Shipping Nations Warn Global Trade is Fracturing

The Consultative Shipping Group, comprising 18 major shipping nations, has issued a warning that global trade is fracturing due to conflicts, trade disputes, and extreme weather events. The group’s statement, published by Denmark’s maritime authority, highlights the impact of the Iran war, U.S.-China tensions, and sanctions workarounds on global maritime trade. The shipping nations are calling for stronger international cooperation, consistent rule enforcement, and support for freedom of navigation through institutions such as the International Maritime Organization (IMO). The group’s warning comes as the global supply chain continues to face challenges, including the COVID-19 pandemic and Russia’s war in Ukraine. The Strait of Hormuz, which was effectively shut down by Iran after the U.S. and Israel launched strikes against it in February, is a prime example of the global consequences of regional conflicts. The shipping industry is also facing increased costs, risks, and volatility due to the U.S.-China trade war, which has embroiled China and nearly every other U.S. trading partner. The world’s two biggest naval powers have contributed to the fragmentation and rise in tensions, with China aggressively increasing its military presence in the South China Sea and the U.S. toughening its rhetoric against China. The Consultative Shipping Group’s warning highlights the need for consistent enforcement of international rules across jurisdictions, transparency, and information sharing between relevant authorities. The group’s statement also notes that the increasing use of economic pressure as a leverage tool is effectively fragmenting the global shipping industry, leading to higher costs for businesses and consumers, as well as greater commercial and environmental risk. A.P. Moller-Maersk A/S CEO Vincent Clerc has also commented on the situation, stating that the company will add capacity to better take advantage of higher freight rates in a more volatile but potentially more profitable market.