Geopolitical Conflicts Push Ocean Freight Rates Higher Without Denting Global Demand

A series of geopolitical disruptions throughout the 2020s —the Covid pandemic, the Russia-Ukraine war, the drought in the Panama Canal, the Red Sea crisis, the tariffs announced by the United States and the recent crisis in the Strait of Hormuz— has reduced the effective supply of available vessels, but has failed to curb economic growth or aggregate cargo demand, according to executives and analysts who spoke at the 18th Capital Link New York Maritime Forum. Angeliki Frangou, of Navios Partners, argued that spending on artificial intelligence infrastructure and the sustained rise in defense spending have become new demand drivers for industrial materials, energy and supply chains.

The most visible impact can be seen in the tanker market, where rates have surpassed all historical precedents. According to Lloyd's List, VLCC, suezmax and aframax rates have broken records, with some voyages generating earnings well above $500,000 per day and the most profitable routes approaching the equivalent of one million dollars per day. The immediate trigger is the Iranian attacks and the threat to transit through the Strait of Hormuz, which have disrupted trade patterns and forced the addition of military escorts and ship-to-ship transfers, absorbing extra fleet capacity across all segments.

According to specialists cited by Portos e Navios, shipping will increasingly face health, military and trade challenges that undermine the sector's predictability amid growing global multipolarity. Along the same lines, voices at the New York forum noted that the shift from a unipolar order led by the United States toward a multipolar one could make these disruptions structurally more frequent, which in turn is prompting shipowners to expand their fleets and fueling growing nationalist interest in vessel ownership and control, particularly in the Middle East.

Columnist Luiz C. Oliveira, of Jornal Portuário, warned that a crisis on one shipping route can trigger diversions, longer voyages, higher fuel consumption, delivery delays and higher insurance costs, effects that end up spilling over into sectors unrelated to the original conflict. According to his analysis, importing and exporting companies that had no part in any diplomatic decision end up absorbing those extra costs, which can be partly passed on to shipowners, shippers, importers and, in some cases, even the end consumer.

Despite the current boom, executives consulted at the New York forum warned that the bonanza is not guaranteed in the long run: Frangou stressed that a prolonged geopolitical disruption could end up damaging global economic growth, and that the extraordinary spending tied to AI and defense will not necessarily continue indefinitely. The risk of new port fees between the United States and China, suspended in November 2025 but with the trade truce extended only until February 2027, even led shipping companies such as Star Bulk and Safe Bulkers to list shares in Athens as a hedge against a possible escalation of the trade conflict.