TIMING is everything in shipping.

That much is obvious from the extraordinary prices currently being paid for secondhand tankers. Reports that UAE energy giant Adnoc has been scrambling to secure immediately available tonnage amid difficulties repositioning time-chartered vessels into the Middle East Gulf are a case in point. Some ageing VLCCs are reportedly changing hands for prices approaching those of newbuildings.

For sellers, the timing could hardly be better. For buyers, the bet is that today’s market distortions will persist.

Perhaps they will. Anyone betting on ever-higher asset values has been right for much of the past six months.

But recent events in the Strait of Hormuz, the Red Sea and the Black Sea serve as a reminder that shipping markets are being driven less by demand fundamentals than by disruption. Trade flows have become fragmented, voyages longer, and fleet productivity lower. What appears to be strength is often little more than inefficiency in disguise.

The immediate effect is freight supportive. Renewed military tensions around Hormuz, attacks on regional energy infrastructure, fixture cancellations in Ukraine and operational constraints in the Panama Canal all add friction to global trade. For segments such as dry bulk, particularly smaller vessels exposed to grain and fertiliser trades, those inefficiencies can provide temporary support.

But disruption should not be confused with demand.

Higher energy costs, geopolitical uncertainty and interrupted trade flows ultimately weigh on economic activity. They do not create cargoes. The current freight environment reflects vessels spending more time completing fewer voyages, not a surge in underlying consumption.

That distinction matters because the industry’s response suggests many owners are pricing today’s conditions as though they are permanent.

They are not.

Across most shipping sectors, freight earnings remain elevated, secondhand values hover near cyclical highs and newbuilding orders continue to flow. The global orderbook has climbed to its highest level in almost two decades, driven by sustained contracting throughout the 2020s and a recent surge in tanker orders.

Container shipping offers the clearest warning. Around 4m teu of new capacity is scheduled for delivery in 2028 — approximately the size of CMA CGM’s fleet on the water today. That will be followed by a further 3m teu in 2029. Those ships arrive into a market where global demand growth remains uncertain and where much of the recent strength has been sustained by diversions and delays rather than expanding trade.

The most dangerous words in shipping remain: “this time it’s different”.

There is little evidence of the structural demand boom that accompanied previous supercycles. Western economies are fragile, Chinese growth is steady rather than spectacular and global trade is increasingly shaped by political fragmentation.

Disruption can sustain freight markets for a surprisingly long time. It can justify remarkable asset prices.

But it is not a long-term business plan.

And shipping parties rarely end without a hangover.

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

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