A geopolitical perspective on the future of shipping—a case study on the Australian coal ban & its effect on the shipping industry

Abstract

Shipping faces significant challenges in identifying future opportunities due to the many factors that affect trade, as shipping is merely a derived demand for trade. One of the most impacting factors that decides trade flows is international geopolitics, although there is conflicting research as to what extent geopolitics affects trade. Through analysing the case study of the Chinese ban on Australian coal, this study thus aims to link geopolitics to the shipping industry by identifying the impact of it on shipping. Furthermore, this paper will also identify plausible strategies affected shipping companies can implement to better prepare for these circumstances, and lastly hopes to add to studies on the interactions between political relations and trade. The results of the case study showed that the ban affected trade flows for the raw material coal, while individual country’s needs saw increased demand for coal. Together, the shift in trade flows saw increased demand in transport and hence rising freight and coal prices. Long term and short/medium strategies were then suggested to shipping companies as a means of mitigating these unexpected situations, and any other important findings were discussed as well, such as the effect of the nature of the cargo on demand. On this basis, these findings suggest that geopolitics and trade will continue to remain intrinsically linked, and indicates to players in the shipping industry the importance of keeping up to date with the global situation and individual country policies to best prepare for the future.