We are witnessing a suspenseful moment. Measures taken by the new US administration, such as punitive tariffs on imports from certain countries, could significantly impact global trade in the coming years. However, it is still a bit too early to make precise predictions about the consequences.

The US plays virtually no role in direct maritime logistics for global trade. The US takes up only 0.1% of global containership building. None of the ten leading container shipping companies are based in the US or listed on a US stock exchange. Only 4.4% of the world’s fleet is controlled or owned by Americans. Holding a leading position in container shipping has never been a priority for the United States. Similarly, US banks do not play a major role in ship financing.

Yes, shipping itself is not a focus for US presidents. But US trade policy has a significant indirect impact on the shipping industry. Punitive tariffs on US imports from Europe and China, which are transported by sea, are relevant for shipping companies and trade. In the short term, there may not be major negative effects, especially if shipping customers try to circumvent tariffs before they take effect by sending goods on their way and stockpiling inventory. Container shipping companies might even benefit from such front-loading effects this year. However, in the medium term, these measures will have an impact.

The tariffs primarily affect global container shipping companies by influencing transport volumes. Car carriers will also feel the impact if imports from China or Europe to the US become more expensive. But shipping is impacted in other ways as well. The new US president has halted projects from the previous administration, such as the promotion of environmentally friendly technologies. The development of green hydrogen and offshore wind is not on Donald Trump’s agenda. As a result, the transition to climate-friendly propulsion technologies and fuels in shipping could slow down.

That’s true. However, if the US no longer adheres to the Paris Climate Agreement and if the US delegation at the International Maritime Organization (IMO) slows down negotiations on new requirements for shipping, that will have an effect. Even in the EU, the shift towards renewable energy and climate protection could lose momentum, but it won’t be reversed.

The EU has decided to include shipping in its emissions trading system starting in 2024. Shipping companies must pay for CO₂ emissions if their routes involve the EU. This policy will not be rolled back, especially since it has created a new source of revenue that could become attractive for other regions or countries as well.

From my perspective, a somewhat slower transition to climate-friendly propulsion and technology in shipping is a healthy development. The industry is already investing in ships that can run on alternative fuels, accounting for nearly 50% of the global order book. What’s still lacking in sufficient quantities are alternative fuels and the necessary infrastructure at many ports. The industry itself cannot create these conditions. Even before President Trump took office, there were already concerns about whether shipping could achieve the transition within the originally planned timeframe.

I don’t think so. The regulatory train has left the station and will not turn back. It may slow down, but shipping companies will continue to align their new ship orders with their climate goals. Asian shipyards have already adapted their production planning to this trend. Large apparel and consumer goods manufacturers, as customers of shipping companies, will continue to pay a premium for greener shipping to ensure a sustainable supply chain. It would be unwise for shipping companies to deviate from the transformation path.

Shipping, which has a reputation for being environmentally harmful and polluting the oceans, needs substantial capital to transition its fleets to greener technology. Although shipping companies currently have strong balance sheets due to the pandemic-driven boom, this situation can change. The shipping industry, which is highly dependent on economic cycles and global trade, competes with other sectors for capital investment in their transition.

Before the financial crisis, there was a major wave of new ship orders. Many of those ships will reach retirement age in the next five years. Shipping companies must decide how much of the aging fleet should be replaced with new vessels. I expect that at least the old fleet must be replaced, even if global trade does not grow. Additionally, inefficiencies in supply chains suggest a need for more transport capacity. At this point, we do not anticipate massive overcapacity and a ruinous price war in the shipping industry, as was the case after 2008.

Shipping companies have shifted their focus. Today, their priorities are quality and punctuality. To provide reliable service, a certain number of ships – and ideally some reserve capacity – are required. Alliances within the industry are being restructured to maintain high standards. Moreover, the proportion of ships owned by container shipping companies has increased from around 50% to over 60%. Following industry consolidation a decade ago, the ten largest container shipping companies now control more than 80% of new ship orders.

Unlike after the financial crisis, when a large number of investors owned ships and wanted to keep them in operation as long as possible, today’s container shipping companies exercise much greater control over their fleets. They can more easily decide to idle vessels, perform maintenance, or retire ships. This trend toward greater control over capacity suggests that we will not see another ruinous price war among container shipping companies.

If the conflict in the Middle East ends and shipping routes through the Red Sea and Suez Canal become safe again, we will see normalisation in Europe-Asia trade, which will affect transport prices and shipping companies’ earnings. However, a severe downturn like after 2008 is unlikely, and companies are financially resilient. Moreover, we should acknowledge Europe’s strong position: four of the five world-leading container shipping companies are European.

Costs depend on how efficiently ships are utilised. Alliances help optimise ship deployment and ensure reliable transport services. Given the high transition costs and the service commitments of shipping companies, partnerships – without engaging in price-fixing – make sense. Increased investments in port terminals also aim to improve reliability and cost efficiency in shipping.

After four boom years, the industry’s balance sheets are stronger than they have been in a long time. Companies are largely debt-free and hold substantial liquidity. Demand for financing has declined significantly. Right now, shipping companies are more investment clients than borrowing clients.

We don’t see that yet. We manage over 4,000 accounts for around 400 shipping clients, and the total liquidity on these accounts did not decrease in 2024. But we expect liquidity to decline this year as the shipping market normalises. Charter revenues are falling, and the shipping industry is no longer in a bull market. While companies are still financing new ship orders with their own funds, bank financing will become more important again to preserve liquidity buffers.

In Europe, there are still six to eight major banks that provide financing based on corporate creditworthiness. This number has remained unchanged in recent years. Additionally, there are banks like Berenberg that operate in the shipping segment as asset managers. These institutions conduct their business based on ship mortgages, which serve as collateral and typically contribute to very strong credit ratings from a banking perspective. Around ten to twelve institutions in Europe offer this type of financing. Overall, this represents a stable group of banks, which, however, has seen little growth in recent years. Growth in the ship financing markets has recently come primarily from leasing companies in Asia, and alternative sources such as private equity or debt funds.

European banks continue to play a role as ship financiers, but Asian leasing companies have significantly gained ground in this segment in recent years. China now dominates both shipbuilding and sales financing. The country’s share of the global order book has risen from around 10% to nearly 60% over the past two decades, following China's accession to the WTO. At the same time, Japan’s share has declined from 30% to 11%, and South Korea’s from 40% to 25%. This trend is unlikely to be reversed, especially since there are no significant capacities for building large commercial ships in Europe, the US, or any other Western-aligned country today.

I see a dangerous dependence on China in shipbuilding, which is politically underestimated and could be exploited by China in the event of escalating trade conflicts with the US and Europe. Large container ships used in the Europe-Asia trade route are significantly more expensive if built at a South Korean shipyard instead of a Chinese one. Many customers are concerned about a potential escalation in trade disputes and possible sanctions against China. As a result, European companies are increasingly seeking alternative financing sources in Asia, such as Japan, where we at Berenberg are actively assisting many clients in their search.

In the short term, there would be no immediate concern about maritime transport. Existing fleets remain in operation and do not need to be replaced overnight. Moreover, European shipping companies control more than half of the world's tonnage. However, when it comes to ensuring long-term shipbuilding capabilities for Europe, alternative capacities would be necessary.

No, there is no indication of that happening. When it comes to dependence on China in shipbuilding, policymakers in Europe and the US have so far done little beyond rhetorical commitments. This is regrettable and poses a potential risk to European trade interests.