Tariffs and Global Tensions Hit Vessel Markets in H1-25

Curbing investment in some sectors while accelerating strategic orders in others, the global tensions and the renewed tariffs proposed by Trump administration have reshaped vessel markets in the first half of 2025, according to Veson Nautical, a leading provider of maritime freight management solutions and data intelligence.

In its latest release entitled “Half-Year Market Report,” Veson said that instability in the Middle East, particularly disruptions in the Red Sea, has continued to affect global trade flows and routing strategies, while tariff tensions have weighed on asset values and transaction volumes. Environmental compliance deadlines continue to drive fleet renewal in certain sectors, rising financing costs and lingering inflationary pressures have tempered appetite for risk across much of the market.

Notably, sectors such as Suezmax Tankers and modern LNG carriers have seen stronger interest, while older and less efficient vessels face growing pressure amid tightening margins, Veson said in the report.

The report also said that the US trade policy changes hit vehicle carrier markets particularly hard, contributing to a 44% reduction in charter rates for standard 6,500 Car Equivalent Units (CEU) vessels and a complete halt in newbuild orders during the first six months of 2025.

The liquefied petroleum gas (LPG) sector was also affected, with newly imposed tariffs between the US and China weighing on investor confidence and helping push sale and purchase (S&P) volumes down by 25% year-on-year (y-o-y).

The report adds that the container ship sector was indirectly impacted, as frontloading and rerouted supply chains prompted operators to accelerate newbuild orders despite persistent cost pressure.

Matt Freeman, Chief Market Analyst at Veson Nautical, said that geopolitical pressure is no longer a background factor; it’s shaping the way owners think about risk, timing and capital.

“From regulation to rerouting, disruption is now part of the operating environment, and owners are recalibrating their strategies accordingly,” he added.

Container ship newbuilding surged, with orders up 288% y-o-y during the first six months of 2025. Owners moved quickly to secure tonnage amid ongoing diversions around the Cape of Good Hope and congestion at European ports.

Despite global uncertainty, trade volumes rose by nearly 5%, and demand for mid-size capacity remained strong. Values for 15-year-old Feedermax vessels climbed by 16.5%, supported by limited availability and steady interest from major buyers.

The tanker sector saw a marked pullback, with newbuilding orders down 74% y-o-y and S&P volumes falling by 31%. Softer earnings and regulatory uncertainty were key drivers. Medium Range 2 (MR2) product tankers were the exception, accounting for over a third of transactions as buyers capitalised on lower values.

Typically sized between 45,000 and 55,000 DWT, MR2s are product tankers that typically ship gasoline, diesel, jet fuel and other refined products across regional and intercontinental routes. Values for 15-year-old units fell by 24%, drawing renewed interest in ageing but versatile tonnage.

Earnings Pressure

The liquefied natural gas (LNG) carrier sector came under sustained pressure during H1 of 2025, with average time charter earnings for large vessels falling by 66% y-o-y. The decline was driven by continued fleet expansion outpacing demand growth, along with weaker seasonal fundamentals.

As rates fell, demolition activity increased sharply, with seven vessels scrapped – a 250% rise on the same period in 2024. Older steam turbine vessels saw the steepest value declines, with 15-year-old units down by more than 8%. While demand for LNG is expected to rise in the coming years, the current tonnage surplus is likely to keep pressure on earnings through the rest of 2025.

In the LPG carrier market, S&P activity slowed by 25% y-o-y, weighed down by trade policy uncertainty between the US and China. Newbuilding orders dropped by 80% compared with the same period last year.

Most activity was concentrated at the very large and small ends of the fleet, with limited momentum in the midsize space. Values fell across the board, though long-term averages remain high by historical standards.