Stock Focus: Clarksons, Shipping in the Spotlight

Thomas Hyde, Junior Investment Research Analyst

With the shipping industry making global headlines, we analyse Clarkson Plc, the largest UK-listed shipping services provider.

Shipping is the backbone of international trade, with the industry accounting for 80% of goods traded worldwide, according to the United Nations (UN). The largest UK-listed provider of shipping services is Clarkson Plc, trading as Clarksons, which traces its roots to 19th century London. Given recent geopolitical tensions, the company’s dominant position as a leading shipbroker warrants closer attention.

The value of global shipping
Clarksons began as a shipbroker, acting as a middleman in maritime transactions such as the chartering of vessels and sale and purchase of ships, and the facilitation of the freight derivatives trade. The company earns a commission on each deal it intermediates, creating a business model that is directly tied to the volume and value of global shipping activity.

According to Lloyd’s List, the authoritative source in global shipping, Clarksons is ranked as the world’s largest shipbroker, with approximately 1,300 employees in its Broking division. This scale is significant. Shipbroking is a fragmented industry with high barriers to entry, as success is relationship-led and requires sector-specific expertise. Unlike in equities or commodities, there are no centralised exchanges for chartering a vessel. Freight benchmarks do exist; the Baltic Exchange publishes daily indices to gauge global demand for shipping. However, individual charters require negotiations involving dozens of factors such as vessel specifications, route, and timing. This bespoke nature of contracts ensures a broker’s role in any large deal. Clarksons generates 80% of total business revenue from broking dry bulk (unpackaged cargo), oil tankers, specialised gas carriers and container ships from 64 offices around the globe.

Diversifcation provides strength
Beyond shipbroking, Clarksons has diversified into three other divisions. The 2015 acquisition of RS Platou ASA, a Norwegian investment bank, helped broaden the company’s Financial division which specialises in advisory services for the shipping and offshore sectors. Marine and Energy Port Services offers logistic services including customs clearance, offshore helicopter operations and terminal handling for the marine industry. Finally, Research produces proprietary market intelligence and data analytics used by the shipping industry and financial services companies. Andi Case, Clarksons’ CEO, described the Research division as an attempt to become the ‘Bloomberg of Global Shipbroking’ by providing a data analytics platform that is so deeply embedded in client workflows it becomes indispensable. This diversified business model can help offset weakness in the shipbroking market. In Clarksons’ 2025 financial year, geopolitical uncertainty, particularly around US trade policy, slowed deal activity in the first half of the year which meaningfully picked back up in the second half. As a result, shipbroking operating profit fell from £122.6m to £93.9m. At the same time, Clarksons’ Financial division delivered a record year, as operating profit increased from £5.2m to £12.9m, driven by an active capital markets environment. Research also grew its operating profit from £9.5m to £10.6m, as it benefitted from the recurring revenue of its subscription model.

How does geopolitics affect shipping?
Geopolitics cuts both ways for Clarksons, as the uncertainty caused by crisis and conflict slows decision making but also creates opportunities. As demonstrated above, shifting tariff regimes, as well as sanctions (e.g., Russia and Venezuela) can cause shipowners and those chartering their ships to pause during times of uncertainty, reducing broking volumes. On the other hand, disruption can reshape trade flows in ways that are beneficial for Clarksons’ Shipbroking division. Attacks in the Red Sea have forced carriers to reroute shipping via the Cape of Good Hope rather than the Suez Canal. This has led to a c.65% drop in Red Sea traffic, according to Clarksons. These longer voyages require more ships, tightening supply and driving up freight rates which, in turn, increases the commissions earned on charters.

The impact of the Iran War
The ongoing Iranian conflict has added further uncertainty to the region’s shipping lanes. At the time of writing, the price to charter a Very Large Crude Carrier (VLCC) from the Persian Gulf to Singapore cost 3.75x the standard reference rate, according to rival shipbroker Fearnleys. Higher freight costs typically translate to higher commissions for shipbrokers like Clarksons.

At the time of writing, Clarksons’ shares trade at their all-time high, having gained nearly 25% year-to-date. With a trailing price-to-earnings (P/E) ratio of 22x, the shares trade at a meaningful premium to its parent index the FTSE 250 (14.1x), suggesting the market has priced in continued disruption to major trade routes. The financial year 2025 dividend was announced at 112p per share, the 23rd consecutive year of dividend increases, signalling management’s confidence in the company’s cash generation. Despite this, it is likely the market has already priced the good news in. A normalisation of freight rates to pre-conflict levels could remove the tailwinds that have supported the recent re-rating.

Not all smooth sailing
Beyond geopolitics, Clarksons remains exposed to many of the risks of the global economy. A global recession reduces demand for goods, putting downward pressure on freight rates and transaction volumes. The commissions earned by shipbroking are directly linked to freight rates, impacting the earnings of the division which produces most of the company’s revenue. Shipping markets are cyclical, and Clarksons may struggle to weather a prolonged freight downturn. The Baltic Dry Index fell over 90% from May to December 2008, illustrating the severity of freight market downturns when global demand is hit. Another consideration is the company’s currency exposure. Clarksons’ revenue is largely dollar-denominated whereas its costs are booked in sterling. This poses a risk that currency fluctuations distort profits. Clarksons recorded the average GBP/USD rate rising from US$1.28 the prior year to US$1.32 in financial year 2025. This can result in headline figures not always reflecting underlying commercial performance.

Overall, Clarksons’ dominant market position and diversified business model provide an income stream across shipping cycles but, with shares trading at all-time highs and a premium valuation, one could argue geopolitical tailwinds appear already discounted.

Please note that this communication is for information only and does not constitute a recommendation to buy or sell the shares of the investments mentioned. Investments and income arising from them can fall as well as rise in value. Past performance and forecasts are not reliable indicators of future results and performance. The information and views were correct at time of publishing but may have changed at point of reading.