THE pandemic wreaked havoc on “just-in-time” supply chains with streamlined sourcing.

Businesses learnt the hard way that “just in case” models make sense in a world of extreme events, where the inefficiencies of sourcing redundancies and higher inventories are hedges against not having a product to sell.

A similar dynamic may now be playing out across the global shipping industry. And on a larger scale.

The pandemic is long over but, courtesy of geopolitics, disruptions remain rampant. As FMC commissioner Daniel Maffei put it: “Black swans are now as common as pigeons in Central Park.”

The consensus is for more splintering, more conflicts, more disruptions.

Rising trade inefficiencies and bifurcated fleets imply that the world will need more ships, all else being equal, to move the same amount of cargo.

A geopolitical tipping point has been passed. You would be hard-pressed to find anyone predicting some kumbaya moment, with all the world’s governments joining hands to embrace unfettered trade, uniform regulation and mutual goodwill.

In today’s divided world, there is less fear of premature obsolescence when ordering a newbuilding with traditional propulsion, because there is less of a belief in a future global carbon tax.

There is less impetus to retire ageing tonnage because there is greater belief that older ships will continue to find employment outside regional emissions zones or in sanctioned fleets.

Container lines are showing a curiously resilient hunger for tonnage, both young and old.

Boxship leasing rates remain near post-Covid highs despite slumping freight rates. Hapag-Lloyd just announced the purchase of the Zim’s leased fleet for $4.2bn or $35 per share, a 58% premium to Zim’s closing price on Friday.

Boxship scrapping remains exceptionally limited. In fact, scrapping for all ship types has been unusually low, coinciding with rising geopolitical unrest.

The number of ships scrapped annually in the three years after the pandemic is fewer than half the average in the three years before it.

Perhaps this is nothing but the same age-old story: shipping’s seemingly unstoppable urge toward overcapacity.

But there may be a new wrinkle this time: a belief among owners and operators that world trade and geopolitical relations have fundamentally changed, that black swans are just white swans, and that there will be demand ahead for a larger and more flexible global fleet.

If so, shipowners would want to have enough tonnage to take advantage of the seemingly inevitable disruptions to come, lest they find themselves in the shoes of just-in-time importers during Covid, suffering stockouts when demand was preternaturally high.

Greg Miller
Senior maritime reporter, Lloyd’s List

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