TORM plc (TRMD): PESTLE Analysis [Nov-2025 Updated]

You're looking for a clear, actionable breakdown of the external forces shaping TORM plc (TRMD) right now, especially as we close out 2025. The product tanker market is always a complex mix of geopolitics and cyclical economics, but TORM's strong operational performance and proactive stance on decarbonization give it a real edge against the near-term volatility.

Political: Geopolitical Volatility and Trade Rerouting

Geopolitical instability remains the primary driver for the product tanker market. Western sanctions on Russian oil products have forced a massive rerouting of clean product trade flows, which translates directly into longer sailing distances, or higher ton-mile demand, for TORM's vessels. Plus, the attacks in the Red Sea and Suez Canal keep war-risk premiums high and inject operational uncertainty into every voyage.

US-China trade tensions and tariffs also create persistent, unpredictable market volatility. This is a double-edged sword: it boosts charter rates but raises operating costs. The market is reacting to headlines, not just fundamentals.

Economic: Strong 2025 Earnings Against Rate Headwinds

TORM's financials for 2025 look defintely solid, despite market headwinds. The company projects full-year EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization-a key measure of operating profitability) to land between USD 540 million and USD 590 million. Honestly, that's a strong anchor.

Here's the quick math: 89% of their 2025 earning days are already fixed at a robust average rate of USD/day 28,281. Still, we have to be real: increased fleet supply is forecast to weaken product tanker market rates slightly in late 2025. Also, central bank policies fighting inflation increase the cost of capital, making fleet refinancing more expensive.

What this estimate hides is the potential stabilizing effect of lower oil prices, forecast to average USD 63/barrel in the second half of 2025, which could steady demand.

Sociological: Talent Retention and Ethical Standing

TORM does a great job managing its human capital, which is a major risk in shipping. They boast high seafarer retention, with senior officers at 95% retention at the end of 2023, which stabilizes operations. They also mitigate the global talent shortage risk through their cadet program and the Philippines Education Foundation.

But the industry faces a severe global seafarer abandonment crisis, with 2,286 seafarers abandoned so far in 2025. TORM's commitment to the Maritime Anti-Corruption Network (MACN) strengthens their ethical standing, but the industry-wide crisis is a dark cloud. Keep your people safe and happy.

Technological: Efficiency and Future Fuel Adoption

The tech focus is all about efficiency and future-proofing the fleet. TORM is investing in digital tools and advanced hull coatings to drive operational energy efficiency. Their fleet average age of around 10 years requires continuous efficiency upgrades to maintain compliance.

They are also actively involved with the Maersk Mc-Kinney Møller Center for Zero Carbon Shipping, focusing on future fuels and next-generation vessels. Adoption of dual-fuel technology, like LNG or methanol, is the emerging industry trend they must follow. You must spend money to save money.

Legal: Rising Carbon Costs and Regulatory Scrutiny

The regulatory landscape is getting much tougher, and TORM is already adapting. Compliance with the EU Emissions Trading System (EU ETS) is a new reality, adding a carbon cost to European voyages. Also, the FuelEU Maritime regulation required an approved Monitoring Plan for EU/EEA vessels by January 1, 2025.

The big one is the formal adoption of IMO mid-term Greenhouse Gas (GHG) measures, including a market-based mechanism (a carbon tax or cap-and-trade system), expected in late 2025. Plus, there's increased regulatory scrutiny on deceptive shipping practices and the 'shadow fleet.'

Environmental: Ahead of the Decarbonization Curve

TORM is ahead of the curve on decarbonization, which is a huge competitive advantage. They aim to hit a 40% CO2 reduction by 2025, five years ahead of the International Maritime Organization's (IMO) initial target. The fleet achieved a 39.6% carbon intensity reduction by the end of 2023.

Mandatory compliance with the IMO's Carbon Intensity Indicator (CII) and Energy Efficiency Existing Ship Index (EEXI) is non-negotiable. Pressure from financial institutions and stakeholders for faster decarbonization is only increasing, so this proactive stance is smart capital allocation.

Action: Operations team needs to model the full financial impact of the IMO market-based mechanism adoption expected in late 2025.

TORM plc (TRMD) - PESTLE Analysis: Political factors

The political landscape for TORM plc is not just a risk factor; it's the primary driver of the current product tanker super-cycle, creating structural inefficiencies that translate directly into higher Time Charter Equivalent (TCE) rates. You need to view global instability not as a temporary headache, but as a persistent, profitable market condition for a compliant operator like TORM. The key is understanding how geopolitical fragmentation ties up vessel capacity.

Geopolitical volatility forces longer routes, boosting ton-mile demand.

Widespread global conflicts and political instability are forcing a permanent re-routing of global oil product flows, which is the core bullish thesis for product tankers. When a vessel has to sail a longer distance to deliver the same barrel of fuel, it effectively removes capacity from the global fleet. This is measured as ton-mile demand (shipping volume multiplied by distance), and it's soaring.

For product tankers, the rerouting around the Cape of Good Hope due to Red Sea attacks has created an estimated uplift to product tanker ton-miles of around 4%. This is on top of the structural shifts from the Russia-Ukraine conflict, which alone added a massive 14% increase to the product tanker sector's ton-mile trade in 2022-2023. TORM's fleet, consisting of LR2, LR1, and MR vessels, is perfectly positioned to capture this effect, which is why the company's average TCE rate for the first nine months of 2025 was $28,281/day.

Western sanctions on Russian oil products reshape clean product trade flows.

Western sanctions, particularly those targeting Russian oil and the so-called 'shadow fleet' of older tankers, are a massive tailwind for the legitimate, compliant fleet. The US Treasury's latest sanctions in late 2025 targeted vessels that accounted for about 42% of Russia's seaborne crude exports to China and India.

This action creates a significant void in the crude (dirty) tanker market, which is then filled by the most flexible vessels in the clean product fleet: the Long Range 2 (LR2) tankers. When an LR2 switches to carrying crude, it is effectively 'cannibalized' out of the clean product market. This tightening of supply for clean products is a direct benefit to TORM, whose LR2 vessels achieved a Q3 2025 TCE rate of $38,685/day. Plus, the European Union's upcoming ban in January 2026 on imports of petroleum products made from Russian crude in third countries will further cement these longer, more complex trade routes.

Red Sea/Suez Canal attacks sustain high war-risk premiums and operational uncertainty.

The persistent threat of attacks in the Red Sea and Gulf of Aden means the Suez Canal, a critical chokepoint, remains a high-risk transit zone. This forces many commercial operators, including TORM, to reroute around the Cape of Good Hope, adding approximately two weeks to a voyage from the Middle East to Europe.

This operational uncertainty is a cost multiplier. For vessels that still transit, the additional war risk premium (AWRP) has surged dramatically. Following renewed attacks in July 2025, the AWRP for a seven-day transit rose from about 0.3% to as much as 1% of a vessel's hull value, matching peak levels from the previous year. This cost is passed on to charterers, but the capacity reduction from the longer route is the real financial lever for TORM.

US-China trade tensions and tariffs create persistent, unpredictable market volatility.

While the most direct tariff-related impact is often on container shipping, the trade war between the US and China is fundamentally altering the clean petroleum product (CPP) feedstock market, which is a key driver for TORM's MR and LR1 vessels.

Specifically, China's retaliatory tariffs on U.S. liquefied petroleum gas (LPG) and ethane have prompted Chinese petrochemical cracker operators to switch back to naphtha as a primary feedstock. This is a huge win for product tankers. Consultancies project China's naphtha imports will hit an all-time high of 16 million tonnes (MMt) to 17 MMt in 2025, a jump of 33% to 41% over the 2024 import volume of approximately 12 MMt. This surge in long-haul naphtha demand directly supports the high TCE rates for the clean product tanker market. The trade war is creating new, longer-term demand patterns.

• Naphtha Demand: China's 2025 naphtha imports expected to rise to 16-17 MMt.
• Fleet Exposure: Over 20% of the global MR2 fleet is Chinese-owned/operated, making it vulnerable to US port fees and creating a tighter market for compliant vessels.
• Volatility: A temporary 'trade war truce' in late October 2025 suspended newly imposed port fees, but the underlying threat of a charge of $56 per ton on US-linked vessels remains a major source of market uncertainty.

TORM plc (TRMD) - PESTLE Analysis: Economic factors

The economic outlook for TORM plc in 2025 is a study in counter-cyclical strength, where strategic financial hedging is insulating the company from broader market softening. You should see a highly profitable year, but the market's underlying freight rates (Time Charter Equivalent or TCE) are normalizing, so don't mistake 2025's strong results for a long-term rate floor.

Full-year 2025 EBITDA is projected between USD 540 million and USD 590 million.

TORM's financial performance for the full year 2025 is expected to remain exceptionally strong, largely due to high fixed-rate coverage secured earlier in the cycle. The company has narrowed its full-year guidance, projecting Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) to be in the range of USD 540 million to USD 590 million. This strong forecast is a clear signal that TORM has successfully managed to lock in favorable rates, substantially de-risking the year's cash flow, defintely a smart move.

Here's the quick math: With a total of 3,625 earning days remaining open (11% of the total), a $1,000 per day change in freight rates impacts EBITDA by approximately USD 4 million. This low sensitivity highlights the benefit of their forward-fixing strategy in a volatile market.

89% of 2025 earning days are fixed at a strong average rate of USD/day 28,281.

The core of TORM's 2025 economic resilience is its strong contract book. A substantial 89% of the company's total earning days for the full year 2025 have been fixed at an average Time Charter Equivalent (TCE) rate of USD/day 28,281. This high coverage provides a predictable revenue stream that shields the majority of the business from the softening spot market rates observed in the first nine months of the year compared to 2024.

Product tanker market rates are forecast to weaken slightly in late 2025 due to increased fleet supply.

While TORM is protected by its fixed contracts, the broader product tanker market is showing signs of a supply-side headwind. The market is normalizing from the exceptionally high rates seen in 2024. The global product tanker fleet is anticipated to see a supply growth of 4.4% in 2025, a significant increase that is expected to outpace the retirement of older vessels. This new tonnage will add pressure to spot rates, especially in the fourth quarter.

The key risk here is that this increased fleet supply, coupled with a decline in long-haul routes (ton-miles) if geopolitical disruptions like the Red Sea situation ease, could lead to a steeper-than-expected decline in the remaining 11% of TORM's unfixed days.

Central bank policies and inflation increase the cost of capital and refinancing for the fleet.

The global environment of persistent inflation and central bank policies aimed at maintaining higher interest rates directly impacts the cost of capital for capital-intensive businesses like shipping. TORM explicitly lists 'inflation and rising interest rates' as a key risk factor. Despite this, TORM has been proactive, securing financing commitments of up to USD 857 million in July 2025 to refinance two syndicated loans and lease agreements covering 22 vessels.

What this estimate hides is the potential for higher underlying interest costs on floating-rate debt. As of June 2025, the company's Long-Term Debt and Capital Lease Obligation stood at approximately $970 million, with a quarterly interest expense of $-18 million. Any further delay in central bank rate cuts will keep this interest expense elevated, cutting into net profit even with strong TCE earnings.

Lower oil prices (forecast to average USD 63/barrel in H2 2025) could stabilize demand.

Lower crude oil prices generally act as a stabilizer for product tanker demand, as they stimulate global consumption of refined products like gasoline and diesel. The US Energy Information Administration (EIA) forecasts Brent crude oil spot prices to decline from mid-2025, averaging less than $60 per barrel in the fourth quarter of 2025. Other forecasts project prices to fall to an average of $62 per barrel in Q4 2025.

This decline in the price of crude oil is a double-edged sword:

• Opportunity: Lower prices reduce the cost of bunker fuel (a major operating expense) and could boost consumer demand for refined products, increasing the volume of cargo TORM carries.
• Risk: A sharp, sustained drop in prices could lead to a sudden reduction in oil inventory building (stockpiling), which would temporarily reduce the need for product transportation.

The current forecast suggests a soft landing, where lower prices support demand without signaling a major global economic slowdown.

TORM plc (TRMD) - PESTLE Analysis: Social factors

The social factors influencing TORM plc's (TRMD) operations are largely centered on managing human capital in a highly competitive and ethically challenged global maritime environment. The company's proactive stance on seafarer retention and education provides a significant competitive advantage, but it must be viewed against the backdrop of a worsening industry-wide humanitarian crisis.

Sociological

In the shipping world, the crew is your most critical asset, and TORM has defintely built an operational stabilizer by focusing on its people. The most recent available data shows a remarkably high retention rate for senior officers at 95% at the end of 2023, which is a key indicator of a stable, experienced fleet operation. This consistency in senior leadership stabilizes everything from safety compliance to operational efficiency, directly impacting the bottom line. Losing a seasoned Chief Engineer or Master can cost you more than a week of lost earnings, so this high retention rate is a clear competitive moat.

TORM's commitment to talent pipeline development is another strong social factor mitigating the global talent shortage risk. Through the TORM Philippines Education Foundation (TPEF), the company is not just hiring; it's investing in the future supply of qualified seafarers. The TPEF's Scholarship Grant Program supports college education for underprivileged youth, including dependents of TORM seafarers, with the latest cohort being the Batch 2025 scholars. Plus, the company's cadet program actively recruits from recognized maritime colleges in key regions like the Philippines, India, and Croatia, ensuring a steady flow of new officers and ratings into the fleet.

Ethical standing is non-negotiable for a global carrier, and TORM's commitment to the Maritime Anti-Corruption Network (MACN) strengthens its position. MACN is a global business network dedicated to eliminating corruption in the maritime industry, and TORM's membership signals a clear zero-tolerance policy. This is not just about compliance; it's about reducing operational risk. The MACN's anonymous incident reporting system has collected over 65,000 reports of corrupt demands globally since its founding, providing data that helps members like TORM navigate high-risk ports with clear, ethical procedures.

However, the industry faces a severe global seafarer abandonment crisis, which is a major social risk that can tarnish the reputation of the entire sector. New figures from the International Transport Workers' Federation (ITF) in 2025 reveal a disturbing surge: at least 2,286 seafarers on 222 vessels were abandoned so far in 2025. This represents a 30% year-on-year increase in abandonment cases. This crisis, often linked to vessels registered under Flags of Convenience (FOCs), creates a humanitarian and reputational headwind for all maritime players, even responsible ones like TORM.

Here's the quick math on the crisis, which highlights the scale of the problem TORM must distance itself from:

What this estimate hides is the human cost, but the numbers show the financial and ethical pressure on the industry is rising. TORM's strong internal retention and external anti-corruption work are essential defenses against this systemic risk.

The company's proactive social initiatives include:

• Maintain senior officer retention at approximately 95%, stabilizing fleet expertise.
• Recruit new talent via the cadet program from key maritime nations.
• Fund the TORM Philippines Education Foundation, supporting the Batch 2025 scholars.
• Commit to MACN to ensure ethical operations and reject corrupt demands.

TORM plc (TRMD) - PESTLE Analysis: Technological factors

Investment in digital tools and hull coatings drives operational energy efficiency.

You can see TORM plc's commitment to immediate efficiency gains directly in their capital spending. The company is actively investing in technologies that provide tangible, near-term fuel savings, a critical strategy given the high cost of bunkers (ship fuel).

Through the first half of 2025, TORM capitalized USD 58.6m for dry docking and vessel modifications, a clear sign of their continuous efficiency upgrade program. This investment focuses on optimizing the existing fleet through measures like advanced hull coatings and propeller upgrades to reduce hydrodynamic drag, plus implementing digital tools for better voyage optimization and connected machinery monitoring. This focus is part of the company's ambitious goal to reduce carbon intensity by 40% compared to the IMO baseline by the end of 2025, five years ahead of the IMO's initial 2030 target. That's a serious commitment to operational tech.

Focus on future fuels and next-generation vessels via the Maersk Mc-Kinney Møller Center for Zero Carbon Shipping.

While optimizing the current fleet is key for the near-term, TORM is also deeply engaged in long-term, zero-emission fuel research. They hold the position of a Mission Ambassador in the Maersk Mc-Kinney Møller Center for Zero Carbon Shipping, a collaboration that helps map the path to decarbonization for the entire maritime industry.

This involvement is not about buying next-generation vessels today; it is about shaping the future fuel infrastructure and ensuring TORM is ready for the transition. Their strategy is to leverage this collective knowledge to make informed decisions on future vessel orders, focusing on fuels like methanol and ammonia, which they view as more viable than Liquefied Natural Gas (LNG) for their tramp shipping business model.

Fleet average age of around 10 years requires continuous efficiency upgrades to maintain compliance.

TORM operates a substantial fleet of approximately 94 owned vessels, with an average age currently sitting above 11 years as of early 2025. To be fair, an older fleet means lower capital expenditure (CapEx) for newbuilds, but it also demands constant technological retrofitting to meet increasingly strict environmental regulations like the IMO's Energy Efficiency Existing Ship Index (EEXI) and Carbon Intensity Indicator (CII).

The company manages this challenge through an active fleet management strategy, which includes divesting older vessels (like the three 2005-built MR vessels sold in Q1 2025) and acquiring high-quality second-hand ships that can be rapidly upgraded to the TORM standard. This is a crucial balancing act: keeping a competitive fleet without massive newbuild CapEx.

Here's the quick math on their current fleet performance and financial outlook for 2025:

Adoption of dual-fuel (e.g., LNG, methanol) technology is an emerging industry trend.

The industry is moving toward dual-fuel vessels, but TORM is taking a measured, specific approach. They have publicly stated they are prioritizing methanol and ammonia over LNG. This is a defintely a realistic choice for a product tanker company, as LNG bunkering infrastructure is not yet globally available for the flexible routes of tramp shipping.

TORM is preparing for methanol adoption by ensuring a portion of its fleet can already carry methanol as cargo for clients, which gives them early experience with the fuel's properties. As of recent statements, about 10% of their fleet is being prepared for this methanol-carrying capability, providing a low-risk entry point into the future fuel ecosystem.

This selective approach contrasts with the broader newbuild market, which still favors LNG, but aligns with the growing interest in methanol:

• Dual-fuel LNG propulsion represented 60% of capacity ordered in the first ten months of 2025.
• Dual-fuel methanol orders, while smaller, represented 12% of capacity ordered in the first ten months of 2025, showing its increasing relevance.

The next clear action for TORM is to finalize an order for their first dual-fuel newbuild, likely methanol-powered, to lock in their long-term fleet renewal strategy.

TORM plc (TRMD) - PESTLE Analysis: Legal factors

The legal landscape for TORM plc is undergoing a rapid, structural shift in 2025, moving from voluntary industry guidelines to mandatory, high-cost international and regional regulations. You need to focus on two things right now: the immediate financial impact of the EU's carbon pricing and the preparation for the IMO's global GHG mechanism, which will dictate long-term fleet strategy.

Formal adoption of IMO mid-term GHG measures, including a market-based mechanism, is expected in late 2025

The International Maritime Organization (IMO) is on track to finalize its mid-term Greenhouse Gas (GHG) reduction measures, with formal adoption anticipated at an extraordinary session of the Marine Environment Protection Committee (MEPC) in October 2025. This is a massive shift because it creates a global, not just regional, cost for carbon emissions. The measures are expected to enter into force in March 2027 at the earliest, but the time for strategic planning is now.

The core of the new framework is a tiered GHG Fuel Intensity (GFI) requirement, paired with an economic element. It's not a simple flat-rate levy anymore; it's a compliance unit system. Ships that exceed the Direct Compliance target will earn Surplus Units (SUs), while those with a deficit will have to buy Remedial Units to balance their non-compliance. This directly impacts the value proposition of TORM's modern, efficient fleet, rewarding lower-emission operations with a tradable asset.

Compliance with the EU Emissions Trading System (EU ETS) adds carbon cost to European voyages

The inclusion of shipping in the EU Emissions Trading System (EU ETS) is the most immediate financial legal factor for TORM in 2025. This is a direct, realized cost that you must manage. As of the 2025 fiscal year, shipping companies are required to surrender EU Allowances (EUAs) for 70% of their verified emissions from voyages within the European Economic Area (EEA) and 50% of emissions for voyages between an EEA port and a non-EEA port. The cost per ton of carbon is significant and volatile.

The price of an EUA allowance has been climbing. After averaging around EUR 65 per ton of CO2e in 2024, the price surpassed €76 per metric ton in September 2025, with analysts projecting it to remain between €73 and €78 in the fourth quarter. This is a substantial, non-negotiable operating expense for any European-trading vessel. The good news is that TORM's modern fleet is better positioned than older tonnage to minimize this exposure.

Here's the quick math on the compliance obligation for 2025:

FuelEU Maritime regulation requires an approved Monitoring Plan for EU/EEA vessels by January 1, 2025

The FuelEU Maritime regulation, which became effective on January 1, 2025, is a technical compliance hurdle that complements the financial cost of the EU ETS. Its goal is to mandate a gradual reduction in the greenhouse gas intensity of the energy used onboard ships over 5,000 GT calling at EEA ports. Ship operators had to submit their approved Monitoring Plans to an EU-authorized verifier by August 31, 2024, so the focus in 2025 is on execution.

The regulation's GHG intensity limit starts with a 2% reduction target in 2025, based on the 2020 fleet average of 91.16 gCO2e/MJ. This requirement forces TORM to not just report emissions, but to actively start using lower-carbon fuels or face penalties. This is a defintely a challenge for the entire product tanker sector, which relies heavily on conventional fuels.

• Start monitoring GHG intensity from January 1, 2025.
• The first GHG intensity reduction target is 2% in 2025.
• Compliance is based on the well-to-wake emissions, meaning the entire fuel lifecycle.

Increased regulatory scrutiny on deceptive shipping practices and the 'shadow fleet'

The 'shadow fleet'-a large, aging group of tankers operating outside of standard international safety and insurance regimes, often involved in sanctions evasion-is a growing legal and reputational risk for the legitimate shipping industry. Regulatory scrutiny surged in 2025, driven by geopolitical tensions and environmental concerns over these uninsured vessels.

In July 2025, the European Union's 18th round of sanctions specifically targeted over 105 shadow fleet vessels and their enablers. This is not just about the ships themselves; the focus has broadened to the entire ecosystem, including flag registries, financial intermediaries, and port operators. For a publicly traded company like TORM, this means due diligence on charterers, counterparties, and even bunkering ports must be more rigorous than ever to avoid accidental entanglement with sanctioned entities or deceptive shipping practices (DSPs) like GPS spoofing and fraudulent flagging that surged in 2025. Your compliance framework needs to be airtight.

TORM plc (TRMD) - PESTLE Analysis: Environmental factors

You need to understand that for a product tanker company like TORM plc, environmental factors aren't just about compliance; they are a direct driver of capital expenditure, operational efficiency, and access to funding. TORM is aggressively positioning itself as a leader, aiming to hit the International Maritime Organization's (IMO) initial 2030 carbon intensity target five years early, by the end of 2025.

TORM's Accelerated Decarbonization Target

TORM has an accelerated target to achieve a 40% reduction in carbon intensity by 2025, compared to the IMO's 2008 baseline. This is a significant move, pushing ahead of the IMO's original goal for the global fleet to reach this level by 2030. To be fair, this early commitment is a clear signal to investors and charterers that TORM is defintely serious about future-proofing its fleet.

The company has already made substantial progress toward this accelerated goal. Here's the quick math on their progress:

• Target Reduction by 2025: 40% (vs. 2008 baseline).
• Achieved Reduction by end of 2023: 39.6% (measured by Annual Efficiency Ratio or AER).
• Long-term Goal: Zero CO2 emissions from the operating fleet by 2050.

This means they were only 0.4 percentage points away from their 2025 goal at the start of 2024, putting them in a very strong position for the 2025 fiscal year. Still, maintaining this trajectory requires continuous investment in operational and technical efficiencies.

IMO Regulatory Compliance and Fleet Performance

Mandatory compliance with the IMO's technical and operational measures is a non-negotiable cost of doing business. The two key regulations are the Energy Efficiency Existing Ship Index (EEXI) and the Carbon Intensity Indicator (CII).

The EEXI is a one-time technical certification measuring the energy efficiency of existing ships over 400 gross tonnage (GT) against a required baseline. The CII is an operational measure for ships over 5,000 GT, rating their annual carbon intensity from A (best) to E (worst). A ship rated D for three consecutive years, or E in any year, must submit a corrective action plan.

TORM's strategy focuses on operational improvements to meet these standards, rather than relying solely on newbuilds. For example, by the end of 2023, more than half of TORM's fleet had advanced silicone hull coatings applied. This single measure is estimated to achieve an annual emission reduction of over 87,000 tons of CO2 fleet-wide, which equates to a 5.9% annual reduction.

What this estimate hides is the challenge of a growing fleet. In 2023, TORM's total Scope 1 CO2 emissions increased compared to 2022 because the fleet size grew from 78 to 82 vessels, and operating days rose from 29,610 to 30,605. So, while intensity per unit of transport work is down, total emissions are still an issue that needs to be addressed with future fuels.

Investor and Financial Institution Pressure

Pressure from financial institutions and stakeholders for faster decarbonization is not just a moral issue; it's a financial one. Banks and investors are increasingly using Environmental, Social, and Governance (ESG) metrics, particularly carbon intensity, to screen investments, which directly impacts TORM's cost of capital.

The CII is now a major market signal. Vessels with strong A or B ratings are more likely to attract favorable charter rates and qualify for green financing. Also, the integration of maritime shipping into regional carbon markets, such as the European Union's Emissions Trading System (EU ETS), is a near-term financial risk. The EU ETS now covers a portion of voyages into and out of Europe, with full scope expected by 2026.

TORM is actively engaged in industry groups to manage this trend and influence the regulatory landscape:

Honestly, the biggest challenge for TORM is the lack of commercially available, scalable zero-emission fuels. They are investing in technology now, but the ultimate solution is still an industry-wide problem.

Next step: Strategy team: model the projected EU ETS cost for 2026 voyages based on 2025 fleet operations and current carbon price forecasts.