when it comes to maritime safety in recent years, the Allianz report noted.
During the 1990s the global fleet was losing more than 200 vessels a year. This total had halved 10 years ago and is now down to a record low of 27 as of the end of 2024 (from 35 in 2023).
According to Captain Rahul Khanna, Global Head of Marine Risk Consulting, Allianz Commercial: “The relevance of political risk and conflict as a potential cause of maritime loss is increasing with heightened geopolitical tensions. Total losses from traditional causes may have reduced over time, but we could be in a position where this positive trend is potentially offset by war and other political-related exposures.”
Khanna added that as an industry, “we are in a better position with regards to traditional risks, but there is a renewed focus on geopolitical risks.”
Furthermore, the ongoing US-China trade conflict and growing shadow fleet bring uncertainty and challenges.
China has been the biggest target of the protectionist measures of the administration of US President Donald Trump with tariffs reaching 145%, before both countries agreed to reduce them for 90 days. Developments have significantly impacted global maritime trade with approximately 18% of it subject to tariffs as of mid-April 2025, compared with 4% in early March, and dramatic declines in shipments reported in the immediate aftermath of Trump’s “Liberation Day” announcements.
While the future of US trade-focused policies remains uncertain, the report said, another phenomenon is posing an increasing challenge for the maritime and insurance industries: the shadow fleet.
Since the start of the war in Ukraine, the size of the shadow fleet has grown significantly. Today, around 17% of the world tanker fleet is thought to belong to the shadow fleet: estimates indicate there are close to 600 tankers trading Russian oil alone. Shadow fleet vessels have been involved in multiple incidents globally including fires, collisions and oil spills, the report pointed out.
Justus Heinrich, Global Product Leader, Marine Hull, Allianz Commercial, said: “Although recent sanctions are making it harder for these vessels to trade, the shadow fleet continues to pose a serious risk to maritime safety and the environment, as many are likely to be older vessels that are poorly maintained and inadequately insured.”
In the event of an oil spill involving a shadow fleet tanker, cleanup costs could be as much as $1.6 billion, Heinrich added.
With ongoing geopolitical volatility in the Middle East, many ship operators have rerouted vessels around the Cape of Good Hope, adding time and cost to transits between Asia and Europe, the report noted.
For example, it said the rerouting adds around $1 million in costs and at least 10 days to a typical transit between China and Europe. Estimates say cargo volumes in the strait had fallen by two-thirds by September 2024, with rerouting costing the global economy some $200 billion that year.
The quality and safety of vessels may also be impacted as a result of this rerouting.
According to Captain Nitin Chopra, Senior Marine Risk Consultant, Allianz Commercial Asia: “With container capacity under pressure, some shipowners have gone out to the market to meet supply, purchasing tonnage that is often older and second best. This has helped push up values and seen vessels scheduled for scrap and older tonnage stay in the market longer.”
Chopra also said concern is that when called back into service, these vessels may not be in the best state to operate safely on longer sea routes and in rough weather.
Then there is the danger of fire causing losses to both ships as well as their cargo, not to mention the danger to crews.
Large vessel fires are still a major concern for hull and cargo insurers.
There were seven total losses reported across all vessel types during 2024, the same number as a year earlier. The number of incidents overall was up year-on-year to a decade high of 250, again across all vessel types, according to Allianz Commercial’s Safety and Shipping Review.
Around 30% of these fire incidents occurred on either container, cargo or roll-on roll-off vessels. More than 100 total losses of vessels have been caused by fires in the past decade. Efforts to mitigate these risks are underway, with regulatory changes and technological advancements aimed at addressing misdeclared cargo, a primary contributor to such fires, the report said.
This is critical as the electrification of the global economy poses further challenges given the growing number of lithium-ion batteries and battery energy storage systems being transported.
Khanna further stated that there is little doubt the shipping industry is becoming more resilient against the risks associated with large vessels.
This is not to say that they are under control.
Last year, there were only 27 total losses recorded.
To put this into perspective: there are over 100,000 ships in the global fleet.
However, uncertainty and multiple risks persist. Cyber-attacks and GPS interferences are increasing. Ceasefires have raised hopes, but the Red Sea security threat and supply chain disruption will likely remain.
“Meanwhile, the green transition requires much work. The coming years will be decisive and will determine the path of the sector and global trade,” said Khanna.
READ: More supply chain disruptions to be expected with new tariff regime
