Maritime transport sails in storms but under control. Shipping risks in 2025 will be like in 2023-2024

By Marek Grzybowski

Shipping, ports and logistics will operate under the pressure of global turmoil and local tensions in 2025. Protectionism, administrative barriers, political turmoil and changes in regulations, cyberattacks and direct attacks on ships, limited supply of highly qualified seafarers – these are the main threats to shipping according to the opinions of top managers of shipping companies. This will have a significant impact on the operations of ports and global logistics. The coming period is a time of uncertainty in global and local markets, in entire regions and in strategic hot spots.
Uncertainty and volatility will increase fluctuations in global markets and slow down the pace of change in ocean shipping and short sea shipping, many processes related to innovation in shipping and ports, such as decarbonization, may slow down, because “the attention and finances of governments are directed to solving more urgent problems” – note the authors of the “ICS Maritime Barometer Report 2023-2024”.

 

 

 

— In the coming period (2024-2025), many countries around the world will be governed by newly formed governments tasked with keeping the industry active on their coasts and in their territorial waters. It is the industry that must pressure governments to provide answers and clear market signals to enable change – regardless of ongoing geopolitical unrest. Action is required by those forces that shape policy, dictate finances and set the parameters for ship safety – this is one of the main conclusions of a report prepared for the International Chamber of Shipping (ICS).

Conservative investments
According to the report’s authors, “investments are still largely conservative and focused on achieving targeted profits, and incentives for shipowners and operators to transition their fleets to greener fuels and technologies remain a challenge.” This is due to ongoing uncertainty about the availability of low- and zero-emission fuels and the appropriate bunkering infrastructure and conditions. Maritime transport operators are still waiting for hard market data that the solutions being implemented will be cost-effective and will enable the acceleration of the decarbonization of shipping. Or rather, it should be noted that the planned pace must be maintained, because operators are returning to the use of scrubbers. We wrote about this here

Shipowners suggest that “closer cooperation with governments and regulators” could help them introduce innovative solutions. The idea is to increase predictability in investment decisions when it comes to tonnage investments and the development of maritime businesses. Regulatory stability should facilitate the optimal allocation of resources – both public and private. ICS members also call for compliance with regulatory rigours. If stakeholders accept the new regulations, this should accelerate “the pace of progress on the green transformation front”.

Shipping in the turbulent oceans of change

— Shipping has repeatedly proven its ability to navigate the turbulent oceans of change. Over the years, we have successfully weathered numerous threats, from the global pandemic and the closure of major trade routes to cyberattacks and more. This ability to maintain the supply chain is the result of stakeholders across the maritime sector — such as shipping, ports, legal and financial services, equipment suppliers, etc. — working together to achieve common goals. I believe this experience has prepared us well for the challenges we face today,” emphasizes Emanuele Grimaldi, ICS Chairman, in the introduction to the “ICS Maritime Barometer Report 2023-2024.” The report is based on responses from 104 senior executives representing shipowners, ship operators, classification societies, trade organizations, service providers, shipbuilders, port authorities, the insurance sector, and law firms. This year, respondents’ perceptions of the risks and factors influencing reshoring, nearshoring, offshoring, and friendshoring were also assessed.

The information provided clearly indicates that there is a strong belief among managers in the resilience, adaptability and ability of our shipping industry to cope with the risks that may arise in global logistics.
– Maritime industry leaders have noted that they are likely to relocate their operations abroad if political instability occurs in their current regions of operation. They would also do so if they were exposed to defensive government policies or geographically concentrated risks, such as conflict, the International Chamber of Shipping report notes.

Flags of convenience will make life easier for shipowners
There is, however, a condition. Transferring their activities abroad will depend on the availability of a “trained and certified workforce”. Local administrative difficulties, as well as existing local risks in the region, may create a barrier. Here, it seems that many countries are trying to help shipowners to facilitate operations in restrictive or unstable legal conditions. Malta, for example, offers stable conditions for conducting shipowner business in Europe.

At the Progress Meeting, Larissa Vella, on behalf of the National Skills Council (NSC), informed about the implementation of the National Skills Strategy. This is a flagship initiative of the NSC carried out in cooperation with Transport Malta, supported by the Technical Support Instrument of the European Commission and developed on the basis of technical expertise of the OECD – reports on the Malta Maritime Forum social network. Larissa Vella explained that “thanks to the active involvement of stakeholders, including within the Forum, the project is preparing a skills gap analysis and needs assessment in the maritime sector as a pilot project within the national strategy”. She emphasised “the key role of the maritime sector in its success”.

Captain Cavid Bugeja stressed the importance of continued investment in the local maritime industry at the Progress Meeting. At the Forum, the Malta Maritime Commission presented a report on the activities of the Malta Ship Registry and the initiatives undertaken by the Merchant Shipping Directorate to promote Malta as an international maritime hub. The implementation of digitalisation of ship registration and administrative support will help to facilitate the life of Maltese-flagged shipowners.

Panama, Liberia, the Marshall Islands and Hong Kong have implemented comprehensive packages to facilitate the registration of ships under their flags and the management of their fleets. For example, after the outbreak of war in Ukraine, the Panama Maritime Authority (PMA) took decisive steps to protect the integrity of the world’s largest shipping registry, introducing strict legal measures targeting ships on international sanctions lists. The new regulations allow for the immediate cancellation of a ship’s registration and navigation licenses, significantly increasing Panama’s response to the growing global sanctions for illegal maritime activities, reports Maritime Safety News.

The changes were formalized with the publication of an Executive Order that outlines the conditions under which the PMA can revoke the registration and licenses of any vessel in Panama’s merchant fleet. This applies to vessels listed on sanctions lists issued by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), the United Nations Security Council, the European Union, and the United Kingdom.

The PMA emphasized that all navigation documents issued by the authority will be invalidated if a vessel is subject to sanctions. In addition, organizations under Panama’s jurisdiction are prohibited from offering classification or certification services to any vessel undergoing a review for the purpose of cancellation.

The Panama Ship Registry has 8,742 vessels and approximately 250 million gross tonnage as of December 2, 2024. The Panama Registry is a leader in the maritime transport market. – The enforcement of these measures by the PMA demonstrates its commitment to international standards and Panama’s reputation as a leading flag state. The decree allows the Directorate General of the Merchant Marine (DGMM) of Panama to propose a deregistration to the PMA Administrator for final approval, emphasizes the Panama Ship Registry, which announced: “We will automatically cancel the registration of any vessel that is involved in illegal activities or changes flags to avoid sanctions.”

The supply chain will evolve
The ICS report emphasizes that based on the opinions of managers, one thing can be taken for granted: “the supply chain will continue to evolve and will need a workforce” that meets the needs of ship operators. – As our industry continues to be affected by geopolitical turmoil, and seafarers face increased risks related to war and piracy, shipping faces new challenges in recruiting and retaining a skilled workforce – according to the managers.

It is believed that many issues related to the decarbonization of shipping will be resolved with fleet replacement. Investments in tonnage and the development of fuel production and new technologies will have a positive impact on reducing carbon dioxide emissions. Therefore, “the sentiment expressed in the report in relation to individual fuels will translate into the construction of a real order portfolio”. We can see this, for example, in the case of increasingly frequent investments in ships using sail and rotor propulsion. We wrote about this here

 

The green revolution in shipping is gaining momentum, with 6,500 ships predicted to be powered by alternative fuels by 2025. Clarksons’ Green Technology Tracker estimates that by 2025, the share of ships powered by alternative fuels will reach 6.5%. Today, an estimated 5.5% of the merchant fleet is powered by alternative fuels, compared to only around 2.3% of merchant ships in 2017, mostly LNG. Clarksons estimates that Energy Saving Technology (EST) has been installed on more than 6,250 ships, representing 27.3% of the fleet (by deadweight tonnage). However, shipping faces other risks.

– The pandemic, energy and trade security efforts to manage geopolitical unrest and adhere to decarbonisation goals, and economic policies that encourage local production and consumption have led to a significant and alarming increase in protectionism around the world. As newly imposed or relaxed tariffs affect trade relationships, either disrupting long-standing patterns or creating new ones, trade routes will continue to change — with costly and complex consequences for shipping and the broader global economy, Grimaldi notes.

“Maritime shipping will continue to adapt and evolve to meet new challenges. But we would be much more effective if our current relationships with governments and regulators were more collaborative. I have seen the changing mood over the past three years of this study, which clearly outlines the positive impact that clear policies, funding streams and assurances from governments and regulators can have on the maritime sector,” Grimaldi said.

However, there is no doubt that threats such as attacks in the Red Sea or elsewhere will pose a threat to maritime shipping. Despite a workforce of over 1.2 million officers and sailors, it is assumed that there may be a shortage of skilled workers. Political turmoil will not help the stable maritime market. In an era of massive use of IT tools and satellite systems, there is the constant concern of cybersecurity and the risk of GPS disruption. There are also a few other important risks that managers should consider. Protectionism and tariff barriers could reduce the supply of cargo or radically change sea routes. ASEAN and APEC strategies could significantly disrupt global supply chains. The Pacific is becoming the Atlantic’s competitor.