By Captain Rahul Khanna

According to Allianz Commercial’s recent Safety and Shipping Review, the shipping industry is facing new risks and challenges linked to the rapidly evolving geopolitical landscape in 2025, compounded by difficulties stemming from the legacy of Covid-19 and the ongoing energy transition.

The industry faces an increasingly volatile and complex operating environment, marked by attacks against shipping, vessel detentions, sanctions, and the fallout from incidents involving damage to critical subsea cables. Increased global protectionism and tariffs also present a threat, potentially interrupting or altering supply chains and long-held trade relations.

Additionally, traditional risks for the shipping sector remain, including large claims from typical risks, such as fires, collisions and groundings, which are still the main drivers for total losses of large vessels. While these risks remain top-of-mind, the industry has made significant maritime safety improvements in recent years. There was a record low in global vessel loss in 2024: 27 losses, down from 35 in 2023 and more than 200 through the 1990s.

The potential for maritime loss due to political risk and conflict is increasing with heightened geopolitical tensions. While total losses from traditional causes may have reduced over time, this positive trend could be offset by war and other politically linked exposures. It is important that shippers keep geopolitical risk in mind.

Developments in U.S. trade policy and rising protectionism have significantly impacted global maritime trade, with approximately 18 percent of it subject to tariffs as of mid-April 2025, compared with 4 percent in early March, and dramatic declines in shipments reported in the immediate aftermath of the Trump Administration’s “Liberation Day” tariff announcements. The future of these policies is uncertain, and any further severe trade restrictions could affect vessels at sea or in ports and disrupt supply chains, among other impacts.

The “shadow fleet,” including older, poorly maintained oil tankers, is also posing an increasing challenge for the maritime and insurance industries. These vessels engage in illegal oil trade under flags of convenience, often disabling identification systems and conducting risky ship-to-ship transfers. Since the start of the Ukraine War, the size of this fleet has grown significantly.

Today, around 17 percent of the world tanker fleet is thought to belong to the shadow fleet, and estimates indicate there are close to 600 tankers trading Russian oil alone. Shadow fleet vessels increase risk, including of environmental incidents around the world, such as fires, collisions and oil spills that lead to major cleanup costs due to lack of insurance. Although recent Western sanctions are making it harder for these vessels to trade, the shadow fleet remains a serious problem.

Large vessel fires are still a major concern for hull and cargo insurers, especially for containerships, car carriers, and roll-on/roll-off vessels, on which around 30 percent of fire incidents occurred in 2024. Overall, the number of incidents was up year-on-year to a decade high of 250 across all vessel types. Efforts to mitigate fire risks are underway, with regulatory changes and technological advancements aimed at addressing misdeclared cargo, a primary contributor to such fires. Enhancing fire detection and fighting capabilities is critical, particularly as the maritime electrification age progresses.

There is little doubt the shipping industry is becoming more resilient against the risks associated with large vessels, although much work remains to be done, and increased geopolitical tensions will shape the future of the sector.

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Captain Rahul Khanna is the global head of marine risk consulting at Allianz Commercial.