Navigating Volatility

Treasury Strategies for Shipping in a Geopolitically Unstable World

In today’s unpredictable environment, shipping treasurers are no longer reacting to isolated financial risks, they’re dealing with fast-moving geopolitical events that shape liquidity needs, funding structures, and even the availability of credit.

Two recent developments – the escalation of Iran–Israel tensions and the advisory by Qatari authorities for liquefied natural gas (LNG) and tanker vessels to delay passage through the Strait of Hormuz – highlight just how exposed (or sensitive) treasury functions are to global uncertainty.

Even without full-scale disruption, perceived risk alone can drive meaningful cost and operational consequences. A waiting period outside the Strait may last only a day or two, but it can lead to increased insurance premiums, delays receivables, and throws off voyage scheduling. For treasury, this means extra working capital locked up in transit, more expensive trade finance, and the need to adjust funding forecasts on very short notice.

Treasury must now integrate these non-physical disruptions into liquidity planning. If a tanker is held up for even 24 hours, we need to know three things instantly: how much extra cash is tied up, how much more it’s costing in insurance, and whether our facilities can absorb the shock. We’re stress testing every route that passes through a geopolitical flashpoint.

This is further compounded by what markets call risk premium inflation. Even if the cargo is still in transit, perceived instability prompts insurers, banks, and counterparties to adjust pricing, impose higher collateral requirements, or introduce new covenants. These reactions can hit treasury hard, especially when decisions must be made quickly and backed by solid forecasting.

Situations have arisen where regional tensions lead to higher insurance premiums or spikes in time charter rates, fundamentally affecting the economics of a voyage. From a treasury perspective, that impacts cash flow forecasts, cost of debt, and sometimes even the covenants tied to profitability or coverage ratios. Companies affected by such incidents must be able to revise liquidity models and hedge assessments in real time, based on these assumptions.

What emerges is a clear pattern: treasury is increasingly the nerve centre for translating global volatility into concrete financial action. Rather than quarterly liquidity reviews or static hedging frameworks, treasury teams are developing dynamic models that factor in potential choke points, sanction risks, and variable freight market conditions. In some cases, this means shifting from bilateral funding lines to committed revolving credit that offers more flexibility. In others, it’s about pre-hedging anticipated costs or adjusting counterparty exposure limits.

Banks expect businesses to have answers to ‘what-if’ questions: what if a key port becomes inaccessible? What if a credit insurer pulls coverage in a high-risk country? Treasurers can no longer afford to take their time answering those questions. They need to build the tools, the reporting, and the banking relationships to respond immediately. At the same time, the sector is becoming more reliant on targeted technology. Tools that automate cash visibility, hedge valuations, or exposure tagging are being adopted – not as silver bullets, but as force multipliers.

Technology is effective, but only if the process is robust. Inaccurate outputs can occur when cash flow inputs are outdated or risk factors are misaligned with operational realities. This underscores treasury’s role in co-ordinating finance with other departments to provide timely and accurate data that powers TMS tools – such as cash flow forecasting, risk management, and hedge valuation – for reliable decision-making.

In today’s shipping world, treasury is no longer just a back-office function – it’s a strategic anchor in times of uncertainty. The volatility we face is persistent, complex, and often driven by forces beyond commercial control. But it’s precisely within this environment that treasury can deliver significant value: by proactively managing risk, protecting liquidity, and facilitating faster, more informed decisions.

Treasurers are not just counting cash anymore. They are making sure the business can keep moving – whatever the world throws at them. As geopolitical pressures continue to shape the markets we serve, treasurers in shipping have an increasingly critical role: not just to react, but to prepare, partner, and guide. At the Hellenic Association of Treasurers (HAT), we actively support this evolution: fostering collaboration across industries, promoting best practices, and elevating the role of treasury as a strategic contributor to business resilience and growth.

By sharing insights, encouraging dialogue, and building a community of forward-thinking professionals, we aim to ensure treasury is not only equipped to handle complexity but empowered to lead through it.