THE victory of Donald Trump is a game changer for ocean shipping. His return to the White House in January will herald a new era of increased volatility and uncertainty.

Trump’s penchant for tariffs should have a significant effect on container import timing, while his positions on Russia and Iran could lead to a major shifts in sanctions policies and global trade flows.

The shipping industry has dealt with Trump before, during his first term in 2017-2020, but this time is different. Republicans will control the Senate and possibly the House as well, the Supreme Court has a conservative majority, and Trump cannot run for a third term, giving him carte balance in 2025-2028.

The initial verdict from Wall Street was negative for shipping.

The broader market skyrocketed on his election win; the Dow jumped over 1,300 points Wednesday morning. But shipping stocks did not follow suit. Numerous tanker and dry bulk stocks were down low single digits in early trading, while container liner Zim dropped the hardest, falling by high single digits early before recovering some ground.

Here come the tariffs

Even if US logistics planners believe Trump won’t go through with his most extreme proposal — a 100% tariff on all Chinese goods — they will assume that something is coming.

Tariffs are taxes on importers and US consumers, and importers’ logistics planners are likely to pre-emptively bring in cargo, paying higher inventory costs as a hedge against future tariffs.

Freight economist Jason Miller, a professor at Michigan State University, said in an interview with Lloyd’s List earlier this year that “2025 has the potential to be the craziest year we’ve ever seen on the ocean container side. If [Trump] wins, and the China tariffs happen, let’s say starting January 1, 2026, we will see front-loading like we have never seen before in 2025.

“There would be a massive pull-forward of demand as everybody rushes to bring in long-life inputs and goods from tariff countries, especially China,” said Miller.

The National Retail Federation released a new study on Monday on the effect Trump’s proposed tariffs would have on six goods categories: apparel, toys, furniture, household appliances, footwear and travel goods. In those six categories alone, the NRF said the cost increases passed along to American consumers would total up to $78bn per year.

During Trump’s first presidency, tariffs pushed up container volumes and freight rates in 2018, before the tariff deadline. According to data from Xeneta, freight rates spiked 70% in 2018. Tariffs then depressed volumes and rates in 2019 due to inventory overhang. It also led to retaliatory tariffs on US exports, altering trades for dry bulkers and LPG and LNG carriers.

Even higher tariffs in Trump’s second term could cause a greater surge prior to the tariff deadline, and a greater negative impact following that date.

Jefferies analyst Omar Nokta said: “The potential for a jump in imports ahead of tariffs has been discussed in the shipping markets, but to what degree this would occur remains to be seen.”

On the downside, he said trade growth has been double GDP growth this year, but this “is likely to revert to a lower ratio going forward as protectionist measures and potential tariffs limit trade growth”.

“Our overall take is that a Trump win would be viewed as worse for shipping,” said Stifel analyst Ben Nolan. “Certainly, a Trump win with associated tariffs is not good for global shipping, particularly container shipping and to some extent dry bulk.”

According to Clarksons Securities analyst Frode Mørkedal, “Trade tariffs could negatively impact shipping more broadly.” The trade war during Trump’s first term “had a negative overall impact on shipping, with tonne-mile growth falling by around 0.5% in both 2018 and 2019”.

Potentially major changes in sanctions policy

One theory on a Trump victory is that it will lead to tighter sanctions on Iran, reducing oil flows from that country and favouring more Saudi Arabian crude exports on board mainstream very large crude carriers.

That would be a plus for VLCC rates and negative for dark-fleet demand, although there is considerable scepticism on whether US sanctions could actually reduce Iranian exports.

Another theory is that the new Trump administration will reduce sanctions on Russia and vessel interests serving Russia, with negative implications for shipping. If Russian trade becomes more efficient, tonne-mile demand would fall.

“The Russia/Ukraine situation is unlikely to be resolved quickly, but based on how things stand, a Trump win would probably lead to a more rapid ceasefire and eventually an end to Russian sanctions, which would be bad for the tanker market,” said Nolan.

According to Eric Orsini, head of compliance and regulatory affairs at Lloyd’s List Intelligence, “Trump’s second term may see a significant shift in policy toward Russia and Ukraine. Since the invasion, the dark fleet* nearly tripled in size, to approximately 670 tankers today, in part to [circumvent] the oil price cap.

“If the price cap disappears, the necessity of the dark fleet moving Russian product ceases, and the dark fleet will only have illicit Iranian and Venezuelan product to move, reducing demand. Following Trump’s upcoming inauguration, the Department of Treasury could act swiftly to walk back Russian sanctions — as quickly as they were imposed — if directed to do so,” said Orsini.

Russian shipping sanctions have been the largest driver of secondhand purchases of older tanker tonnage. A change in policy towards Russia would decrease dark-fleet demand for older tankers.

Tanker asset values, which are historically high, are being driven from the top (by newbuild prices) and the bottom (by inflated dark-fleet asset pricing). A reduction of sanctions on shipments of Russian cargoes would reduce asset-price support from the bottom.

Hew Crooks, chief financial officer of Ridgebury Tankers, said during the Capital Link New York Maritime Forum in October that if the dark fleet business “unwinds”, then “there’s the possibility of a really hard repricing of the tanker fleet, and that runs from the old ships all the way back up to the top”.

The caveat to the thesis is that the oil price cap is specifically designed as a relief value to EU and UK sanctions on shipping service providers, particularly insurance. If the US unilaterally changed its sanctions policy on Russia, it would not remove the EU and UK sanctions restrictions for mainstream tankers and would leave dark-fleet demand in place.

Could Red Sea reopen sooner?

Yet another theory of the new Trump presidency relates to the Middle East.

It has been speculated that Trump could somehow compel peace in the Middle East more quickly, and/or take a harder stance on Iran and the Houthis, and thus reopen the Red Sea, causing a huge drop in tonne-mile demand, particularly for containerships and product tankers.

“Peace in Gaza and a tougher stance on Iran could eventually lead to safer passage through the Red Sea, which would be negative for container shipping,” said Nokta.

Nolan warned that “Trump is likely to be more aggressive with respect to the Houthis — it would be hard to be more passive — which may bring an end to that situation [which is] bad for every type of shipping if it were to happen”.

* Lloyd’s List defines a tanker as part of the dark fleet if it is aged 15 years or over, anonymously owned and/or has a corporate structure designed to obfuscate beneficial ownership discovery, solely deployed in sanctioned oil trades, and engaged in one or more of the deceptive shipping practices outlined in US State Department guidance issued in May 2020. The figures exclude tankers tracked to government-controlled shipping entities such as Russia’s Sovcomflot, or Iran’s National Iranian Tanker Co, and those already sanctioned.

Download our explainer on the different risk profiles of the dark fleet here 

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