APPEC: Geopolitical hurdles, US tariffs open new trade opportunities for shipping industry

Geopolitical tensions and economic uncertainties surrounding higher US tariffs may pose challenges for the global shipping industry, yet emerging trading patterns offer significant opportunities for firms to capitalize on new logistical demands, according to industry executives at the APPEC 2025 conference in Singapore on Sept. 9.

The shipping industry is experiencing a transformative shift that has opened new trade opportunities amid the recent global uncertainties. As conflicts such as the Russia-Ukraine war and instability in the Middle East disrupt traditional shipping routes, companies are adapting by exploring alternative pathways and forging new trade patterns, Takeshi Hashimoto, CEO of Mitsui O.S.K. Lines and Amitabh Panda, Managing Director at Tata NYK Shipping, said during a panel discussion at the APPEC hosted by S&P Global Energy.

"Geopolitical conflicts have created significant challenges, but they also offer opportunities for new shipping routes," Hashimoto said.

Hashimoto indicated that the need to adapt has led to the emergence of alternative pathways, particularly in regions such as Africa and India. This shift has allowed the shipping industry to maintain its crucial role in global trade, even amid disruptions.

Panda echoed this perspective, describing the geopolitical climate as a "new normal" that shipping companies must navigate.

"While trade disruptions are challenging, they also create opportunities for agile companies," Panda said.

As many countries reassess their trade relationships, shipping companies are finding new routes, particularly in emerging markets where demand is growing, Panda said. "Amid sanctions and tariffs, we are witnessing a substantial increase in trade flows between Russia and India, as well as Brazil and Asia, highlighting the adaptability of our industry to changing geopolitical landscapes."

For instance, Platts data analysis showed South Korea has completely halted imports of Far East Russian ESPO, Sokol and Sakhalin Blend crudes in the past several years, but Asia's third-biggest crude buyer ramped up shipments of Brazilian crude to 19 million barrels in the first seven months, up 41% from a year earlier.

"Dislocation in trade routes creates opportunities for those willing to adapt," Hashimoto said.

This proactive approach allows shipping firms to maintain their roles in global supply chains and explore burgeoning markets that promise increased demand, ultimately positioning them for growth in a rapidly changing environment.

Red Sea

Meanwhile, Hashimoto emphasized Mitsui O.S.K Lines' strategic decision to avoid the Red Sea route for major shipping operations due to geopolitical risks.

"We have significantly reduced our use of the Red Sea, opting for alternative routes to ensure the safety and reliability of our shipping operations."

Hashimoto highlighted that this cautious approach is driven by concerns over potential terrorist attacks and regional instability, which could jeopardize ship safety.

By steering clear of the Red Sea, Mitsui aims to maintain operational efficiency while navigating the complexities of the current geopolitical landscape.

Cost concerns

Despite these opportunities, the shipping industry faces significant challenges. Both Hashimoto and Panda acknowledged the impact of rising insurance costs and operational expenses, which have surged due to inflation and increased risk exposure.

"The costs of new shipbuilding and maintenance have risen significantly, affecting our bottom line," Hashimoto said. This inflationary pressure complicates the industry's ability to maintain profitability while adapting to new market conditions, he added.

Additionally, the unpredictability of US diplomatic and tariff policies poses a considerable risk to the shipping sector.

Hashimoto warned that while current tariff levels are manageable, any drastic changes could disrupt established trade patterns. "The uncertainty surrounding US trade policy makes it difficult to plan long-term investments," he explained.

Panda also expressed concern over the rising costs that the shipping industry is currently facing, attributing much of the increase to inflation and heightened risk exposure.