Tonnage transits through the Suez Canal were running about 70 percent below the 2023 average as of early May 2025, with traffic still routing around the Cape of Good Hope. The additional distance has absorbed surplus capacity while newbuilding deliveries continued, and the effect is clearest in container. An owner placing or deferring an order this quarter is taking a position on how long that persists, whether or not the decision is framed that way.
The exposure runs in both directions. While the routing holds, tonne-mile demand carries a fleet that would otherwise look long. If the Red Sea reopens and voyages shorten, distance-adjusted demand falls against a fleet that has kept growing through the disruption. The quantity an owner is implicitly forecasting is the duration of a security situation, and it sits inside every order placed or held back on geopolitical grounds.
UNCTAD sets the routing alongside two other pressures running through the same period: trade growth declining in some markets, and shifts in trade policy and tariffs. The capacity concern it records attaches specifically to the normalisation of distance-adjusted demand, which is the moment the absorbed surplus comes back to the market with the intervening deliveries added to it.
The obvious place to look for discipline on that judgement is the geopolitical risk index that most of the financial research relies on, built by Caldara and Iacoviello. It counts press mentions across eight categories: war threats, peace threats, military buildups, nuclear threats and terrorism threats, which form a threats subindex, and the outset of war, escalation of conflict and acts of terrorism, which form an acts subindex.
That construction does what it was designed to do. A monthly national index lines up against monthly asset returns, and the research built on it has produced a great deal of evidence about how prices move when tension rises. An investment decision belonging to one owner, in one segment, on one trade, playing out across the years between a contract and a delivery, is a different object, and the index was never shaped to it. Press attention and an owner’s exposure move on different clocks, and the Red Sea is a case in point: coverage has faded well ahead of the routing.
Islam Abdallah and Mohamed Bahaa Bekheit, of the Arab Academy for Science, Technology and Maritime Transport, went through the field to see what it covers. They searched the Web of Science for work pairing geopolitical risk with shipping, maritime transport, shipping finance or investment decisions, published between 2018 and 2025, and screened it for relevance to economic and financial questions in a maritime setting. Eleven articles appeared in the first four years of that window. The following four years produced the rest, so most of what exists has had no time to be replicated or tested against a second episode.
The most-cited work in the set addresses asset returns, volatility, hedging and commodity-market spillovers. The closest shipping-specific study the review identifies is Kotcharin and Maneenop (2020), in Transportation Research Part E, on corporate cash holdings in the shipping industry. The mechanism it describes will be familiar to anyone who has sat through a board discussion in a tense quarter. Geopolitical uncertainty makes the cash flows and earnings of shipping companies harder to forecast, which pushes management towards a wait-and-see posture and postpones decisions about future investment.
That is a finding about cash balances. The step from holding more cash to ordering fewer ships is the one the literature has largely left alone.
The review states the gap directly: no previous study has investigated how geopolitical risk affects the effectiveness of corporate investment in shipping, and firm-level evidence on investment timing is what the field lacks. An owner looking for research to inform whether to place, defer or cancel an order therefore has three things: an index of press attention, evidence that uncertainty raises cash holdings, and no tested link between the two and the timing of a newbuilding contract.
A review of this kind maps what has been published, and it cannot establish what the answer would be if somebody ran the study. The absence of evidence on investment timing says nothing about whether geopolitical risk moves it. What the exercise does settle is that an owner weighing the Cape routing against an order book is working ahead of the research, on judgement, with the published work supplying context and stopping short of the decision.