SHIPPING is doing very nicely right now. Shipping stocks are outpacing the pack. Shipowners are cash rich and the disruption driving the profits just doesn’t seem to want to go anywhere.

Viewed through the traditional shipowner lens of cyclical opportunities, such periods should be considered a welcome anomaly.

Return on equity over time in shipping is not great and, as every successful owner from Onassis to his natural heirs today know, there are long periods where shipping is not making any money.

The trick is to survive the fallow periods long enough, with enough of your capital intact, to ride the boom markets when they appear.

Real shipping money is made in times of crisis.

Onassis made most of his money based on three wars, particularly the Suez Canal closure in 1956 and 1967.

One of his natural heirs was in London on Thursday talking at a private meeting where he recounted how fantastically lucrative sanctions and US unpredictability have been to the Greek shipping market.

Shipping thrives on unpredictability, crisis, and luck.

But in that same meeting, experts from every corner of the global value chain warned that everything from technology to globalisation itself was changing around this business model.

The supply of crises to fuel these profitable cycles may be plentiful right now, but the global economic structures underpinning shipping’s ability to profit from them are not necessarily going to be there forever.

Globalisation’s earlier phase was designed and defined by scale and symmetry.

One set of rules for all. One currency system to clear transactions. One consensus on the value of integration.

A containership leaving Shenzhen, could be virtually certain that its containers would pass smoothly to their final destination in any port, in any country.

Now, though, supply routes are mapped not only for distance and cost, but for political alignment.

They are increasingly contingent on security of passage and the shifting sands of sanctions regimes that may be profitable while they are in flux, but what happens if a more fractured global economy becomes the established norm?

Trade volumes have not collapsed in this new phase of globalisation. They have plateaued and re-routed.

Supply chains have not vanished, they have shortened, duplicated and hedged.

Capital has not gone home, but it has become more selective and more politically conditioned.

Meanwhile, data has become the new oil, the core commodity of the economy going forward.

Right now, the regular flow of crises are proving reliably profitable, and the Onassis model of cyclical survival holds firm. But how shipping’s traditional business models navigate this next phase of globalisation is far from clear.

Richard Meade,
Editor-in-chief, Lloyd’s List

Click here to view the latest Lloyd’s List Daily Briefing