Safety and Shipping Review 2026

The shipping industry has undergone a fundamental transformation since Covid-19, breaking from decades of relative stability defined by steady trade flows and largely predictable operating conditions to become increasingly complex and volatile. Escalating geopolitical tensions, trade fragmentation, and growing uncertainty around strategic maritime chokepoints have introduced systemic risks into global supply chains, while extreme volatility in bunker fuel prices, congestion at critical ports, and climate-driven disruptions are pressures which are compounded by decarbonization challenges, sharply rising vessel costs, and accelerating fleet renewal demands. Taken together, these forces are not cyclical but structural - fundamentally reshaping the industry’s operating model and ushering in a new era in which maritime trade is more complex, capital-intensive, and risk-exposed than at any point in recent decades. 

The shipping industry is unlikely to revert to the relatively stable, efficiency-driven paradigm that characterized the pre-Covid-19 period. Instead, many of the structural forces that have reshaped the sector in recent years are expected to persist. Geopolitical fragmentation, the growing vulnerability of maritime chokepoints, and a more transactional approach to the provision of security are likely to sustain elevated levels of operational risk and route uncertainty. At the same time, regulatory pressures – particularly those linked to decarbonization – will continue to impose additional costs and accelerate technological transition across fleets. While global trade volumes are expected to expand over the medium term (but will be limited in the short term) this growth will likely be more uneven and regionally fragmented, reflecting shifts in supply chains, nearshoring trends, and evolving trade alliances.

The industry outlook is best characterized by structurally higher volatility combined with selective areas of opportunity. Freight markets are expected to remain sensitive to exogenous shocks, including geopolitical disruptions, energy price fluctuations, and policy changes, limiting the likelihood of a sustained return to historically low and stable freight rates. However, this more complex environment may also support greater earnings resilience for well-positioned operators. The ongoing capital expenditure cycle, coupled with constrained shipyard capacity, could further underpin market tightness in certain segments. Overall, rather than a normalization, the sector appears to be transitioning toward a “new equilibrium” defined by persistent uncertainty, higher risk premia, and a greater strategic emphasis on resilience over pure cost efficiency.

Conflict in the Middle East paralyzed the Strait of Hormuz, a critical global oil trade route, exposing thousands of vessels and 20,000 seafarers, causing severe disruptions to vessel operations, supply shortages, and severe mental strain for those crew enduring months on board facing threat of attack. The psychological impact of the conflict adds to pressures already inflicted by the Covid-19 pandemic, attacks against shipping in the Red Sea, piracy threats, and the rise of the shadow fleet –  crews that work on such vessels are more likely to face challenging conditions. Meanwhile, seafarer abandonments have risen for six years straight – a record high of more than 6,000 were left stranded last year. The shipping industry will struggle to retain and recruit seafarers at a time of growing demand for skilled workers, driven by automation and green transitions, ultimately threatening the sector’s resilience and global supply chain stability.

The Middle East conflict and the Strait of Hormuz blockade have caused extensive damage to vessels, cargo, and port infrastructure. Insurers face significant claims under marine coverages for damage to vessels including container ships, oil tankers and bulk carriers from missiles and drones in the region, as well as related damage to cargo. 

Marine insurers have supported the shipping industry throughout the conflict with continuity of insurance cover, albeit at increased premiums. However, for shipowners, the issue has been more about the risk to the crew and the vessel of transiting a conflict zone, rather than insurance considerations. Even when the Strait of Hormuz reopens properly, solid assurances of safe passage will be required, involving the international community, particularly if traffic is to return to its pre-war levels, of as many as 140 vessels a day.

The unprecedented closure of the Strait of Hormuz raises concerns about the future of global maritime trade. Historically open even during conflicts like the Iran-Iraq war during the 1980s, its blockade highlights the shipping industry’s increasing vulnerability to geopolitical tensions, as escalating security risks along strategic maritime corridors disrupt established trade routes, forcing rerouting and tightening effective vessel and commodities supply, which in turn has amplified supply chain pressures and reinforced persistent freight rate volatility.

As of June 15, 2026, Allianz calculates that around 1,150 cargo-carrying vessels (over 100GT), with a total volume of 29mnGT, were operating within Persian Gulf waters, representing an estimated combined vessel and cargo value in the range of US$125bn.

Strategically important shipping routes and infrastructure are increasingly seen through the lens of national rivalries, while many countries are looking to expand their naval capabilities to protect critical supply chains and routes. The reported proposals to impose transit fees on vessels passing through the Strait of Hormuz also signal a potentially profound shift in the global maritime order.

While any direct cost impacts on shipping and oil transport would be significant, the deeper implication lies in the normalization of “tolling” strategic waterways, where access could be priced, tiered, or politically conditioned. Most importantly, the emergence of such ideas – particularly if coupled with a more transactional US security posture – risks setting a precedent that could extend beyond Hormuz to other global maritime chokepoints, fundamentally reshaping global trade by turning freedom of navigation into a commodified and contested service rather than a shared international principle.

Navigating the matrix of geopolitical issues – from tariffs to regional conflicts and regulation – is the number one issue for shipowners and cargo operators going forward. The increasingly volatile and disruption-prone nature of global shipping trade routes is reinforcing the need for greater operational resilience and companies are shifting from "just-in-time" to "just-in-case" supply chains, prioritizing resilience over cost efficiency, The Middle East conflict and Strait of Hormuz closure underscore the need for politically-aligned partners and adaptable strategies. Shippers must demonstrate reliability despite disruptions, while rerouting supply chains to mitigate risks. The industry must balance resilience, geopolitics, and efficiency in an increasingly unpredictable world, where the cost of uncertainty is reshaping trade dynamics.

The conflict in the Middle East will likely have indirect implications for marine insurance claims, particularly with regards to inflation, and machinery breakdown and maintenance issues. Even before the outbreak of the conflict, average hull claim costs were projected to increase by as much as 20% over the next five years with claims costs per vessel already 33% above pre-Covid-19 levels. Many of the factors driving marine hull and machinery claims inflation in recent years have not gone away, including shortages of skilled labor, long lead times for repairs and spare parts, increased values, high energy and material costs, such as for steel, and limited capacity at shipyards due to high demand for new vessels and retrofitting.

As seen with the Covid-19 pandemic and the Russia / Ukraine war, supply chain disruption can drive claims inflation through longer repair times and higher repair costs. At the same time, the Middle East conflict is expected to drive higher inflation as increased energy costs impact manufacturing and transport. Trapped vessels, unable to adhere to maintenance schedules, may face heightened risk of machinery breakdown, while any delays with spare parts will compound challenges for insurers and the shipping industry.

Ships stranded in the Persian Gulf’s warm, shallow waters have become increasingly vulnerable to biofouling, where marine life accumulates on hulls, causing drag, reduced speed, and higher fuel consumption. Severe cases can render vessels inoperable. 

Outside the Middle East, another area of interest is the Arctic, the economy of which has surged, tripling in size since 2003 to more than US$650bn, driven by resource extraction, trade route development, and increased investment, particularly from Russia. In 2025, the Northern Sea Route (NSR) saw record activity, including the first China-Europe container ship transit, halving typical Suez Canal voyage times. However, Arctic shipping can pose significant risks due to harsh conditions and limited infrastructure. Allianz analysis show that machinery damage or failure is the cause of almost half of the 500+ reported shipping incidents in Arctic Circle waters over the past decade. At the same time, territorial disputes and sanctions can complicate operations.

Ships navigating conflict zones, and increasingly trade lanes, face growing risks from Global Navigation Satellite System (GNSS) interference, including GPS jamming and spoofing. Although jamming does not mean a vessel is sailing blind, such disruptions can compromise critical systems like navigation, AIS (Automatic Identification System), and safety equipment, potentially increasing collision and grounding risk in busy shipping lanes. GPS interference was cited as a factor in recent vessel collision and grounding incidents. In addition, the manipulation of AIS signals and data has led to incidents of falsified vessel locations, complicating issues such as sanctions compliance.

Fires on large vessels, including container ships and car carriers, remain a major concern. There were more than 200 reported fire incidents during 2025, down on 2024, but still representing the second highest total over the past decade. Larger vessel sizes can amplify risks, with overwhelmed crews often abandoning ship before salvage teams arrive. The increased size of vessels is also driving a trend for a rise in general average claims, where the shipowner and cargo interests share losses or expenditure to save the whole venture in an emergency. Such claims are typically complex and large. Contributions to cover losses can be as high as 50% of the cargo value, which if a vessel is carrying a few thousand electric cars, for example, could easily be in excess of US$100mn.

The presence of lithium-ion batteries, typically found in electric cars and consumer goods transported in shipping containers, has been linked to several large fire claims handled by insurers. Global lithium-ion battery deployment in 2025 was six times as high as just five years earlier. Demand for the storage device is expected to double by 2030. While battery technology is inherently safe, damaged batteries can lead to large fire losses on board vessels or in storage. As battery use surges, updated safety standards, vessel design improvements, and stricter regulations will need to keep pace if this issue is not to continue to challenge the industry.

Progress on the International Maritime Organization’s (IMO) greenhouse gas (GHG) reduction framework stalled at the end of last year after a number of countries opposed its adoption. Any ongoing uncertainty may delay investments in greener vessels and create regulatory fragmentation, industry division, and lost momentum on sustainability if different nations pursue different rules. Conversely, rising oil prices, driven by geopolitical tensions in the Strait of Hormuz, could renew focus on energy security and the net zero transition.

The adoption of low and zero-emission fuels in shipping is accelerating, with more than 50% of container ships on order in August 2025 capable of using alternative fuels, such as liquefied natural gas (LNG). However, regulatory and liability frameworks lag behind, creating uncertainty for shipowners when it comes to investing in more sustainable vessels, as well as for insurers. Alternative fuels pose different risks compared to conventional oils. For example, ammonia has zero emissions when used as fuel, but it is also toxic and corrosive, requiring specialized handling systems and crew training.

The number of dual fuel ships able to run on low-emission fuels has increased dramatically in recent years, with the number of such vessels in operation doubling since 2024. However, the operation of dual fuels can be more complex than traditional heavy fuel and therefore can be more susceptible to claims activity such as machinery breakdowns if crews have not had sufficient training or are unfamiliar with necessary procedures.