How Wars Make Shipping Profitable

Added: 2026-05-20

[00:00:02]Every time a war starts, someone gets rich. And I'm not talking about companies that make weapons. I'm talking about companies that own ships. The same ships that carry food, oil, and raw materials across oceans suddenly start earning five to 10 times more money just because there is war somewhere. And this is not just a speculation. From the Russia-Ukraine War to the recent 2026 Iran War, real-world data shows that war consistently transforms shipping into one of the most profitable industries operating inside global chaos. Let's find out how. The biggest misconception about war is that it stops economic activity. When in reality, it reshapes it in unpredictable and inefficient ways that increase the cost of moving goods across the world. For example, countries at war still need energy, often more than before. While countries outside the war zone have to find alternative suppliers to replace disrupted trade routes, which forces cargo to travel longer distances through more complex paths and under significantly higher risk, which in turn increase fuel usage and insurance premiums. This distortion creates what economists call friction in global trade. And in shipping, friction is not a problem. It is a pricing advantage. Because shipping companies do not earn based on efficiency alone, they earn based on scarcity, complexity, and urgency. And war increases all three simultaneously.

[00:01:27]For example, after the Russia-Ukraine conflict disrupted Black Sea trade, global grain shipments had to be rerouted through alternative ports and longer maritime paths, increasing shipping demand even as regional trade collapsed. Similarly, conflicts in the Middle East have repeatedly forced tankers to avoid critical choke points like the Strait of Hormuz. That increases voyage durations and tightening vessel availability worldwide. This means that instead of reducing demand for shipping, war redistributes it in ways that make logistics significantly more expensive and therefore more profitable. The most direct and measurable way shipping companies profit from war is through explosive increases in freight rates, which often rise within days of geopolitical escalation. When conflict disrupts major routes, the number of ships willing or able to operate in those areas drops immediately, while demand remains stable or even increases, creating a sharp imbalance between supply and demand. This imbalance drives freight rates to extreme levels. During periods of heightened tension around the Strait of Hormuz in 2026, tanker earnings surged dramatically, with some routes experiencing rate increases of over 60% in a matter of days. In previous crises, such as the tanker market spike in 2019 following attacks in the Volga region, very large crude carriers earned more than $300,000 per day, compared to typical earnings of under $30,000 per day. This tenfold increase illustrates a crucial point.

[00:02:59]Shipping companies operate with relatively fixed costs, meaning that any surge in freight rates translates almost directly into profit. A ship that costs $20,000 per day, but earns $200,000 per day during wartime conditions, is generating extraordinary margins. And when multiplied across entire fleets, this creates billions in additional revenue for shipping companies. Among all sectors, oil shipping consistently delivers the highest profits during war, largely because energy markets are deeply sensitive to geopolitical instability. The Russia-Ukraine war provides one of the clearest modern examples of this phenomenon. When Western sanctions restricted Russian oil exports, traditional shipping channels were disrupted, but global demand for oil did not disappear, leading to the emergence of a massive alternative system known as the shadow fleet. This shadow fleet consisted of hundreds of older tankers operating outside conventional insurance and regulatory frameworks, allowing oil to continue flowing to countries willing to purchase it at discounted rates. By 2024, estimates suggested that more than 1,000 vessels were involved in this parallel system, representing a significant portion of global tanker activity. These ships often charge premium rates due to the legal and operational risks involved, and many were sold at inflated prices due to sudden demand. At the same time, oil that previously traveled short distances within Europe began moving to Asia, dramatically increasing voyage lengths and further boosting shipping revenues through higher ton-mile demand.

[00:04:33]A similar pattern emerged during the 2026 Iran conflict, where restrictions and military tensions forced oil shipments to reroute or rely on less conventional shipping networks, again increasing costs and profits for those willing to operate in high-risk environments. One of the most powerful, yet underappreciated profit mechanisms in wartime shipping, is the increase in ton-mile demand, which measures how far cargo travels rather than just how much is transported. When conflict disrupts direct trade routes, ships are forced to take longer paths, significantly increasing the distance traveled per shipment. For example, during disruptions linked to both the Russia-Ukraine War and Middle Eastern tensions, some shipping routes became up to 40% to 50% longer as vessels avoided conflict zones or restricted waters.

[00:05:22]This has two major effects. First, it increases revenue per voyage because ships are paid for longer journeys. And second, it reduces the effective supply of ships since each vessel is occupied for a longer period of time, making fewer ships available globally. This artificial scarcity pushes freight rates even higher, creating a feedback loop where longer routes lead to higher prices, which in turn generate higher profits. In essence, war stretches the global shipping network, and that stretching translates directly into increased earnings.

[00:05:55]Another critical source of profit comes from war risk premiums and insurances, which allow shipping companies to monetize danger without necessarily absorbing its financial burden. When vessels operate in conflict zones, insurance providers increase premiums dramatically, sometimes charging up to 2 to 5% of a ship's total value for a single voyage. For a vessel worth $100 million, this can mean millions of dollars in additional costs per trip. However, shipping companies rarely pay these costs out of pocket. Instead, they pass them directly to customers through war risk surcharges, effectively turning increased risk into a revenue-generating mechanism. In some cases, even the perception of risk is enough to justify higher pricing, allowing companies to increase margins without a proportional increase in operational danger. During the Iran conflict, insurance rates in the Persian Gulf region reportedly increased several times over within a week, yet shipping companies continued operating, transferring these costs to cargo owners while maintaining profitability. War also transforms governments into major customers for shipping companies, creating a stable and highly profitable source of revenue through defense and logistics contracts.

[00:07:07]Military operations require the movement of fuel, equipment, food supplies, and humanitarian aid, and rather than maintaining massive fleets, governments often rely on private shipping companies to handle these operations. These contracts are typically high-value, long-term, and backed by government funding, making them far more secure than commercial shipping deals. During large-scale conflicts, these contracts can represent a significant portion of a shipping company's revenue, providing guaranteed income even in volatile markets. Historically, wartime logistics contracts have played a major role in boosting maritime industry profits, and this dynamic continues in modern conflicts where supply chain complexity requires specialized shipping expertise.

[00:07:50]War creates rapid fluctuations in commodity prices, freight rates, and regional supply-demand balances, and companies with strong trading capabilities can exploit these changes.

[00:08:00]For instance, during both the Russia-Ukraine War and Iran conflict, European logistics companies reported increased profits during these periods, not simply because they transported goods, but because they leverage market instability to optimize routes, pricing, and timing. This combination of logistics and trading turns shipping companies into active participants in global markets, rather than passive carriers. War also transforms the vessels themselves, allowing owners to sell older ships at premium prices or use them as collateral for financing.

[00:08:32]During recent conflicts, older tankers that would ordinarily be nearing the end of their operational life were sold at premium prices due to their utility in high-demand, high-risk routes. This creates an additional layer of profit beyond operational earnings, turning ships into appreciating assets during periods of geopolitical instability.

[00:08:51]When you connect all of these factors together, a clear and somewhat uncomfortable truth emerges. War does not stop global shipping. It transforms it into a high-margin, high-risk, and highly profitable industry driven by disruption, scarcity, and urgency.

[00:09:07]Thanks for watching, and see you in next video.