Shipping now operates in a high-risk environment

French frigate escort
Risk is the new normal in the global shipping industry, with geopolitical tensions, protectionism, and climate change adding pressure. Former U.S. Defense Secretary Robert Gates warns of global threats not seen since WWII. Houthi attacks in the Red Sea impact cargo deliveries, diverting ships to the longer, costly route around Africa.
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The global shipping industry, responsible for 80% of world trade, is facing increased risks due to geopolitical tensions, rising protectionism, and climate change. Former U.S. Defense Secretary Robert Gates warned of global threats not seen since World War II at a shipping conference in Long Beach, California. The focus is on Houthi missile and drone attacks in the Red Sea and Gulf of Aden, but other concerns include political uncertainties and climate change-related costs.

Chris Williamson, S&P Global Market Intelligence’s chief economist, noted that the industry entered the year with the highest risk in 25 years. Elections in various countries could lead to more protectionist policies, while climate change impacts like bypassing the Panama Canal could drive up costs and threaten global economic stability. Disruptions caused by the Red Sea attacks have led to increased transport costs and diverted shipping routes, impacting cargo deliveries and trade volumes.

Militant attacks in the Red Sea region, including the sinking of a British ship by Iranian allies in Yemen, have further escalated risks in the industry. The threats of more attacks have caused concern among ship owners, leading to increased costs, delays, and disruptions in cargo deliveries. Despite retaliatory actions by coalitions and navies, the situation remains volatile and poses challenges for the global shipping industry.

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