Trade tariffs have a profound impact on global shipping patterns.

When faced with steep U.S. import tariffs during the first Trump administration’s trade war against China, many manufacturers adjusted their logistics to circumvent direct China-to-U.S. routes.

This often meant rerouting goods through third countries: products were shipped to an affiliate or partner in another country before final export to the U.S., effectively relabeling the country of origin to avoid tariffs.

A portion of China’s exports was funneled through Vietnam during the 2018-2019 tariff period, estimated at about 16% of Vietnam’s surge in exports to the U.S. at that time was actually Chinese goods rerouted to dodge higher U.S. duties.

Companies moved semi-finished components across borders for final assembly elsewhere, exploiting loopholes in tariff codes.

This led to a rise in intermediate goods crisscrossing the globe.

As final assembly shifted to countries without China’s full supply chain, those countries had to import more parts and materials, fragmenting production and increasing shipments of components.

This created an environment where smaller and midsize container vessels could thrive.

Unlike ultra-large ships built for direct China-U.S. voyages, mid and small-sized container vessels excel at connecting secondary ports to mainline routes and calling at facilities that cannot handle the biggest tonnage.

As trade hubs diversified, intra-regional shipments of components and parts accelerated, pushing charter rates for 3,000-10,000 TEU ships above historical norms.

Looking ahead, revived tariff threats in 2025 could trigger a repeat of these dynamics and Global Ship Lease (GSL) can benefit from it.

GSL ranks among the largest container ship chartering companies in the world.

The company leases ships to major shipping lines like Maersk, CMA CGM, and Hapag-Lloyd, and has gotten much more profitable in recent years.

GSL also took advantage of unusually high charter rates by signing longer contracts, locking in these good rates for years to come.

The company specializes in small to mid-sized container ships, renting them out on long-term contracts at fixed rates.

This gives it a steady, predictable income, something especially valuable when markets get choppy.

With 71 container vessels and an average fleet age of 17.5 years, GSL has built up about $1.9 billion in guaranteed future revenue.

The company works differently from shipping lines that operate in the volatile spot market.

Instead, GSL runs more like a financial firm, with ships as assets and a business model focused on generating reliable cash flow.

In the last few years, GSL has greatly improved its financial health.

The company cut its debt burden from over 8 times earnings in 2018 to about 1 times earnings by the end of 2024, with more reductions expected in 2025.

Management refinanced expensive debt and pushed out payment dates, reducing the overall interest rate to 3.85%. These moves cut the company’s interest expenses, boosting profits.

Furthermore, by replacing older ships with newer ones and buying older ships at good prices when they still have plenty of useful life left, GSL manages to keep the fleet competitive and profitable.

All these factors combined enabled the company to achieve 20% Uniform return on assets ”ROA” and 13% asset growth last year.