Geopolitics boost freight rates but pose challenges to shipowners elsewhere

Geopolitical conflicts have pushed up vessel earnings while creating obstacles for shipping companies in crewing and making mid- and long-term investments, several shipowners said June 2.

Freight rates in various sectors have risen as Iran seized control of the Strait of Hormuz since its war with Israel and the US began Feb. 28, limiting maritime traffic vis the choke point to 90% below the pre-war level and prompting consumers to seek goods elsewhere, often in longer shipments.

The rate rally has come after multiple geopolitical events, including the Russia-Ukraine war and the Houthi-Israel conflict over Gaza, lead to shipping disruptions and generate more ton-mile demand in recent years.

Andy Dacy, chief executive of JP Morgan Asset Management's Global Transport Group, the US bank's shipowning vehicle, said geopolitics could be positive for shipping markets even though shipowners should prioritize crew safety.

"It's a bit of an irony," Dacy told the TradeWinds Shipowners Forum Greece at Posidonia. "Next 12 months we are in a pretty good shape.

"Our goal is to do it safely ... to support the world for what it needs."

Having jumped from $170,409/day Feb. 27 to $401,138/d March 4, Platts Global Dirty Tanker Index for scrubber-fitted, eco-ships stayed at a strong level of $221,657/d May 29.

Platts Global Dry Bulk Index for non-scrubber ships surpassed $32,000/d in May for the first time since it was launched in November 2023. It was last assessed at $35,807/d on May 29.

The Platts Container Index, a weighted average of key container routes, rose about 112% or $2,384/FEU since August 1, 2025, reaching a 10-month high of $4,512.7/FEU on June 1.

Platts is part of S&P Global Energy.

Caveats

Harry Vafias, CEO of Vafias Group, one of the largest Greek shipowners, said geopolitics "helps shipping markets obviously" but makes investment decisions like buying ships more difficult.

"You can't make any [longer than] mid-term decisions, just day by day," Vafias said.

The difficulty results from market uncertainties as geopolitical conflicts could be resolved and bring down freight rates eventually, but the timings of which are hard to gauge, according to executive.

"If you look at previous shipping markets, it's never going one way," Vafias said. "What if the war finally ends, there will be less ton miles, less sanctions, hundreds of newbuild ships coming into the market?"

The global order book stands at 21% of the existing fleet, with a record 60 million compensated gross tons due to be delivered from shipyards in 2027, according to shipbroker Clarksons.

"Sooner or later the party will finish; the million-dollar question is when," Vafias said.

Takeshi Hashimoto, chairman of Japanese shipping conglomerate Mitsui O.S.K. Lines, said the Hormuz disruption creates "an operational nightmare" as some of its tankers remain stranded in the Persian Gulf, but that "overall bottom line is slightly better."

"I am relatively optimistic" over freight markets, Hashimoto said. However, increasing Chinese yard capacity as some shipyards return after years of inactivity could trigger even more newbuild orders and create ship oversupplies down the line, he added.