Shipping markets outlook for H2 2026

When it comes to shipping markets in 2026, there is certainly plenty to talk about. And that's what we'll be doing today with the team from Maritime Strategies International. Hi, it's Marcus Hand, editor of C-Trade Maritime News here, with our mid-year shipping markets outlook episode. You'll be hearing from Adam Kent, Daniel Richards, Will Free, and Tim Smith from MSI, and we'll be discussing the outlook for second half of 2026 for container shipping, dryblock shipping, tankers and shipbuilding. Before we drill down into the specific sectors, we'll be starting with a broad macroeconomic outlook from Adam Kent. Welcome back to the podcast, Adam. Hi Marcus, and thank you for having us back yet again. Well, thank you so much for taking the time to talk to our listeners, and perhaps you could just set the scene for what has been a somewhat eventful first half of the year. Yes, of course, we didn't think that the world is shipping could get any more complex. I think 2026 is certainly shown us otherwise, up until a year to date. The industry has once more been confronted with more geopolitical shops and a playbook that seems to change almost on a daily basis. But overall, I say that certainly from a shipping market perspective, they've continued to adjust and have performed actually quite well. Of course, a big part of volatility has been the height and conflict in the Middle East, and now with the U.S. Uranian War being a new significant development over 2026, that certainly shaped the economies and the shipping market yet further. From a pure macroeconomic perspective, our global GDP outlook has weakened since the start of the war, and we revised this down from 2.8% to 2.4%, was a lot of that 0.4% dropped being a downgrade in expected GDP grade actually in the Middle East. I think at the start of the conflict, there was certainly anticipation that the economy was suffer more than it has, but I think that the oil markets have stood the loss of volumes via the straighter formulas, a lot better than most would have anticipated at the end of February. Industrial production remains similar to pre-war levels, and while we've seen some increase in headline inflation by about 1% in the U.S. and Eurozone, compared with February, it certainly hasn't exploded like it did two or three years ago. I think two of the broader drivers that are helping to support the economic resilience continue to be the strength from Chinese exports, and there are few signs that we've seen that the Uranian War have dented global demand for Chinese goods, and of course we continue to see the sort of heightened investment tied to AI and all things AI. And that AI investment boom is certainly giving a significant lift to the U.S., Chinese, Korean, Taiwan economies. Generally in the U.S., our 2020 GDP growth forecast now sits at around 2.1%, that's a slight downgrade to where we had it at the start of the year by about 0.2%. And that downgrade basically just reflects our view of the gradual drag from the higher energy prices, weaker real income growth, and slower consumer spending. So the U.S. still remains relatively insulated compared to other advanced economies. Overall, however, we think that the sort of risks do remain on the downside, especially in Europe and East Asia. The picture here is that economies are still expanding, but they've become a lot more fragile, and with the higher energy costs, there's disruptive trade routes, and those commodity prices are certainly putting pressures unevenly across these different regions. Our core view certainly remains that the longer term, the longer we see the disruption to oil and gas supplies, the greater the negative impact this will be on the global growth. However, we have sort of become a little bit more optimistic about the world's economy resilience to withstand these geopolitical headwinds, given events that we've seen over the course of the last five years, and just how well global economy has performed. If we look at from a more of a shipping perspective, certainly on the earnings side, sectors have continued to perform well, and in some cases exceptionally well in 2026. And this is perhaps somewhat surprising at a headline level. If we just look at where we expect global sea-borne cargo graves to be this year, we actually expect to see cargo graves that are around minus 1% in 2026. And that's largely due to the lack of volumes going through the straightforward moves given the war in the Middle East. Therefore, the supports in the market continue to come from the inefficiencies that we see across the various sectors of shipping, longer-toned miles, slower speeds, longer waiting times to get into ports and general disruption. And we've also pushed back our expected timings to see returns to transits via the Red Sea into 2027. Again, that continues to support market balances. And at the same time, we've recently seen the Panama Canal Authority reduce the number of transits it's expecting through the Panama Canal during two drought conditions. And with this year being a potential severe alineo year, we could see further reductions in Panama Canal transits, which again would help support market balances for most shipping sectors. On the supply side, ordering continues as a pace. So we're seeing similar volumes being ordered over the course of the last five years, as we did during the super boom years between 2003 and 2008. Containers, ordering has, I guess, passed the mantle over to the old tankers this year. And old tankers have certainly taken the line show of all orders. While scrapping generally remains at a snail's pace, we've seen virtually no scrapping over the course of this year, counter to the high ordering volumes that we have seen. So I think this time last year, when we did a similar podcast, I did comment on that it's been a very eventful start to 2025. And I think we can say something very similar. And it seems to be a playbook that seems to be playing out pretty much over the course of each of these podcasts that we do that there are always a series of events as you sort of said in your introduction, Marcus, that have been shaping the shipping markets and continue to shape the shipping markets as we move forward over the course to 2026 and into 2027. Thank you, Adam. There's a lot of different things there that are going to affect the individual sectors that we're now going to look at in more detail. If you're enjoying the C-Trade maritime podcast, make sure you never miss an episode by subscribing on the app of your choice. First, we shall be turning our attention to the container shipping market with Daniel Richards. Welcome back to the podcast, Daniel. Hi, Marcus. Good to be back. Thank you so much for taking the time. Now, container free rates markets bounce back in Q2. Could you give an overview of what has happened in the first half of this year? It's in many respects quite similar to what we saw a few years ago with the initial phases of the Red Sea crisis. The container market starts of the year in generally pretty subdued fashion, that obviously was co-instinct with the Lyda companies, generally returning to being not profitable or only slightly profitable, and that fired on from a relatively weak period for markets at the end of 2025. You did see a bit of an increase in spot rate rates in the run-up to balloon in New Year in China, but thereafter it seemed that the industry was heading back into a relatively weak period for markets, and that even before supply was expected to ramp up again in 2027 and beyond. Now, in practice, events have conspired to generate a far more profitable market. The Lyda companies are far more volatile market for beneficial cargo owners and shippers, and the initial catalyst for this was the closure of the straight report moves. That's clearly not as significant with the container sector as it is, certainly, the tanker sector or certain the gas sectors, but what we saw is with the rise in global bunker prices, you started to see the imposition of bunker surcharges on top of freight rates. That had an initial infleashably impacts on freight rates. You saw freight rates, certainly, to the Middle East, begin to surge, as you saw the loss of sailing capacity to the region. But I think it's what's happened since then has been what's kind of caught people off guard a little bit, in that bunker surcharges have been added to the freight road. for those should be measured in hundreds of dollars, but what you've seen is compared to the situation before the war in Iran, the Asia-Europe freight rates then were around $2,500 per FVU, those have gone up to around $5,000 per FVU now, rates on the Asia-US West Coast trade that don't go anywhere near the Middle East, those vessels at least, those have gone for around $2,000 to about $6,000 per FVU, so it's been a far more explosive response in markets than many would have expected, and there isn't really one single driver. There's evidence clearly that the demand side of the industry is helping, demand has held up really well, so far this year, so again continuing growth around 5% year over year, only really some of the Middle East trades have seen a notable negative impact so far this year. What you've also seen as the vessels have slowed down a bit, as a result of the increase in bunker prices that takes effective capacity out of the market, it's also likely that the loss of access to sort of the transshipment hubs in the UAE, so Jebel Ali and Khalifa, that's possibly having some ripple effects on the wider efficiency of containerized supply chains, and as those become less efficient, that takes supply out of the market. There's also likely on the demand side that there's been some sort of front loading of cargo, it's now we can't tell how much this is yet, you can't really tell if you're front loading until you've got the subsequent slow down to prove that things were being brought forward, but it is likely that shippers were bringing goods in ahead of anticipated higher bunker surcharges, certainly those moving on contracts, it's possible that in the US there was some front loading ahead of the tariff regime changing in July, although in practice tariffs haven't really changed much at all from where they were even before the Supreme Court judgment was handed down. What we're also seeing though is it's possible that goods have been brought ahead of expected, it rises to input costs, so if we look at the containers arriving in the US in Q2 where those return to annual growth after a quite a week period, you've saw a big increase in imports of things like plastics, so it's possible that people are anticipating that with higher energy prices, energy intensive goods, the cost of those are going to go up to people who are trying to front load ahead of that disruption, so it's been a real cocktail of different market drivers on top, added to which at least recently has been high port congestion, so that has spread out from the South Asian hubs to Southeast Asia where up to now where it's really Shanghai that's seeing particularly significant port congestion and port wasting time, so again it's a pattern where events kind of happen, containerized supply chains get disruptive and it's just a market that's far more responsive to these kinds of forms of disruption, a loss of supply compared to where we were in the pre-pandemic years, and I think that this has been the sort of third instance of that explosive responsive freight rates to events following the COVID-19 pandemic and then the Red Sea crisis a few years ago. You mentioned that sort of pattern you've seen in the previous crises, in those cases the freight rates remained high for quite a significant length of time, would you see that happening in the second half of this year or will things start to come off again? So in recent weeks there has been some evidence of what freight rates beginning to weaken, certainly on the trans-Pacific, the Asia into the West Coast trade, I think for the moment they're not at least a collapse, perhaps part of something because the Bunga surcharges are going to remain relatively elevated, it seems that for the moment oil prices are going to remain higher than they were before the around war kicked off, and for the moment we are relatively optimistic about the demand side, it remains to be seen if there has been front loading, but I think a big theme of certainly the analytical reports that we're putting out to clients, a theme we're highlighting in those is that the big sort of demand side driver has been the cost competitiveness of Chinese exporters, the inability of Chinese domestic demand to absorb all the goods that their factories are producing, and that's effectively leading almost to a positive supply shock to kind of the global goods industry or manufacturing goods industry, so for the moment we don't see that dynamic is particularly changing, there are rumblings around protectionism, this idea of a China shock 2.0 where perhaps down the line economies beyond the US will begin to look at this kind of flood of Chinese exports a bit more negatively, but for the moment provided the world economy can remain relatively insulated to what's going on in oil markets in the Middle East, they would think the demand side of the industry should continue to perform pretty well, but it will be a slower pace of growth likely than we saw in the first half of the year, we're also for the moment at least least of the remainder of 2026, the supply side of the industry is going to be relatively manageable, so fleet growth in the first half of the year was around 5% of the year, that's still not nothing, but it's in line with growth in demand, in global container trade growth again was about 5% of the year of the year, the second half of 2026 is going to start to see deliveries ramp up a bit, but overall it's not going to be yet this expective flood of new capacity, but that will arrive in 2027 and beyond, so we think that the framerates probably have peaks barring other unseen events, but we're not expecting a collapse in the near term. Okay, and you mentioned there on the supply side, when we were talking six months ago we were talking about the potential for return to the Red Sea, but in Adam's opening comments there, it sounds like you're now not expecting that to happen given recent events in Saudi and Yemen. I mean actually what we had even seen prior to the event of the past week or so was actually there had been a bit of a gradual ramp up in line of companies announcing returns to the Red Sea, so CMAC GM have been running some services back through the Red Sea for a while now, what you saw in July is that Merck announced really three kind of changes to their services, so one of their Asia Europe loops with Hapag Lloyd, the announced was going back through the Red Sea, the announced that a Middle East India to US East Coast route was going back through, and similarly a Middle East Mediterranean West Africa service was also going to go back through. Those ships have continued to make those transits, there's a few vessels with the AIS company turned off who should be making those transits at the moment. I guess we'll see what's happened since the recent Houthi announcements, whether that does continue, but I think for in terms of a wider range of carriers, again the events of the past week where the Houthis are now talking about replicating the Iran's approach in the state straight up almost, it's unlikely that other carriers are going to be rushing to announce returns and but there had been some movement to walls that even since the start of the war in Iran. Okay, but that will act as a constraint on the supply side. How are things looking if we look at the Charter Market? The Charter Market continues to fare incredibly well, it remains very much a vessel owner's market, not a liner company Charter's market, TC rates have remained broadly at a very, very elevated level since they kind of rose in the first half of 2024, and if anything they continue to strengthen. So not big changes, not all benchmarks we can't were tracking at once, but rates do just continue to inch upwards, and it's fundamentally a very, it's a story really of continuity where liner companies still are trying to add ships to their networks in particular Charter Market size ships of sort below 8,000 to you, and they just don't have many to choose from at the moment. This is again, a longer term story at NSC and other liner companies buying so many ships out of the market, relatively limited, fleet growth in some of those segments. So for the moment, if you're trying to fix a ship out to a liner company, you remain in a very strong bargaining position, and that doesn't seem likely to change at all for the remainder of 2026, to the extent we do see a normalization or a weakening in those markets, that's going to take really some time to play out. So even if we do see a weakening freight rate outlook sooner rather than later, it is likely to remain the case of the Charter Market, and then also second-hand values will respond with more of a lag. Okay, so pretty good news if you were a tonnage owner and supplier to the market, and just what's all one more thing in terms of the vessels themselves, and that's we've seen this continued ordering of new buildings. When does this actually come back to sort of bite the sector? So the order that's happening now isn't really going to be the problem, the ships that you've seen around nearly 1.9 million to you have vessels ordered so far this year, compared to what five million in last year as a whole, those ships have shifted towards smaller vessels, in general, but we do think that realistically from 2027, 2028, the wave of ships that we're expecting to see hit the water, those are going to have a negative impact on overall market balances, and I think the order you've seen so far this year has been interesting. I think that the volume of orders of smaller to mid-sized ships that we've seen placed has been more than I think people had anticipated. We're seeing a lot of Greek owners kind of move into this space. We're seeing a lot quite obscure Chinese owners placing our orders at yards people haven't really heard of before. So there is a bit of a rush to kind of get this volume of tunnage on the water and ultimately, I think if you look at our measures for market balances, so in our sort of online platforms on our in our course, it's called the analytical reports. We're tracking how this evolution of market balances looks for different sub-segments of the fleet. And what we're seeing is that this increase in order into the small to mid-sized ships, it is generally speaking still consistent with the ageing profile of that fleet. It's a very different picture for the large ships where there's no elderly fleet to scrap. But I think what we're going to be trying to do for clients in our upcoming reports and model updates is really trying to tease out. How do you balance this very lopsided order book and fleet profile dynamic? And really, how do you find homes that are all the large ships that we're coming to see online? And like you saw in 2015, 16, is there going to be a point where there's a pinch point in this containship cascade where the volume of larger ships is too much for smaller trade lanes to absorb. So it's a really interesting picture. On top of this, you have all the dynamics around the energy transition and the potential for line companies to slow their fleets down. But the big picture is, although the industry clearly is quite responsive to episode of crisis and that can lead to temporary boosts profitability, the big picture is that the order book is very large. Nearly 40% of the fleet now. And we think that will take a toll on markets as we move into next year and beyond 40% of the fleet. That's a pretty big number. We're very interesting to see how that plays out in the years ahead. Thank you, Daniel. I'd like to move on so we can look at the dry bolt market with Will Fro. Will, we'll come back to the podcast. Hi, Marcus. Nice to speak to you again. Thank you so much for taking the time to talk to our listeners today. Well, dry bulk has enjoyed a strong first half of the year. Could you give an overview of the market and want us to happen, please? Yeah, well, you're right. The very very start of the year. I think the chart and markets had started to soften a little bit, but things have been upended somewhat. And certainly as the years progressed, then chart and markets have have strengthens, or be it being highly volatile with the upsides weighted towards Cape size ships, really. I think the Middle East crisis has had an obvious significant impact. Duncan, some minor bolts trade and also seen panamax. Supply growth has been quite strong. So those factors have undermined the subcapes eyes earnings relatively speaking, whereas I know on bulk site trade and Cape size ship has been has been firm. So so the upside really has been tailored more towards those Cape size ships indeed. Charter rates of capes and Q2 were almost as high as they were back in 2021. Although subcapes are about 50% lower by the same comparison. I think more striking this year has been the rise in the second hand asset values in bulk markets. We published some analysis in our horizon monthly dry bulk report recently to show that an investor with a cost of equity of 10% and investment horizon of five years would would struggle to justify buying ships at the day's prices purely for the vessels returns. Even on the strength of the current freight futures market unless they believe there was still further upside for asset prices in future and we pointed out they'd actually need to sell ships of prices higher than they paid for it in five years time. So so there's certainly been a ramp really very high rise in second hand values, which has been more surprising even given that strong freight market. What would you say was behind that rise in second hand values? Are there any sort of factors that you can see in particular? Well, this is a question because you know, we're looking at the underlying economics of it. Now, obviously the fees aging, there is a sense of owners wanting to secure modern tonnage to replace all the ships and and the new build prices are so strong that that will be pushing some owners towards towards modern assets rather than contracting new ships. In particular, you've got a very long lead time between ordering and delivery. So there's there's some incentive there for owners with a strong cargo book to be purchasing new ships, but but to be frank, there's also been high rises and older asset values as well. So there is some kind of speculative purchasing perhaps or maybe some more short term drivers secure to short term cargo is that that's important those investments. But you know, from an MSI perspective, looking at the economics of it, looking at the patterns versus historical distributions of values, then what we're seeing is that second hand values are excessive compared with with historical relationships. So that's interesting to see that happening in the market. You mentioned that where you talked about the rising rates, it seemed to be much more biased towards the larger sizes of vessels, how much does geopolitics play into that because I think the smaller sizes were more impacted by the closure of the streets before moves, for example. Yeah, absolutely, yeah, I think there's, you know, I think the certainly directly in terms of the trade in and out straight before moves, then that is affecting a smaller smaller sizes, but of course there are there are indirect effects. So it's so directly you've lost the fertilizers coming out the region and aggregates trade and obviously some importing of grains and steals the Middle East accounts around about three and a half percent of global demand. So whilst it doesn't seem like a lot is it is significant in terms of the trade volumes in terms of market balances, but really it's the indirect effects that are perhaps having a bigger impact on dryball market. Obviously, oil and gas prices of the risen and coal has certainly benefited from this increased charting for coal market, called trade into Far East Asia into Japan, career, Taiwan, bunker prices increasing of sort of brought about lower speeds or at least prevented vessel speeds from rising even when when freight markets have strengthened. But there's always the sort of more nebulous positive effects of changing trade patterns as charters look to source qualities from all 10 origins and the instructions associated with that. So the effects whilst it directly and more associated with the kind of subcapes eyes market and that's been more negative for those vessels that have been other other factors which are more positive. And perhaps more positive for the market in general and for a capes eyes segment. Okay, if we look into the second half of the year, what do you see as the demand picture and what's driving that? Well, I think it's increasingly looking difficult to see a resolution to the to the around conflict in the short term. So these kind of disruptive effects that we've been trucking will continue particularly for grades, minor belts trades, you know, the trade into and after the region. Certainly, when we smooth, even if the straight is is reopened in in some form, so if that sort of loss of trade is likely to continue for now. If you go through different commodities, China still demand is still weak, so you could argue that there are some downside risks to iron or trade, but but actually we're assuming that the China's domestic. I know output will fall supporting more trade out Australia, Brazil and obviously some and do is now now ramping up and as we go to second half of the year, you'd expect to see a seasonal bump. So it's the iron ore markets. If we could leave aside those downside risks from the China steel market and assume that the domestic iron ore production will come down, then there is there is some upside there. Borks like trade is perhaps a bit more difficult to pick. I think it's there's something subject to government policy in in Guinea and they're making efforts to to restrain exports. It might take some time for that to come through. They're looking for more investment in aluminum capacity in Guinea. So I think we'd say it remains firm, but there are some downside risks if the government takes more extreme efforts to reduce that trade. For coal and for grains, we would probably expect some to see some more disruption related to El Nino. For the dry bot sector, then we probably expect to see stronger power demand in northeast Asia and lower hydropower output, so overall in that region you expect a boost to coal demand and coal trade. Grave markets are a bit more difficult to call. You probably see lower trade out of Australia. The impacts in the Americas are kind of depend on the intensity of weather patterns and timings often in past. We've actually seen that it's had a negative impact on yields in Latin America, but that's probably going to affect next year's trade rather than this year. So overall I think for that, then the balance is a bit more positive for coal markets more than offsetting that down. side for grains. And if mind about some mentioned Middle East, but also there is some pressure on steel trade at the moment. There's Europe's C-Bam policy is having something packed on European steel imports and there's also tariffs around the world on China's steel. So I think we're a bit more cautious on the mind about market. So overall, say the picture is for steady, but not solid growth in aggregate. We're actually predicting around growth and cargo around one and a half percent year on year as a whole. Now that actually finally is the same as what we predicted 12 months ago, but the composition has changed a lot. So whereas previously you're expecting it to be driven by by minor bolts trade this year actually has switched into more kind of iron ore and bortside much more cost just than we were previously. And that helps explain why the Cape size market is being strong. But I think that obviously one of the key impacts from El Niño is the low water levels in the Panama Canal and the restriction of access there. So we through our market models, we account for these inefficiencies when translating cargo growth into actually the fleet required to move that cargo. So that's been corporately not only tonn miles effects, but also re-routeings, also portolose feed and other inefficiencies. So we're actually predicting demand and debris terms to rise by four and a half percent this year. And actually there's upside risks to that if the access to the Panama Canal is dramatically restricted. So there's quite a big difference between a one and a half percent growth in cargo to a four and a half percent, maybe five percent growth in the demand for shipping, particularly if the fleet is going to expand by just under four percent this year. So that probably gives some indication of how much those inefficiencies are affecting the market again that someone had mentioned right the start of this discussion globally inefficiencies, having such a huge impact on the market and they continue to do so. So I think in summary our demand outlook is relatively firm, but not necessarily from trade volumes, more from inefficiencies. That could make a quite a serious difference there based on what you just described. You mentioned the supply side there, I think you mentioned a figure of four percent growth, how is that looking and you also talked earlier about the high second hand prices? Yeah, so it turns to fleet growth. I mentioned earlier about the Panamax fleet growth dampening subcaptives freight markets this year, and that's going to continue to remain quite firm. We're expecting that section fleet, the Panamax section, so we, with up between 70 and 120,000 deadweights, we're expand by over 5 percent this year. So that is a real kind of strong area of fleet growth this year. I think it's just something we're about to see an uptick in capesize ships being delivered. So, capesize market has, again, one of the reasons why it's been strong this year has been a few years cumulatively a low fleet growth. So we had 1.0% in 2025, but that's why it's 2.0% this year, and actually expecting 4% in 2027. So where as the Panamax market's been growing quite strongly for now and is kind of flattening off for around about 5 percent and will probably start to decline, capesize fleet growth is going to start to ramp up. So I don't think that will have an immediate effect on the freight market, but cumulatively as we head into 2027, then an increasing influx of the capesize vessels will start to challenge that segment's market balances, albeit if freight rates come off, they're going to come off from a very high base. So it's not predicting disaster, per se, but certainly it will start to have a dampening effect on the market. Thanks Will, there's a lot of interesting factors to watch there as we go through the rest of this year and then into 2027. Now I'd like to sort of turn to the tanker market and welcome Tim Smith back to the podcast. Hi Marcus, thanks. Tim, thank you so much for taking the time to talk to our listeners. Now coming to the tanker sector, that's the one that's probably been the most impacted by the war and around and the effect of closer to the straightforward moves. Can you explain what this has meant for the tanker markets in the first half of the year? Yes, I think certainly if the sectors were covering today, it has been the most affected. I think Dan mentioned as well, gas carriers as well also significantly impacted, but yeah, tankers, of course, the straightforward moves, the conflict between the US and Iran and the disruption there has effectively cut off a key route for a large amount of global oil trade, both crude oil and products. And as a consequence, and I think at the start of the year when we did this podcast, we were talking about the US Venezuela issue, which was at the time of size of a geopolitical event, seems quite a long time ago in memory now. This is an order of magnitude greater in terms of its impact on both the tanker market, wider oil markets and global economy. And as a consequence of this, which really did start towards the end of February, we have seen a massive spike in tanker rates, broadly speaking, primarily impacting segments most exposed to all movements from the Middle East, but also has rippled across the wider tanker market. We've, of course, seen all prices move significantly higher, and we've seen knock-on effects on wider global economy. So it's been a huge event, certainly for tanker markets, but of course, more broadly, and it's very much dominating the wider geopolitical environment this year. The reason we've seen that, I think the key or a key point for the tanker sector is the divergence between the earnings picture where we've seen very strong rises, certainly in terms of nominal rates from the Middle East Skull, which haven't always been widely accessible, of course, because of the disruption to the straightforward moves. But the cargo side has dropped significantly as we've seen oil effectively hemmed into the Middle East Skull, unable to move out. One key offset for that has been the fact that crude oil has been able to be re-rooted, but largely across Saudi Arabia and the east-west pipeline to the Red Sea, but also by the UAE as well via their pipelines as well. So we've seen a significant volume of crude around in 5 million barrels per day, additionally moved through alternative outlets, and I think that's had a very important effect in terms of cushioning some of the impact on the wider oil supply chain, if you like, and oil prices, although they've moved very high, haven't moved perhaps as high as people might have expected when this event was being speculated about previously. For the tanker sector, earnings have stayed very strong, and of course, we've seen a lot of fluctuation in terms of the situation itself. So it's been a case of weekly, even daily tracking, and of course, everyone else has been seeing what's happening in terms of the potential for the peace talks, the memorandum of understanding between US and Iran and June, has broken down into July, so we've seen a resumption in tension, conflict, and uncertainty around weather and when the strength of our moves will effectively be open. That's both increased oil prices, and also added further fuel to the tanker rates picture. We've seen markets move up again in July, and then on top of that, of course, we've seen potential actual disruption in the Red Sea, Baba Mendebs straight with Houtia tax on shipping there, and also a tax on actual onshore infrastructure. I mentioned the East West pipeline, which has been key to moving crude out of the Middle East Gulf. That's been attacked recently, and we've also seen further attacks on refining installations in the Red Sea, Saudi ones as well. On top of that, we've seen extensive Ukrainian attacks on shadow fleet vessels elsewhere in the Black Sea region, which has added further impact on wider tanker fleet availability. Really, it's an ongoing expanding, intensifying geopolitical situation, which is driving up tanker rates, and tankers, of course, are part of the wider energy logistics chain. As such, you tend to see premiums on earnings in the sector when we see these geopolitical shocks, and at the moment, we're seeing intensive geopolitical shocks, which are widening, so we continue to see a market which is extremely strong in terms of earnings in the tanker sector. Yeah, we've seen very volatile rates, having been over the last few months. If you look forward, given all those different factors, you just talked about there. What does MSIC see as the outlook in the remaining five months of the year? Yeah, so I mean, your listeners will find our views on this in our monthly and quarterly market reports, where we can also posit different scenarios, and of course, we have to be fairly flexible in terms of being able to look at different conditional events, which may have happen and our outlook is conditional on expectations for these geopolitical events. And so, with the time concept, we've had to factor in more and more geopolitical upside and additional support beyond just those fundamentals I mentioned, which would in any other situation where we sort of demand cargo demand falling in prior drop in earnings. I think our expectation going forward is that should we see effectively stability in terms of the effective blockage of the straight hall moves continue for a significant period of time, I would expect to see earnings coming off as a consequence of that drought in cargo effectively, because I think that uncertainty, urgency premium in the market would dissipate to a degree, because the world would effectively come acclimatized to this new normal of lower cargo, higher all prices, and you see a drop in earnings as a consequence. Interestingly, in June, when we started to see traffic increase through the straight hall moves in that brief period of recovery, if you like, we also saw market tanker markets drifting lower. So similarly, if we start to see a smooth return, and again, that kind of certainty in the market returning, i.e. that we're seeing some sort of picture which is stable, be it blockade or be it increase in cargo, we'll also probably see some of that risk premium coming out with the market, even though we're seeing higher cargo volumes as a consequence of that normalization. So our overall view is that markets will move lower in the second half. Should we see stability, but I think that's the key thing, if we don't see that stability, if we continue to see this kind of fluctuation volatility in the wider picture and the relationship between the US and Iran, we'll continue to see uncertainty, and that will continue to drive high earnings in the tanker sector. And as I said, we cover this in our monthly market reports. The other benefit we've had is from our C-Scape platform where you can see effectively real time shipping, not just across tankers, but other sectors in terms of vessel locations, and we've been able to use that to effectively track choke point traffic and also look at other areas of the market, such as deployment and asset values, which, as with the case in dry block for tankers, have been extremely strong. And the straightforward moves situation this year has not been the only thing going on. We've seen very aggressive moves into the VLCC market by Sine Accord, controlling a large chunk of that sector, and I'm sure we'll move on to as well, incredible volumes of ordering, which has already been touched on in the tanker market this year too. Yes. Just as you said, I mean, there's a lot of external factors, obviously, impacting the market now. And I was going to ask you about that very thing, the ordering that we've been seeing this year, I think, especially in the VLCC sector, and what lies behind that and what you see as it meaning for the market going forward. Yeah. And it has been exceptional. The VLCC ordering scene in 2026 is smashed through previous annual record levels, even in the first half of the year. So that's been going on. As we've seen this disruption, I think, in part, when you look at shipping ordering, you look at the causality of that historically, a key factor is all often, usually with strong market, strong earnings. And so I put that as a kind of number one factor that we've seen exceptionally strong markets for VLCCs, but all of these wider issues we've discussed on the geopolitical situation add to that, I think owners can see the value in the energy logistics chain looking forward and being involved in that. So I think, and that's obviously become very prominent, not just this year, but as we've mentioned at the start of the podcast, increasing ongoing geopolitical risk in the world, the prominence of oil and energy shipping is heightened. So high rates, why did geopolitical disruption, I think, has been a factor. But then when we look at the fleet itself, we also see a large chunk of that fleet above 20 years old. A lot of that in turn has moved into the shadow fleet, not just in VLCCs, but in other markets as well, primarily larger tankers. So I think owners can see the supply side kind of renewal picture supporting investment in the market as well. We've now got around 35% audiobook to fleet ratio for VLCCs. You've got around 20% of the fleet above 20 years old, so you can see the kind of offset. And certainly that plays into our expectations in the longer term at MSI where we see supportive conditions for the tanker sector, despite some assumption of down fluctuation in near a term, that supply side picture is supported, but it can't be indefinitely supportive of new contracting. I think the other key factor that supporting the market is the fact that the fleet's increasingly segregated as well. And so I've mentioned the shadow fleet, so a portion of the market effectively off limits for conventional chargers and so on moving Russian and Iranian crude, obviously we've had a change in the situation in Venezuela this year, but also I mentioned the kind of incursion in the VLCC fleet from Sinacore, which has been very aggressive in buying second hand tonnage and also chartering and tonnage this year and controls a large chunk of the fleet as well. So this is not a market as it used to be 5, 10 years ago where you effectively see this kind of a modernist capacity picture is segregated and there's a smaller proportion of that market available for chargers as a consequence. I think that's also playing into the overall supportive environment and very strong environment for contracting, particularly for the VLCCs. Okay, interesting to get all the factors behind that. I think that whole ordering that we're seeing in the tanker market brings us sort of neatly back to the last segment that we're going to talk about and that's coming back to Adam to talk about what's happening with new buildings and shipbuilding market. Now, Adam, it's been another bumper six months for shipbuilders and not just for tankers, I don't think. Can you give us an overview of the activity in terms of what's been ordered and where? Yeah, of course. I mean, as you rightly say, it's been another exceptional first half of the year for ordering with contracts, I think, in the first half of this year, probably over 50% versus where it was this time last year. So volumes continue to increase almost year on year. And China, what's more, has taken the line share of these orders, capturing around three quarters of all contracts placed so far in 2006. It itself has taken more orders this year than it has done in any other year previously. So we can certainly see that China is continuing to dominate the shipbuilding markets. As a comparison, South Korea is only attracted around just under 20% of all orders in 2026. So it was a long way behind China currently. In terms of what's being ordered, it has been a broad mix, as you've heard from my colleagues who have all talked about ordering in their respective sectors. We have seen stronger ordering from dry bulk containers, all tankers and in the gas carrier sectors. But as we've heard from Tim, I think the all tanker sector has been the sector that stood out very much driven by the dynamics that Tim has spoken about in terms of the market segregation, but also earnings. We always see very strong earnings tend to lead towards very strong contracting and we've seen that once more in the all tanker sector. And if you sort of class all tankers with chemical tankers and you look at tankers as a whole, tankers have been responsible for our 50% of all orders placed over the course of 2026 so far. Having said that, containers are still making up a very large chunk of new orders and as Dan has already mentioned the container order, but now is around 40% of those vessels on the waters. And we see sort of moved towards some smaller vessels, but we're still seeing some very large orders being placed by both non-operating owners and aligning companies. We have seen new orders outpace new deliveries this year and that again has continued to push up yard forward cover and have kept new building prices high. We haven't actually seen new building prices, interestingly enough, although new orders have been coming in. New building prices seem to have sort of found a high plateau at the minute. We've not really seen those new building prices change across any sector over the course of Q2 to 2026 and into Q3. So that's sort of an interesting dynamic and one that we continue to monitor in our shipbuilding products to see actually will prices continue to climb or have we hit up. peak and will we start seeing some decline in new building prices as we move forward to the back end of this show and into 2027? That's interesting actually you would expect the prices to continue rising really wouldn't you? With the amount of ordering we're seeing we're still seeing this demand there what sort of lead times are owners looking at now if they were ordering today and are they going to smaller yards that people have never really heard of? Yeah I mean it is the case that lead times are continuing to stretch out and if you're ordering a vessel today you're most likely to be looking at a delivery slot in 2029 or beyond certainly orders now be in place 2030 and 2031. I think you could probably still squeeze some vessels into 2028 certainly the second half of 2028 but that will very much depend on the price you're willing to pay your relationship with the shipyard and the vessel that you're looking to place an order for so I do expect to see some more 2028 deliveries being recorded at the back end of this year. I think as you say off the back of the street in the shipbuilding market I think we continue to see more new greenfield and more mothball yards coming back to being reactivated and we are in the situation once more as we were back in the period 2005 to 2008 where yards are being built and are taking orders for ships before the shipyard south has been built and there we are starting to see some earlier delivery slots certainly some slots in 2028 that are being made available by these new yards. For example we really saw the old Gunsand shipyard that used to be HHI in career that's recently come back to fruition is now taking orders for 2028 the last time that yard made a delivery historically was in 2017 so we're certainly seeing some a further expansion of shipyard capacity both for greenfield yards and the reactivation of mothball yards and I guess there is a cautionary note to be made again versus what we saw in that period 2005 to 2008 when again we saw lead time stretching out three four five years as we know the world will be a very different place in four years time than it is today when a lot of these vessels hit the water as it was when people were ordering in 2008 and getting vessels in 2012 when the world had moved on considerably over that four years gap I think that's a very personal word of caution there in terms of if you look at say the Japanese and Korean yards and you mentioned sort of share they have there does this boom in ordering does that sort of bolster their position going forward? As we said China is dominating and almost all the sort of significant capacity growth in shipbuilding has come from China I think the Japanese and the Koreans certainly have to carve out sort of distinct niches within shipbuilding rather than compete head on for volume with the Chinese shipbuilding community I think Korea certainly seems to have given up that sort of low cost high volume into the market and it's more concentrating on the high end high value set to such as LNG which continues to dominate though China the Chinese yards are trying to muffle in a lot more on market share there that seems to be working for the Koreans at the minute I mean if we look at their profitability of the Korean shipyards those that publish their accounts they they had an exceptional year in 2025 the best year they've had for a number of decades I think Korea is also putting a bit more focus on the voting capacity and resources to military and naval shipbuilding that is of course for a really high ticket vessel types and has attracted a lot of investment for one reason or another over the course of the last couple of years I think generally Japan is just struggling to capture orders let alone expand and we've seen some consolidation in the Japanese shipbuilding we've seen some modernization of shipyards and we've seen some closing of some of the old facilities so I think that I mean the story for both the Japanese and the Koreans going forward I think is less about trying to compete head on with the Chinese in terms of volume and defending either their high value or their highly reliable segments which is sort of has always been the sort of mantra of the Japanese very good at building specific vessel types on a production line basis and of course they are also trying to deploy new technologies trying to increase efficiencies and productivity to try and compete with China on price and I think that will be a continual battle between the sort of three big Asian shipbuilders on who can deploy technology digitalization sort of automation to try and bring down pricing to remain competitive so yeah technology becomes a sort of part of that battleground growing forward now just to wrap this episode up what do you see as the outlook for the second half of the year or the remaining five months I think it's been amazing as we've sort of said throughout the the podcast we've seen this general uncertainty with regulations geopolitics alongside high new building prices and what we've seen is sort of record ordering over the course of the first half of 2026 they all but now is equivalent to around 20% of the fleet I think generally we think contracting momentum is likely to continue for the rest of this year but perhaps not quite at the same volumes as we've seen in the first half of the year and we do expect to see a slowdown as we move into 2027 they're just you know it's difficult to see where that new contracting volume will come from if we look at the individual sectors and sub sectors and what has already been ordered deliveries will continue to ramp up over the course of the second half of this year but they won't actually peak until 2028 and I think it's quite pertinent to look at that statistic at 2028 deliveries from our shipbuilding model we're anticipating to be 65% higher in 2028 than they were in 2025 so there's a huge deluge of new tonnage hitting the water over the course of the next 18 months or so that the industry will have to absorb of course we do expect to see more scrapping there will be increased demand from a cargo perspective and no doubt further inefficiencies but there still is a lot of tonnage that the industry does have to deal with over the course the next few years thank you Adam and that's quite a sobering thought that amount of deliveries in 2028 given how difficult it is to predict what's even going to happen in the next six months so we'll be following all these markets on ctrade-mattein.com and I'd like to thank Adam Daniel Will and Tim for their valuable insights today thank very much Marcus always a pleasure and we look forward to returning to talk about the markets with the team at MSI at the beginning of 2027.