It was only in March last year that shipping truly came into the public consciousness. Suddenly, the world was full of shipping experts as mainstream media ran wall-to-wall coverage of the six-day grounding of the Ever Given. Since then, our industry has remained in the public eye thanks to the repeated headlines related to inflation, congestion, and persistently high shipping costs.

The fact is, according to multiple panelists speaking at this week’s Marine Money conference in Singapore, the world must accept shipping will get more expensive in the years ahead. The event discussed many of the industry’s top topics such as decarbonization, globalization and ESG, but an overarching theme throughout much of the debate was on the increased costs coming shipping’s way, and by extension to the end user.

Setting the scene well was Arjun Batra, the veteran executive chairman of shipping consultancy Drewry, who discussed the golden years shipping has enjoyed since the 1990s with the rise of China. “Most of the growth has been driven by cheap rates,” Batra said, adding: “Yes, there have been periods of volatility, but it has been generally cheap. Going forward the cost of shipping will be much higher thanks in part to decarbonization. We are entering an era of substantially higher rates.” Batra predicted that long term seaborne trade will grow slower, and that the shipping industry will be smaller by 2050.

Also convinced that shipping was entering a period of higher costs was Pietro Allevato, a dry cargo broker with Bancosta. “We see a cost situation. There is a need for investments, especially regarding new fuels. The biggest issue we are facing is the issue of costs, and this will impact supply and demand,” Allevato said, arguing that the costs to decarbonization needs to be shared. “Freight costs will have to accommodate these additional costs,” Allevato warned.

Eric Robertsen, global head of research and chief strategist at Standard Chartered, argued that while the nature of globalization has changed in recent years, it is still here to stay, albeit with increased costs. These increased outlays are not just higher supply chain costs but are due to uncertainty. Risks have increased, the cost of insurance has gone up, Robertsen pointed out. Pre-covid, shipping enjoyed low interest rates and low asset prices, so the cost of hedging was immaterial, but today the cost of hedging and financing has shot up. “So, people looking at new businesses in shipping will face greater scrutiny,” Robertsen argued.

Carrying on this theme about globalization was James Marshall, CEO and founder, Berge Bulk, one of Singapore’s largest shipowners. “One of the worries about deglobalization is the risk of cutting back on what has been happening about sustainability,” Marshall told delegates.

Abhishek Pandey, global head of shipping finance at Standard Chartered, suggested shipping was currently sitting at the top of the cycle and it was vital to use the cash made to recalibrate the fleet. “If the reconfiguration of globalization has to happen as well as decarbonization, shipping will come out of it in a very different light,” Pandey said. Heng Chih Chwen, director, shipping finance, Standard Chartered, pointed out that the global merchant fleet today is worth $1.4trn, up dramatically from $1trn just two years ago. Adam Kent, who heads up consultancy Maritime Strategies International (MSI), had good news for delegates, saying that the 2020s is on course to outperform the last two decades rates-wise.