Geopolitics overshadows the shipping industry

“EVENTS, dear boy, events,” was reportedly British prime minister Harold MacMillan’s answer to the question, posed by a journalist back in the 1960s, of what was most likely to blow a government off course.

That might be a truism, but the shipping industry has been reminded rather too often recently that unexpected, unplanned-for events can disrupt everything. And that is certainly what has happened in the past few days.

Seven days ago, I confidently wrote that decarbonisation would dominate discussion during the Singapore Maritime Week (SMW), now in its third day. The topic, I noted, pops up in the titles of events multiple times throughout SMW.

One panel discussion that escaped my notice last week was Geopolitics and the Disruption of World Seaborne Trade, which features in the Singapore Shipping Forum 2024 to be held on Apr 18 at the Raffles Hotel.

Sadly, that discussion has now become even more relevant. I imagine the session’s speaker Rahul Kapoor, global head of shipping analytics and research at S&P Global Commodity Insights, will have been making a few last-minute changes to his speech.

Ironically, a rather upbeat assessment of the container scene landed in my inbox a couple of days ago, from S&P Market Intelligence, including how US East Coast cargo flows are recovering from the Baltimore bridge disaster. Their next report is likely to be less optimistic following the events that started to play out on Saturday (Apr 13).

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At 10.37 am local time, the large Portuguese-flag container ship MSC Aries was seized by Iranian forces 50 nautical miles north-east of Fujairah, United Arab Emirates, and forced to proceed towards Iran.

It could be said that this is similar to the attacks and hijackings carried out since October last year by Yemen’s Houthi rebels.

Also, it is not the first time Iran has detained ships in or near the Middle East Gulf. But this action by one state against another was immediately justified in terms of the ship’s alleged ownership links to Israel.

Within hours, the International Chamber of Shipping (ICS) put out a strongly worded statement condemning Iran’s actions.

ICS secretary-general Guy Platten commented: “Iran’s seizure of the MSC Aries is a flagrant breach of international law and an assault on freedom of navigation. This reprehensible attack against a merchant ship once again places innocent seafarers on the front lines of geopolitical conflict. Our thoughts are with the 25 seafarers who are now captives of Iran, and with the families who are now in fear of their loved ones’ safety. Iran must release the ship as a matter of urgency.”

The global shipowners organisation also issued some practical advice, saying that ships transiting the region “should conduct a thorough threat assessment and liaise closely with military forces to ensure they are fully protected against further possible aggression by Iranian forces”.

Ironically, given what was about to unfold, last Saturday morning, ICS chairman Emanuele Grimaldi was busy briefing G7 transport ministers, who were meeting in Milan to discuss the importance of maritime connectivity and the industry’s security concerns.

Grimaldi, and Cruise Line International Association (CLIA) European chairman Pierfrancesco Vago reportedly discussed the conflict in the Middle East and the conflict in Ukraine. The ICS chairman emphasised the continued plight of the 25 crew members of the carrier Galaxy Leader held hostage by the Houthis, at roughly the same time as the capture of the MSC Aries by the Iranian Revolutionary Guards.

Then, of course, Saturday night saw the massive Iranian missile and drone attack on Israel. As this column is being written, what happens next is still a matter of intense speculation.

What can be said with some confidence is that there is now huge uncertainty over the safety of shipping in the Middle East Gulf. It has also shifted attention away from the MSC Aries, though the Indian government has reportedly made contact with Iran over the Indian nationals who make up most of its crew.

Possibly, by the time the Singapore Shipping Forum starts, it may a bit clearer how events in the Middle East will unfold.

While it is inevitable that the ongoing crisis will be very much on the minds of all taking part in SMW, there is a lot to be positive about when it comes to Singapore’s continued development as a maritime hub.

That is underlined by a new report from classification society DNV and Menon Economics. According to their Leading Maritime Cities (LMC) report, Singapore has retained its title as the leading maritime city in the world, followed by Rotterdam and London.

For Singapore, the good news is that the report expects it to hold this position for the next five years.

Knut Orbeck-Nilssen, CEO Maritime at DNV, said: “Cities are major hubs for knowledge, skills and innovation. Across various sectors, particularly in the maritime industry, they are competing to attract the best talent, the brightest minds, and the most promising business startups. As such, cities that succeed in these challenges will steer the green transition and become the leading maritime hubs in the world.”

Dr Shahrin Osman, co-author of the report and DNV’s Business Development Director, Maritime Advisory, said that Singapore is “undoubtedly the world-leading hub” and “appears unaffected by the many changes currently sweeping the sector”.

However, Busan, South Korea, overtook Singapore to become the world leader in maritime technology, adding US$9.2 billion to its export volume in the first half of 2023.

Interestingly, the report notes that, despite war and turmoil in the Middle Eastern region, Abu Dhabi has moved up 10 places in the maritime city league, from 32 to 22.

In the current troubled times, there is one certainty. The world will continue to need shipping to keep global trade flowing, whatever the challenges it faces.