Shipping in the crosshairs as trade uncertainty hits all-time high.

At no point since tracking began on the subject have global trade policies been more uncertain than right now, according to one index developed in the US.

The Trade Policy Uncertainty (TPU) Index (see chart below) developed by four employees at the Federal Reserve Board analyses the frequency of joint occurrences of trade policy and uncertainty terms in major newspapers, firms’ earnings conference calls, and aggregate data on tariff rates in a way that is similar to existing volatility indices in mainstream financial markets, spanning equities and derivatives.

Since Donald Trump returned to the White House on January 20, the index, which goes back to 1960, has spiked to record levels, almost twice as high as previous peaks registered during Trump’s first term in office.

Donald Trump’s first six weeks back in the White House have dominated shipping headlines for tariffs, a push for peace in Ukraine, a renewed ‘maximum pressure’ strategy on Iran, the creation of a National Energy Dominance Council, and a planned tax on Chinese-built tonnage calling US ports.

A paper submitted by the creators of the TPU index documents that increases in trade policy uncertainty reduce investment and activity using both firm-level and aggregate data.

We might as well suspend making credible forecasts of future supply-demand balance across shipping sectors

Today’s uncertain trading and geopolitical conditions were discussed at length earlier this week as Splash celebrated its 10th anniversary.

The news cycle – and by extension shipping cycles – have accelerated and shortened in recent years, a viewpoint picked up by Andy Dacy, managing director of the global transportation group at JP Morgan Asset Management.

“Geopolitics, wars, pandemics, financial crises, and regulation have all buffeted shipping over the past 10 years. We’ve seen more of these in a shorter time span than before,” Dacy told Splash.

Nick Brown, the CEO of Lloyd’s Register, conceded that global trade has been tested by an extraordinary set of challenges over the past decade, listing the likes of the pandemic, sanctions, tariffs, and war, all of which, he said exposed vulnerabilities in the supply chain.

Writing earlier this week, Andrew Craig-Bennett, Splash’s lead columnist, noted that merchant shipping moves 80% of world trade. In money terms, the US accounts for a quarter of world trade, with the US accounting for 11% of world imports.

“11% is quite a lot,” Craig-Bennett wrote, adding: “Let’s assume that President Trump imposes tariffs in all directions – what happens to our business, the international carriage of goods by sea? Probably, not a lot, unless and until Mr Trump manages to crash the US economy. Stuff moving by sea finds other routes. If those other routes are longer, that’s more ton-miles.”

“As the Trump 2.0 reality show unfolds, as it does daily, often with singular market-moving tweets, we might as well suspend trying to make credible forecasts of future supply-demand balance across shipping sectors. Underwhelming spot earnings render shipping sentiment downbeat while we seek greater clarity on today’s geopolitical, trade and social threats,” noted a recent report from broker Hartland Shipping.

 

By Saritha RaiSam Chambers
Source:  Splash 247.https://splash247.com/shipping-in-the-crosshairs-as-trade-uncertainty-hits-all-time-high/. 9 March 2025.

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