Good morning, Joel, and welcome back to Commodity Conversations. Much has changed since we last spoke. You mentioned the idea that “ships are the new chips”. What did you mean by that?
“Ships, the new chips” captures a broader shift in supply chain economics and geopolitics. In the old paradigm (homo economicus), freight was largely treated as a service: secure the cargo, charter the vessel, pay the freight, and optimise the margin. That model becomes far less reliable when commercial sea routes are disrupted, sanctions change, war-risk areas expand, canals are constrained, or contractual and insurance conditions vary during a sea voyage.
Today, controlling shipping capacity can be as strategically important as controlling the cargo itself. Security and reliability take precedence over pure cost efficiency—and when they conflict, national security and strategic interests can outweigh sustainability targets or short-term ROIC. Physical transport capacity has therefore become a strategic asset. We see this in an exaggerated form in energy -VLCCs’ historical rates, vertical NAVs, and Snap’s contango.
When routes through the Persian Gulf, Red Sea, Panama Canal, or Black Sea are disrupted, voyages lengthen, and vessels are tied up longer, increasing tonne-miles at an already high fleet utilisation level.
This is compounded by the rigidity of vessel supply. Since around 2010, shipbuilding capacity has contracted materially, while the industry faces ageing fleets, regulatory uncertainty, limited yard capacity, sanctions, shadow and “dark” fleets, slower average fleet speeds, higher compliance requirements and decarbonisation pressures. The supply picture is increasingly complex and tight amid these adjustments.
The consequence is simple: cargo interest players – traders – may have the commodity, the buyer, and an attractive arbitrage – geo, time, substance – but if they cannot secure the ship, they cannot execute the trade. If the market moves while they wait, the opportunity disappears.
Given such a healthy balance sheet and the industry context, capital allocation becomes a leading active indicator. This includes investing not only in origination, processing and logistics, but also in direct or indirect exposure to the vessels that connect those assets.
The key question is no longer simply “what is cheap today?” but rather “which capacity will be scarce when the next cycle or disruption arrives?”
Cargo interests’ players are becoming significant fleet controllers through ownership, stakes, joint ventures, pools and long-term commitments. They already control major physical commodity flows; increasingly, they will also control the fleet needed to move them. It is already happening, and it is a game-changer.
Commodity traders have always chartered ships. Why is that no longer sufficient?
Because a charter gives you commercial control, but not necessarily control of the underlying asset. In a voyage or time charter, you have rights under the charterparty, but your execution remains subject to your carrier, the vessel’s condition, the contractual allocation of risk, sanctions, insurance, war-risk provisions, and the practical availability of the vessel.
In a disrupted market, that distinction becomes critical. A trader may have a profitable transaction on paper yet be unable to execute it because the vessel cannot enter a particular area, the counterparty will not accept the risk, insurance terms change, or the contractual position lacks sufficient flexibility.
So ownership matters because it gives you more influence over whether a ship enters a disrupted area?
Exactly—but I would go further. Ownership does not make a vessel immune to disruption, of course; it gives you a materially stronger position from which to manage it. It adds an additional layer of strategic optionality. With an ownership stake and suitable commercial and management arrangements, a company may have greater influence over operational performance, repositioning, and the decision to wait or enter a higher-risk area. All decisions remain subject to safety, sanctions, insurance, and contractual obligations.
Risk Management Control does not eliminate risk; it means understanding it, pricing it, transferring what can be transferred, and preserving the ability to act when conditions change. Specialist best-in-class solutions, such as North Standard’s Strike & Delay, can also help significantly to address disruption exposures that traditional planning may overlook.
You also argue that geopolitics has become more important than economics. How does that relate to ship ownership?
Economics still matters, but companies and governments are placing greater emphasis on supply-chain security, resilience, and national interest. They may prefer a more secure supply chain even if it costs more. Ports, shipyards, the merchant fleet, energy corridors, and commodity flows are therefore both commercial and strategic assets.
China has built influence across several parts of this system through its Belt and Road Initiative, and other powers, including the US and India, are now paying greater attention to similar strategic networks. Corporate decisions and public policy increasingly overlap. Supply-chain resilience is becoming part of national strategy, and national strategy is reshaping commercial economics.
You use the term “geo-shipping”. What does it mean in practice?
Geo-shipping means analysing shipping alongside international trade, commodities, finance, law, liquidity (bond markets), security and geopolitics. Shipping markets cannot be understood in isolation from sanctions, tariffs, interest rates, insurance, shipbuilding capacity, ports and relations between geopolitical blocs. Commodity markets also depend on freight rates, vessel availability, port options and the routes available for moving goods. Geopolitical risk is increasingly embedded in the economics of both commodities and shipping.
The implications are practical. Corporations and public bodies need talent that can connect these disciplines, spot emerging bottlenecks, and ask the right questions early enough to inform decisions. The objective is not to produce a clever theory; it is to ask the right questions early enough to make strategic decisions. That is why multidisciplinary expert advisory committees are increasingly common at board and public-policy levels. The complexity is now too high for siloed decision-making.
Is world trade shrinking because of these disruptions?
Trade is being reorganised more than it is shrinking. Goods still need to move from producers to consumers, but disruptions can lengthen routes in an already highly utilised market. This increases tonne-miles and demand for ships, even if cargo volume remains similar. We should therefore consider origins, destinations, route availability, voyage duration, congestion, fleet speed and the supply of compliant vessels—not just total trade volumes.
We are also seeing the emergence of alternative maritime corridors—NSR and Chancay—and non-maritime corridors. The crisis affecting traditional routes—Suez, Panama, and some Black Sea and Middle Eastern passages—is prompting companies and countries to rethink their networks rather than simply wait for the old system to normalise. It’s time to ask different questions. Moreover, companies are not only restructuring physical supply chains but also reforming payment chains.
How quickly can the industry build additional vessels?
Not quickly. Shipbuilding capacity has contracted and become more concentrated since the financial crisis, while yards face labour, cost and capacity constraints. Shipowners also compete with container ships, LNG/LPGs and car carriers for slots. Regulatory and alternative-fuel uncertainty makes investment harder, as a vessel ordered today may operate for 20 to 25 years. Meanwhile, longer voyages increase demand for tonnage. Depending on the vessel type, new orders may not be delivered until 2029 or later, making vessels already in service more valuable because they are available now.
What does that imply for vessel prices and freight rates?
The effect varies by shipping segment, as each has its own fleet age, orderbook, trade patterns and earnings. In some tanker markets, a five- or ten-year-old vessel available now can be worth more than a newbuilding delivered a year or more later. Buyers pay for the earnings immediate availability can generate. Current fundamentals and dynamics, adjusted, only put upward pressure on freight rates and asset prices.
How does this affect agricultural commodities?
Freight rates and supply chain logistics costs can be a significant part of the delivery-at-destination price of agricultural commodities. A canal restriction or a longer route can make a grain cargo less competitive.
Food and fertilisers are also increasingly viewed through the lens of national security. Disruptions to energy supplies can affect fertiliser production and availability, while conditions in the Black Sea remain important for wheat. Therefore, everything we are discussing here has a major impact on agri-commodities. And remember, there is no Plan B for the Bosphorus.
Is the main problem that cargo cannot move, or that moving it is prohibitively expensive?
Both. The market can be disrupted physically, financially or contractually—and the three can reinforce one another. A route need not be closed for a trade to become uneconomic. Freight, insurance, security, congestion and contractual risk premiums can rise sufficiently to undermine the economics. Legal terms also determine who bears the consequences when conditions change, including sanctions, force majeure, deviation, safe-port, off-hire and insurance clauses. The key question is whether the cargo can be delivered safely, legally, insured and profitably under the prevailing conditions. Again, confusion can lead to inaction.
Is insurance still available for these trades?
Yes, but “insurance is available” is not the same as “all risks are covered on the same terms.” Availability, exclusions, limits, deductibles, pricing and underwriting appetite depend on the nature and location of the exposure. Relevant covers can include P&I, Hull & Machinery, cargo, charterers’ liability, war risks, loss of hire, and specialist disruption products. The key is to map the actual operational exposure against the policy wording and the contractual allocation of risk.
The International Group P&I Clubs are fundamental to global trade, but the insurance market is evolving alongside geopolitical developments. Sanctions, parallel coverage arrangements, shadow fleets and changing war-risk exposures are creating a more fragmented risk landscape. That makes counterparty quality particularly important. In a stressed market, a good risk-management solution must assess the financial strength, claims capability, exclusions and legal enforceability of the protection you buy.
The industry therefore needs a continuous dialogue among traders, charterers, shipowners, lawyers, operators, brokers and insurers. Risk is changing faster than the organisational silos inside many companies. Addressing confusion requires ongoing dialogue among key supply chain stakeholders. This is why companies like North Standard play such an important role in the industry; they lead initiatives that foster productive dialogue among all players, helping make the industry safer, more reliable and more efficient.
The International Group—comprising the 12 most prominent Protection and Indemnity (P&I) clubs—now covers about 80 per cent of the global fleet, down from over 90 per cent not long ago. This decline in the percentage of the fleet covered by the International Group is concerning, as it leaves the seas, coastal areas and supply chains far more vulnerable and fosters a parallel insurance market that is difficult to rely on given the enormous interests at stake.
Where does the shadow fleet fit into this picture?
The shadow fleet reflects the fragmentation of global trade and raises questions about ownership, management, flag, class, insurance, sanctions exposure, vessel condition and counterparty risk. These ticking time bombs at sea are arguably among the greatest global risks to supply chains, both economically and environmentally.
We talk about protecting ships and cargoes. Are we doing enough to protect the crews?
Crews must remain at the centre of the discussion. Seafarers can endure months of severe pressure, particularly when crew changes are complex, supplies are uncertain, or vessels operate near conflict zones. Injuries and deaths are human tragedies, not merely operational incidents. Shipowners, governments, the IMO and maritime organisations all have responsibilities. Resilience includes protecting the people who make trade possible. Risk Management Control must therefore address human risk alongside financial, operational, legal, insurance and geopolitical risks.
Who are the winners and losers in today’s market?
Participants who control the commodity, transport capacity, or reliable access to it have more options, though control does not guarantee profit. This lets fleets reposition, change employment, respond to regional dislocations, or avoid a particular risk area. Some traders are therefore moving beyond chartering to take ownership stakes, build dedicated fleets, including the latest addition, Volare, or secure long-term access. The strongest position belongs to organisations that identify and price risk early, execute reliably, and preserve optionality.
At the country level, the question is ‘Are you energy- and/or agricultural-commodity-dependent?’
Do these changes create opportunities for new ports and service centres?
Yes. When routes change, demand for bunkering, repairs, supplies, crew services, insurance, and security can shift as well. Ports such as those in Morocco, Gibraltar and Durban may benefit from routing changes. Alternative corridors also matter. The Northern Sea Route has seen increased activity but remains seasonal, dependent on ice and infrastructure, and exposed to geopolitical, sanctions and insurance risks; it is an alternative rather than a straightforward replacement for Suez. For Russian interests, the ability to navigate eastward from the Urals opens a world of possibilities, far removed from NATO’s zone of influence. The question is what alternatives are available if a traditional route becomes unusable.
Has security become more important than sustainability?
Security of supply chains and national interest are increasingly taking precedence when they directly conflict with sustainability goals. Sustainability has not disappeared, but the hierarchy of priorities has shifted: a supply chain must reliably provide energy, raw materials, food and transport before it can decarbonise. Shipowners must make long-term choices about fuels, capital costs, and infrastructure despite uncertainty about technology, regulation, and future costs. The relevant question is which option is technically viable, financeable, compliant, secure and resilient over the asset’s life.
Can shipping pursue security and decarbonisation at the same time?
It must, though timing matters. Security and continuity of supply are immediate constraints, whereas decarbonisation requires long-term investment. Owners need available fuels, infrastructure, workable technology, predictable regulation, and customers willing to absorb the costs. Charterers and cargo owners must also understand the implications of the choices they request. Since vessels may operate for decades, investment based on short-lived assumptions can become uneconomic. Assess security, economics, and decarbonisation together.
What is the main message you would like readers to take away?
My main message is simple: in this environment, asking the right questions is a competitive advantage. Insanity is doing the same thing over and over again and expecting different results.
Complexity requires unconventional talent to help fit the pieces of the puzzle together—pieces from very diverse disciplines that may seem unconnected.
In a fragmented, geo-economic world, controlling the commodity cargo may not be enough; companies also need to understand and, where justified, control the transport capacity, contractual rights, insurance and expertise required to move it.
Remember, as artificial intelligence advances, the value of human contribution grows. You learn if you’re teachable.
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