As global trade tensions escalate due to U.S. tariffs and retaliatory measures from key trading partners, Danish Shipping examines the potential impact on the shipping industry and global trade.
As explained, the United States has imposed tariffs on steel and aluminum, and in response, countries such as Canada, China, and the EU have introduced tariffs on American goods. Despite trade tensions between the U.S. and several countries—including those in Europe—Danish Shipping does not foresee a decline in global economic growth in the near future. Danish Shipping takes a closer look at the three phases of the trade war:
- Shipping companies may see increased demand for transport capacity through potentially new trade routes. As an international sector, shipping generally has good opportunities to adjust its operations in line with changing trade conditions, making it highly resilient.
- Phase 1: New or increased tariffs come into effect, and the market risks being affected by increased uncertainty. However, existing contracts maintain trade flows despite the changed conditions.
- Phase 2: After the expiration of contracts, new trade routes take shape. Global demand for goods, and thus global trade volume, will remain unchanged. As a result, new trade flows will emerge as the market adjusts to the new conditions. For individual shipping companies, this may lead to a decline if the new markets these trade flows pass through are affected by specific local conditions, logistical challenges, or different competitive factors. Conversely, it may present new opportunities if the new trade routes involve longer sea distances.
- Phase 3: Lower global economic growth negatively impacts demand for goods, leading to a relative decline in global trade volumes.
- Current Status: Shipping is currently in Phase 1, where existing contracts ensure continued trade flows, but the market is marked by increased uncertainty. Going forward, shipping companies that are adaptable will still have good opportunities to adjust by establishing new trade routes with potential for higher earnings.
We are still in the initial phase of a full-fledged trade war
… said Jacob K. Clasen, Deputy CEO of Danish Shipping.
Furthermore, Clasen stated that the world is still in the early stages of a trade war, with its impact on global economic growth not yet significant due to existing contracts maintaining trade flows. However, he warned that once these contracts expire, new trade routes may emerge, which could negatively affect some shipping companies if local conditions or infrastructure change. Despite these challenges, opportunities may arise with longer shipping distances.
Clasen highlighted that the final phase of the trade war could lead to economic losses, reduced demand for goods, and lower trade volumes, significantly impacting the shipping industry and global economy. While trade restrictions lead to financial losses, he remains optimistic about Danish shipping companies’ ability to adapt, despite the increased uncertainty.
