A president (stating TARIFF as ‘lovely’ word has left trades at askance! Shipping being a derived demand of economic activities is perplexed about volumes and tonne-miles, after recent ownership and freight fluctuations exemplified by ship prices thrust by high freight rates in most sectors, segments and sizes indeed! Reality, as is that firm markets seldom hold! This when UNCTAD reports record $33trillion world trade in ’24 with 3.3% growth envisaged in ’25! At end ’24 markets in Bears’ grip: Crude oil near 70$: about a mbpd oversupply forecast for ’25 and stocks falling 20% in the wake of phenomenal rise of 600% from 2020!!
Nonetheless, geopolitics has shaken foundations and pillars of shipping, trade and logistics with info available to enforcers and misusers alike. Like mobiles, it is a threatening tool in anyone’s ploy with viruses and what not! Have AIS, LRIT, ECDIS etc morphed converting ships and cargoes to sitting ducks to all including pirates, terrorists and organisations and missions ashore bend on using trade & ships as bargaining / negotiating chips.
Leaving aside politics, GEO -geographical- has become Damocles sword whilst politics an Achilles heel what with flags of convenience etc that shipping has lived and survived with, ensconced in! It does take all to logistics, that is compelling service part -once shipment effected- camouflaging source: certificate of origin to start with- modifying trade documents in transit, margins etc such that it may be acceptable while -encashing LC- not intercepted and stopped enroute, sold CIF to deliver anywhere, offshore storage too, for resale to avoid and minimise wakes.
This ‘track-catch’ (like mobiles pursue users) shadows ship-laden cargoes (not just energy: oil and gas) whatever need be frowned upon! It is fraught with lurking danger even after delivery with claims and cross claims surfacing globally. Banks were found fixing LIBOR; replaced with SOFR?! JP Morgan Chase & Co was fined 1.8m$ in Singapore over Bond Trades! Claims of many kinds including origin, insurance, mis-delivery, quantity etc ensue trying to whitewash deals! Is insurance industry too getting dragged in and taking measures to avoid subversion!?
As for shipping used to embargo / blockade and taking such games in stride, bypassing as necessitated, new danger is blackmail and ransom of not only crew -like in piracy- but ship, cargo and pollution risks as well! Lord Neptune is at loss to answer prayers from all quarters: crew & their families, and all lined up one way or the other indirectly too! Herein is a new challenge that shipping is subject to: ransom for not targeting by unknowns (as agents) afloat on behalf of mafiosi, terrorists, separatists, law breakers et al.
Troublemakers are well camouflaged and unidentifiable, using operators through bargainers, having pistols, guns, missiles deliverable through drones at chosen targets as samples while negotiating! Drawing blood to get message across is resorted to, pushing global panic buttons, as ships are owned, chartered in chains, manned, managed and operated by entities with questionable track records, cutting costs by tax planning, evading norms and conventions/rules/regulations every which way possible!
There is no simple precedent to tackle these in international waters -UNCLOS, its new BBNJ or not, Coastguard or Navy of any country can enforce rules or justice, in open seas, with rights of innocent passage through territorial waters also and hot pursuit fair enough!
Who will patrol `free’ trade routes? Will insurance collect premia and engage willing navies idling around? Freelancing ex-armed forces can be called, like North Koreans with Russia against Ukraine. UN peacekeeping force afloat to protect trades? Takes us to many ideas and new solutions never thought of or thrown up!
Before I get traced-monitored as suspect #1 by the good or evil minded, here are apologies for sharing information streams on what’s happening or could happen at the risk of ideating new possibilities. Professional view is to be prepared and not get caught. Hence all in trade should ensure that there would be no leak of critical or regular information that could be utilised by game changers. Do not rule out office staff, intermediaries: brokers, insurers etc who are privy to delicate info. Should AIS and others be discontinued is a query to start with!!
As faced off Somalia, organised crime with mafia-like settings can start tracking to go after! Who will patrol, organise preventive action and rescue from wrongdoers is an apt question. As vast areas of sea away from coasts and islands cannot be monitored for initiating action in good time, terrorists of any-many kinds and ransom seeker-facilitators could line up info channels of informants: reward seeking or innocent, to effect multiple ploys quickly.
Deepsea fishing trawlers could be useful carriers, as they bunker, crew change, fish and trade in international waters in most areas, with no allegiance to any creed. Yes, new technology enables monitoring everything with an eye in the sky, but who will go after the pie? Amen.
An alternative to US$ being grappled -starting with Saddam Hussein, Gaddafi etc- by many leaders, countries and amongst nine in BRICS is often a conjoining force against Uncle Sam, against which Trump has aired his vehement ire. Pushed by disintegrated USSR member states and others, alternative to US$ dominance -that bestows a small but huge transaction margin income to US banks during fund transfers, is the underlying issue. Thus, any kind and type of oil protectionism and its embargo under one pretext or other as evidenced against recent Russian oil trades is a show-stopper calling for retaliation. That India’s and others imports from Russia has grown phenomenally over a short period, casts shadows!
The captioned topic, throws up more questions than answers, as is a usual wont in such cases! In closing, underscoring that shipping is what linked Continents through sea trades with marine adventures after spice route was lost when Constantinople fell, through colonisation, migration and digitalisation, it’s fair to recall that half the world will freeze and the other half perish, if not for shipping.
Marex Media
