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Shipping Industry - A recent years Economic and Business Review


In recent years, the shipping industry has navigated through a tumultuous period marked by unforeseen global events, notably the COVID-19 pandemic and Russia's invasion of Ukraine and the war at Middle East, the phenomenon of inflation together with new geopolitical and economic formations and alliances and the high level of interest rates. These events have had a profound impact on the operation of shipping businesses, transforming the industry and reshaping its future. As we explore these changes, we delve into the intricate challenges and adaptations that have emerged, highlighting the resilience and dynamism of the shipping sector in the face of adversity.

Ø In recent years, two important but also unforeseen events have occurred. One is the Covid-19 pandemic and the other is Russia's sudden attack on Ukraine. How much did these affect the operation of your business?

Our business as part of global shipping industry and integral to international trade, navigated unprecedented challenges, notably the COVID-19 pandemic and Russia's invasion of Ukraine. Globally the pandemic triggered a 4.4% drop in global seaborne trade in 2020, echoing the 2009 financial crisis. This era turned maritime shipping into a conduit for widespread supply chain disruptions, impacting economies globally. The U.S. felt this impact with a 7% fall in maritime container imports in early 2020, later countered by a surge. Furthermore, accidents like the Ever Given which wedged across the Suez Canal exacerbated the already high container freight rates, escalating global trade costs.

Moreover, 2020 due to COVID-19 pandemic marked a sharp 4.1% fall in global maritime trade. Russia's Ukraine on February 2022, incursion intensified these challenges, causing additional issues in supply chain, port congestion, and crew crises, due to the difficulty of coexistence of Russian and Ukrainian seafarers and their safe repatriation, particularly affecting Black Sea overall shipping operations.

A significant consequence of the conflict has been a spike in shipping operating costs, especially in the Black Sea, fueled by logistical challenges, halted Ukrainian port operations, infrastructure damage, fatal accidents due to war attacks and rising insurance and fuel costs.

These events have transformed the shipping industry, ushering in a new era of operational and logistical adaptations. The industry's resilience underscores its vital role in sustaining global trade amidst adversity.

Ø Lately we have been hearing more and more that the primacy of the dollar is in danger from a new currency of the BRICS countries (Brazil, Russia, India, China & South Africa). What is thought to be possible?

In the ever-evolving realm of global finance, the BRICS nations' (Brazil, Russia, India, China, and South Africa) proposition to launch a new reserve currency is stirring significant discussions, hinting at a potential transformation in the global economic order. This proposed currency, underpinned by a conglomerate of BRICS currencies, symbolizes a strategic stride towards economic self-sufficiency, posing a formidable challenge to the U.S. dollar-dominated international financial system. Advocated fervently by Brazil's President, this initiative is designed to bolster trade and investment within the BRICS countries, aiming to curtail their reliance on the U.S. dollar.

Responses to this groundbreaking proposal vary widely. Nations such as Turkey, Egypt, and Saudi Arabia have shown interest, while experts warn of the potential for economic alignment among countries with contrasting economic foundations, possibly escalating dependence on China's yuan. Notwithstanding these obstacles, the BRICS bloc is making headway in discussions, gradually gaining consensus for the idea.

Should this BRICS currency materialize, it could substantially weaken the U.S. dollar's dominance in global foreign exchange reserves. It promises enhanced ease in cross-border transactions and greater economic integration within the BRICS nations, potentially diminishing the U.S. dollar's role as the primary global reserve currency. This shift could also encourage the formation of regional currencies, reducing global economic volatility and lessening dollar dependency.

The journey towards establishing a BRICS currency is riddled with challenges and remains a subject of intense debate. However, the ability of BRICS to be the cause for a revision of the global financial landscape, challenging the long-standing dominance of the US dollar, is seen, if not impossible, at least for the next 2 decades, as something very difficult. Keep in mind that the extent of BRICS impact finally hinges on various factors, including global acceptance, stability, and implementation in international trade and finance.

Ø There is an assessment that we are facing global geopolitical events. Do you think this is the case? And if so, what might be the impact on global shipping?

The modern global geopolitical landscape is profoundly transforming the shipping industry. Heightened geopolitical tensions, such as the ongoing Russia-Ukraine conflict and most recently the war in the Middle East, have led to the reshaping of trade routes and patterns, heightened insurance costs, and increased security risks. This is vividly illustrated by the disruption in the Black Sea and East Mediterranean regions, where geopolitical strife has significantly impacted traditional shipping lanes and the world trading. Sanctions against major economies, notably Russia, have necessitated changes in shipping routes, cargo compositions, and have caused widespread supply chain disturbances. These shifts are driving a reevaluation of global trade alliances, with nations seeking to diversify trade partners to reduce dependence on countries embroiled in conflicts. The U.S.-China trade war and India's role in geopolitical formations and alliances should be presented as a key example of worldwide situations, affecting shipping demands in various regions.

The shipping industry is still contending with the aftermath of the COVID-19 pandemic, regardless of whether two years have passed, which highlights the susceptibility of global shipping to large-scale disruptions. Volatility in energy markets, especially in oil and gas, is directly influencing operational costs due to the substantial role of fuel in shipping.

Simultaneously, there's a push towards exploring alternative trade routes, like the Arctic passage, and a heightened focus on environmental and regulatory compliance. These efforts are directed at minimizing carbon emissions and fostering sustainable shipping operations. The industry is also adapting to technological advancements, which, while beneficial, raise concerns over cybersecurity, particularly the risk of cyberattacks on essential maritime infrastructure in a tense global climate.

In response to these complexities, shipping companies are undertaking strategic planning and risk management to adapt to changing trade patterns and to handle increased operational costs including the cost of the expected reduce of emissions. The shift of the world forces from globalization to state protectionism, navigates the shipping industry to an ocean complexities of the fragmented global political and economic landscape.

Ø What are the reasons, in your opinion, for increased inflation even in developed countries?

In the aftermath of the COVID-19 pandemic, developed countries are facing a significant surge in inflation; a multifaceted issue shaped by various intertwined factors included the cost of capital. Key among these is the vigorous economic rebound following the pandemic, characterized by an extraordinary increase in consumer demand. This surge, contrasted with ongoing supply chain issues, such as factory shutdowns, shipping delays, and workforce shortages, has led to a notable mismatch between supply and demand, escalating prices. Central banks, including the U.S. Federal Reserve and the European Central Bank, have played a crucial role through their monetary policies.

Geopolitical tensions, particularly the Russia-Ukraine conflict, have also significantly impacted inflation, driving up energy costs, a vital aspect of production and distribution. Concurrently, the labor market is experiencing heightened demand, resulting in increased wages as companies compete for employees, pushing up costs for goods and services. Governments' extensive fiscal stimulus measures during the pandemic have inadvertently increased spending power and demand, contributing further to the inflationary trend.

Other factors exacerbating inflation include rising global food prices due to climate change, supply chain disruptions, and geopolitical conflicts, alongside the cyclical nature of inflation expectations and the substantial increase in housing prices and changing post-pandemic housing preferences. Additionally, changes in trade policies have raised production costs, as domestic goods generally cost more than imports. Addressing this complex inflationary trend requires a deep understanding of these factors and a comprehensive, collaborative policy response.


As we navigate through these tumultuous times, the shipping industry stands at a critical juncture. The confluence of global events, from the COVID-19 pandemic to geopolitical upheavals like the Russia-Ukraine conflict, has reshaped the landscape of international trade and shipping. These challenges have not only tested the resilience of the industry but also underscored its indispensable role in maintaining the flow of goods across the globe. The industry's ability to adapt to rapid change is a unique capability that reflects remarkable flexibility. As we look towards the future, the shipping industry's continued evolution in response to these dynamic global forces will be crucial in sustaining the interconnectedness of our world's economies. The road ahead may be fraught with uncertainties, but the industry's proven resilience offers a beacon of stability in an ever-changing global landscape.

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