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Trade complexity

Global economic development, leading to growth in volumes shipped, amidst a dynamic geo-political landscape, drives ever-increasing complexities in trade. As an essential part of the supply chain, our Broking teams benefit from growing volumes of cargoes and ships chartered, and our expertise, global network and market-leading research leave us well placed to guide our clients through this complex and ever-changing environment.

85%

Global trade carried on ships

+4%

Increase in global seaborne trade

(Estimated total increase in global seaborne trade average haul across 2020-24)

-54%

Reduction in Suez Canal transits

(Reduction in Suez Canal transits in January 2024, versus first half of December 2023).

Context


Global economic development drives growth in trade while a shifting geo-political landscape is creating disruption events and increasing complexity. Today the shipping industry moves 12.4bn tonnes of trade, with volumes increasing by 80% in the past 20 years and 20% in the past 10 as population growth, emerging markets and trends in expanding commodities such as gas impact. Change is constant, from economic cycles and, increasingly, from disruption events that the shipping industry must manage while continuing its vital role in moving 85% of all international trade. Geopolitics increasingly disrupt and change trade flows while also creating an extensive international sanctions and compliance regime. The redistribution of oil and gas flows after the Russia-Ukraine conflict has increased trade distances and driven tanker rates to high levels. LNG has largely replaced European pipeline trade. Trade tensions between the US and China remain and Middle East conflict is disrupting vital shipping choke points and threatening supply chains. Against this dynamic backdrop shipping companies, traders and cargo interests look increasingly to service providers that can guide, partner and support them through these ever-increasing complexities.

 


What this means for Clarksons

 

Enabling global trade is central to our strategy. As an essential part of the freight supply chain and market leaders across all major cargo sectors, our Broking teams benefit from growing volumes of cargo traded and ships chartered and in the support needs of our clients in managing disruption. We are diversified, achieving market leading positions and specialised expertise in every shipping segment, increasingly vital as volumes and complexity build. Our strategy to build a truly global network of offices, expanded again in recent years, allows us to combine global reach with local relationships, knowledge and expertise. Our deep understanding, through our research and analysis of increasingly complex trade flows and geo-political disruption, makes us a trusted advisor and intelligence provider to cargo interests and shipowners as they execute strategies to manage increasing disruption. Our investments and scale are increasingly needed by clients as they look to improve productivity and manage risk, leveraging off our investments in legal and compliance support, in our technology and in our data-led solutions. This truly differentiates our service offering in an increasingly complex world.

02

Energy transition

As the demand for sources of energy which will moderate climate change grows, changes in the fleet will be required to accommodate the transportation of alternative fuels and to build and support offshore renewable energy. The combined expertise of all of our divisions positions us well to support our clients in their ship chartering, asset and financing strategies as they navigate the energy transition.

Kenneth Tveter speaks on the panel at the IMO second symposium
11x

Increase in offshore wind power

(Estimated increase in global offshore wind power generation in the last 10 years)

4.7bn

tonnes

(Seaborne energy trade (2023): 4.7bn tonnes)

Context

 


The need to transition to a green and sustainable economy is an urgent priority for society and the shipping industry must play its role in reducing greenhouse gas emissions whilst managing the complex but essential flow of global trade. Shipping produces around 2% of global CO2 emissions and, whilst shipping remains the most carbon-efficient means of transport, further acceleration of decarbonisation strategies is crucial. Regulation is driving change. IMO short-term measures introduced in 2023 are already starting to influence investment and operational behaviour. And from 2024, shipping is included in the EU ETS carbon trading system, putting a price on carbon in the shipping industry for the first time. These new and complex environmental regulations and policies are a significant step on shipping’s decarbonisation pathway. With a net-zero commitment for the first time from the IMO, regulation will accelerate. Significantly increased investments in fleet renewal, technology and port infrastructure will be needed to facilitate the fuelling transition that will be vital to decarbonisation. However, there are hugely challenging strategic decisions for shipowners and cargo interests given uncertainties around propulsion technology, regulation and timing of investment decisions. Regulations and policies are also increasingly impacting supply and demand dynamics and commercial decisions across the shipping markets, including the speed of vessels. The impacts of the green transition across the maritime industry will be deep and long-standing, requiring huge investment, technology change and innovation.

 


What this means for Clarksons


The green transition is central to our strategy as we look to lead positive change. We strive to manage our own operations sustainably and, by evolving and investing in our market-leading service offering, we can facilitate positive industry change by supporting our clients to develop, validate, execute, finance and monitor their policies and strategies to decarbonise. We invest to provide market-leading support to cargo interests and shipowners in executing their freight, carbon and fleet renewal decisions that combine commercial opportunities with the meeting of environmental targets. Clarksons is uniquely placed to advise, execute and finance fleet renewal strategies, building on our unrivalled track record with alternative fuelled newbuilding projects by continuing to invest in our expertise and offering. We have established a dedicated advisory team to work with our Broking teams to develop and execute decarbonisation strategies for our clients and are uniquely placed to understand and explain the economic impact of new regulations and policies. We have initiated advisory and broking services for the growing carbon credits market. Our Financial teams are already active in green financing initiatives and increasingly across the specialist battery, mineral and renewables industries. Our technology team has developed innovative emissions reporting and monitoring tools. The wide-ranging data and intelligence developed by our Research team, including coverage of green technology on board ships, alternative fuels, CO2 emissions benchmarking, vessel speeds and bunkering facilities, is widely used by the shipping industry, academic research and policymakers as a trusted source.

03

Green transition

Shipping must play its part in the drive for a more sustainable future, and societal and regulatory pressures are accelerating the focus on the vital fuelling transition that is needed to meet targets to decarbonise the industry and the IMO’s net zero commitment. We have built a dedicated Green Transition team of experts who are advising our clients in their freight, carbon and fleet renewal strategies.

Carbon Capture Storage
2.2%

Shipping's share of global CO2 emissions

(2023e)

833m

tonnes of CO2

Estimated amount of CO2 produced by the world shipping fleet in 2023 (tank-to-wake)

45%

Alternative fuel capable ships

Share of tonnage ordered in 2023 capable of using alternative fuels

Context

 


The need to transition to a green and sustainable economy is an urgent priority for society and the shipping industry must play its role in reducing greenhouse gas emissions whilst managing the complex but essential flow of global trade. Shipping produces around 2% of global CO2 emissions and, whilst shipping remains the most carbon-efficient means of transport, further acceleration of decarbonisation strategies is crucial. Regulation is driving change. IMO short-term measures introduced in 2023 are already starting to influence investment and operational behaviour. And from 2024, shipping is included in the EU ETS carbon trading system, putting a price on carbon in the shipping industry for the first time. These new and complex environmental regulations and policies are a significant step on shipping’s decarbonisation pathway. With a net-zero commitment for the first time from the IMO, regulation will accelerate. Significantly increased investments in fleet renewal, technology and port infrastructure will be needed to facilitate the fuelling transition that will be vital to decarbonisation. However, there are hugely challenging strategic decisions for shipowners and cargo interests given uncertainties around propulsion technology, regulation and timing of investment decisions. Regulations and policies are also increasingly impacting supply and demand dynamics and commercial decisions across the shipping markets, including the speed of vessels. The impacts of the green transition across the maritime industry will be deep and long-standing, requiring huge investment, technology change and innovation.

 


What this means for Clarksons


The green transition is central to our strategy as we look to lead positive change. We strive to manage our own operations sustainably and, by evolving and investing in our market-leading service offering, we can facilitate positive industry change by supporting our clients to develop, validate, execute, finance and monitor their policies and strategies to decarbonise. We invest to provide market-leading support to cargo interests and shipowners in executing their freight, carbon and fleet renewal decisions that combine commercial opportunities with the meeting of environmental targets. Clarksons is uniquely placed to advise, execute and finance fleet renewal strategies, building on our unrivalled track record with alternative fuelled newbuilding projects by continuing to invest in our expertise and offering. We have established a dedicated advisory team to work with our Broking teams to develop and execute decarbonisation strategies for our clients and are uniquely placed to understand and explain the economic impact of new regulations and policies. We have initiated advisory and broking services for the growing carbon credits market. Our Financial teams are already active in green financing initiatives and increasingly across the specialist battery, mineral and renewables industries. Our technology team has developed innovative emissions reporting and monitoring tools. The wide-ranging data and intelligence developed by our Research team, including coverage of green technology on board ships, alternative fuels, CO2 emissions benchmarking, vessel speeds and bunkering facilities, is widely used by the shipping industry, academic research and policymakers as a trusted source.

04

Fleet evolution

As global trade continues to grow, so too does the capacity of the world’s shipping fleet. Dynamics across the shipping fleet have become increasingly complex. As well as providing greater potential volumes for our asset broking teams, our Broking and Financial teams’ deep understanding of the markets, supported by our comprehensive and market-leading intelligence and our growing technology business, enable us to provide unrivalled support to our clients.

Ship propeller
$1.7tn

Value of the world fleet and order book

(at the start of 2024)

11%

Global order book as a % of fleet capacity

Context

 


Over the past 20 years, the capacity of the world’s shipping fleet has grown by more than 150% to over 1.6 billion GT as the shipping industry has expanded to meet its crucial role in servicing global trade. Although fleet growth has started to moderate in recent years and some supply constraints have developed helping markets recalibrate, the world fleet is significantly larger (+90% by tonnage) and broader by type than at the start of the global financial crisis, providing greater potential volumes for our asset broking teams. The dynamics across the shipping fleet are also becoming increasingly complex, with trends towards slower speeds, increasing length of haul, storage plays, ‘tiering’ of charter markets, shipyard consolidation and congestion. The finance landscape for the shipping industry has also changed significantly since the financial crisis, impacting the number and geography of institutions participating and the scale of finance available. This has led to many shipowners and cargo interests diversifying their funding sources and investigating new and more complex financing solutions and structures. Green issues specifically, and ESG more broadly, are increasingly impacting the policies of ship finance institutions and access to finance for cargo and vessel owners. Despite these trends and complexities, financing the world shipping fleet and its renewal to meet decarbonisation targets remains hugely capital intensive, with today’s shipping and offshore fleet valued at US$1.7tn and the world orderbook limited by historical standards.

 


What this means for Clarksons


Our strategy, to develop Broking teams that are market leaders through the full lifecycle of the asset and across every ship type operating in the world fleet, benefits from the increased fleet capacity, the broader nature of the shipping fleet and greater volumes of vessels bought and sold in recent years. The guidance and execution that our market-leading Financial teams can provide across the more complex ship finance landscape, at a time of increasing investment needs around the green transition, is unique in the market. Our deep expertise, combined with an innovative approach, allows us to support our clients to raise finance across capital markets, project finance, debt markets and through leasing structures. Our understanding of the world’s shipping fleet and shipbuilding industry, both at an aggregate trend level and on an individual asset basis, is unrivalled. This understanding builds on the synergies between our Broking, Financial and Research teams and supports our clients in their decision-making across our complex and multi-cyclical markets. Our Research coverage has been built out to cover all markets and offer unique understanding of the expanded global fleet and shipbuilding capacity position. Our valuations, leveraging our understanding of the more complex dynamics driving the world fleet, continue to be trusted as the market-leading source across the finance sector.

05

Technology growth

Growing demand from clients for digital services and solutions that improve efficiency, regulatory compliance, transparency and risk management (particularly around greenhouse gas emissions) is resulting in increased demand for data, intelligence and technology solutions. We continue to invest in these areas in line with our strategy, helping to differentiate our offering from that of our competitors and providing market-leading solutions for our clients.

~70%

Internet connection

(Share of global population connected to the internet)

+88%

Increase in annual data creation

(Increase in total annual data created globally over the last 3 years).

Context

Rapidly evolving technology is introducing opportunities to radically improve efficiency, regulatory compliance and transparency. These trends are amplifying within the shipping industry, as they are across society, with growing demand for digital services and solutions that leverage these opportunities around the freight transaction process and the monitoring and management of risk and emissions. But with the opportunities from new technology, such as AI, there are also risks. The need to provide trusted data and intelligence is more vital than ever. And while a range of new technology entrants are also looking to exploit these opportunities, industry participants are increasingly looking to work with established partners with critical mass, domain knowledge and industry understanding.

What this means for Clarksons

Technology is central to our strategy. Shipping must use innovative technology to digitalise its workflows but needs trusted partners that understand, not just technology, but also our industry. We invest in technology and data across all of our business lines, including developing tools for trade for our core Broking business that help differentiate our teams from competitors and demonstrate the power of our offering and market knowledge to clients. Our Broking business is now executing a dedicated Digital Transformation strategy. Our broader investments into the digitalisation of our workflows and the evolution of digital support systems are long-standing and provide a competitive edge for our Broking, Financial and Support divisions. Our Research division continues to utilise innovative technology to generate and deliver its proprietary data and intelligence, with growing demand across the industry to integrate data into client internal digital systems. Our technology arm has invested in a market-leading integrated platform connecting charterers, brokers and owners to support streamlined pre-fixture workflows. This investment has been significant, long-term and in recent years has involved a number of strategic acquisitions. The platform enables greater collaboration and stronger governance across the chartering ecosystem, while also allowing users to optimise their freight and emissions.

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