Disruption to major shipping lanes has sent freight rates on a rollercoaster ride this year. A specialist investment manager argues that shipping’s low correlation with other markets and its inflation-hedging qualities make it worth a closer look.

Interruptions to major shipping lanes in recent months, such as the Strait of Hormuz, remind investors how important maritime logistics are: while these problems can be a headache for importers and exporters, they also highlight the sector’s significance. A supply-side pinch, whatever the cause, can inflate freight rates because it takes time to bring new ships into the mix before the market settles at a new equilibrium. 

This is a major sector that the public perhaps takes for granted. As much as 80 per cent of global trade is carried by sea. It is a sector that seemingly only gets wide attention when there are problems.

The way that shipping rates and revenues paid to ships’ owners rise during supply interruptions can perhaps be positive for investors seeking to diversify. This is part of the case that Nikos Petrakakos, managing director at Tufton Investment Management, a UK-based firm specialising in the maritime sector, recently made to WealthBriefing.

Tufton’s assets under management, including committed pipeline capital, are over $1.5 billion, across public and private funds and mandates.

“The key thing about shipping is that it is uncorrelated with other markets and it is an inflation hedge,” Petrakakos said. “Different parts of the shipping sector don’t always move at the same time.”

Prices have oscillated. Take the case of the Baltic Dry Index. The BDI tracks the cost of shipping raw materials such as coal and steel. The index is up about 36 per cent since early January (from about 1,850 to 2,511), having surged as much as 60 per cent from a low point in mid-January; it has fallen about 31 per cent from its peak in September. In short, it has been a rollercoaster.

The Drewry World Container Index, a widely-cited benchmark for container freight, has approximately doubled since the start of the year, reaching about $4,500 per 40ft container, with Asia-US routes accounting for the gains (sources: Daily Cargo News, others). Asia-Europe rates, however, have languished since capacity returned via the Suez Canal. Reports say that carriers are trying to push through higher Asia-Europe rates of $4,500 to $4,800. 

A website that monitors logistics, czapp.com, said the market in September and October showed regional divergence. "The global container market remained sharply bifurcated through September and early October. Transpacific rates stayed elevated, supported by strong US import demand, congestion in Asia, and capacity controls, while Asia-Europe pricing continued a steady correction from its July peak," it said. 

Capturing a slice of the investment returns by navigating these trends is what Tufton specialises in. The firm, founded in 1985, buys ships outright and then charters them out over periods of, say, one or two years. These charters can be at a fixed rate or linked to an index of inflation.

Petrakakos said that over the last 20 years, a diversified fleet with low leverage and patient hold has shown to earn about 10-11 per cent. Leverage is kept low to avoid problems if the sector’s rates go down.

There is a general shortage of shipping, Petrakakos said. “We are bullish on this market because of that.”

“There was massive over-investment about 20 years ago,” he said, referring, for example, to major shipbuilding activity in China. However, several shipyards went bust and others cut activity.

Fast-forward to today, and there is a “very large” order backlog for bulk carriers and for ships carrying cargoes such as liquefied natural gas (LNG). The order queue for smaller ships is not as long, he said. “Since 2008, there has not been much construction in the smaller sizes [of ship] that we are in,” he said.

Tufton Assets Ltd, with the appropriate stock ticker SHIP, is a closed-ended investment company listed in London. Its portfolio comprises 21 vessels, including product tankers, chemical tankers and bulk carriers. Almost three-quarters of the portfolio consists of ships aged 10 to 15 years, about a quarter of ships aged 15 to 20 years, and the rest of ships aged five to10 years.

The company has delivered a net internal rate of return of 12.9 per cent since its inception in December 2017. Its shares trade at a discount to net asset value at around 18 per cent.

The maritime investment story
Shipping-focused funds are relatively few, but they exist in various forms, both in unlisted and listed form, with varying ease of accessability for private clients.

For example, Taylor Maritime Ltd (ticker TMIP), formerly Taylor Maritime Investments, is a London-listed, Guernsey-based investment company that owns a fleet of dry bulk ships. There are exchange-traded funds (ETFs) that track shipping indices, such as the US-listed SonicShares Global Shipping ETF (ticker BOAT). There are also the stocks of listed shipping operators to consider, such as giants AP Moller-Maersk and Hapag-Lloyd. 

Away from listed markets, examples include MPC Storm Maritime Opportunities, a platform launched in February 2026 by MPC Capital and Storm Capital to buy modern second-hand ships. A US example is Hudson Structured Capital Management, which closed Hudson Northern Shipping Fund V in 2025 with $719 million of committed capital to provide senior loans and capital leases secured on vessels.

Recent geopolitical events, such as around the Gulf and Red Sea area, have put the importance of shipping lanes and their flows under the spotlight. The significance of this has been growing for some time. A decade ago, for example, piracy off the coast of Somalia in East Africa sent insurance rates soaring, prompting counter-measures. The writer, Edward Fishman, addressed the challenges for ship-born trade with his 2025 book, Chokepoints: How The Global Economy Became A Weapon Of War. A contributing editor of WealthBriefingAsia, Paul Cuthbert-Brown, has examined the supply chain issue and its significance for wealth management, here. To some extent, the ability of ships to move around without hindrance from war or trade restrictions is a marker for globalisation.

Experience
Getting a handle on this sector takes experience and knowledge. Before his current role, Petrakakos was a partner at ARGO Capital Advisors, where he advised on fundraising for cleantech and maritime technology startups, as well as on M&A and pre-IPO secondary transactions. He was also a director of investment banking and head of environmental innovation at Seabury Capital, focusing on maritime infrastructure. In 2014, he co-founded Ursus Maritime Capital, a provider of green ship retrofit financing, in partnership with the Carbon War Room. Earlier in his career, he served in executive roles at Oldendorff Carriers, HART Shipping, PPG Industries, CMP and Maroon Capital Group.

Petrakakos, who joined Tufton more than four years ago, relishes unearthing opportunities in the sector. Tufton prefers to focus on smaller vessels because this end of the market tends to be less volatile, he told WB. One reason for the lower volatility is that there are more small ships than large ones, he said.

Another challenge with the largest ships is port infrastructure. “Larger container ships are designed for certain ports,” he said. 

(The largest vessels tend to carry a single commodity which Tufton’s fleet doesn't face as they are able to go to almost any port and carry a wider variety of commodities. This also means less volatility versus the larger size of vessel.)

In total, covering all aspects of shipping, this global business is worth about $2 trillion, Petrakakos said, and yet for a long time it has not been widely accessible, if at all, to private investors. 

While geopolitics and other forces may give the shipping industry more publicity than it would welcome, recent events are a reminder that shipping, as an asset class, is worth attention.