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Scanning forward into 2026, the outlook is guarded.
The macro environment in the Pacific Rim continues to be shaped by geopolitical competition, though risks will likely oscillate in severity through cycles of cooperation and rivalry.
Tariffs and trade barriers will continue to reshape trade and shipping flows. Robust South-South trade outpaced world trade growth by value last year and contrasts with a contraction in US imports. As this trend gains momentum, some volume-based increase in operational risks can result from ageing port infrastructure and vessels, lower safety automation, capacity bottlenecks, and varying regulatory standards and enforcement.
Risk from sudden surges in export activity caused by tariff uncertainty will likely persist into 2026. Real-world effects include port congestion and usage of older or substandard containers and vessels. Heightened time pressures also result in rushed deliveries or riskier routes being taken, raising issues of coverage. Even in the absence of acute pressures, the average age of a vessel in the global merchant fleet is now approaching 23 years according to the International Union of Marine Insurance's 2025 Stats Report, increasing the threat that minor incidents escalate into write-offs.
Trade and tariff uncertainty in 2026 will probably impact trade finance, as rapid shifts in regulatory environment have led to bankruptcies, causing cargo abandonment, non-delivery claims, and trade credit insurance issues. Notably, the US Supreme Court is set to rule on the legality of the sweeping "reciprocal tariffs", USMCA is up for review, and the US extension of tariff exclusions on 178 Chinese products expires in November 2026.
We expect the market for container shipping to soften, resulting in more ships chasing less freight. If freight rates come under pressure, this can cause cost-cutting that manifests in maintenance deferrals and smaller crews, raising the potential for losses.
Meanwhile, risks attach to decarbonization. New technologies can result in increased claims costs while kinks are worked out. As well, the continued shift in Pacific Rim economies to electrification means that fire risk on shipments containing lithium batteries persists. Further, proliferation of offshore wind and energy infrastructure in Pacific Rim waters raises the prospect of collisions.
Insurers should watch closely for compliance with new safety changes in the SOLAS requirements effective 1 January 2026. Failure of a vessel to implement required safety changes could jeopardize insurance coverage, also impacting the ease of recovery actions against negligent carriers.
Finally, in a softening marine insurance market, we expect insurers will be looking more closely at subrogation and recovery to bolster the bottom line.
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