n a five-part series mid-year we take stock of shipping markets in the first six months of the year and look ahead to the remainder of the 2026 with experts Maritime Strategies International (MSI).
In this second part the Seatrade Maritime Podcast talked to Daniel Richards from MSI, about the developments in the container shipping market and the outlook for the remainder of the year.
Container shipping market over the first half of 2026
Looking back on the first half of 2026 Richards drew a parallel with the beginnings of the Red Sea crisis and the year starting in a subdued fashion with container lines returning to being only “slightly profitable”. Following some increase in spot rates around the Lunar New Year markets looked to be headed to a fairly weak period even before tonnage supply ramped up in 2027.“Now, in practise, events have conspired to generate a far more profitable market for liner companies, a far more volatile market for beneficial cargo owners and shippers,” Richards says.
The catalyst was the closure of the Strait of Hormuz due to the conflict in Iran and while not as big an impact as say for tankers, it has however it resulted in a rise in global bunker prices which had an inflationary impact on freight rates, a surge in some Middle East freight rates, and loss of capacity due to ships stranded in the Gulf region.
While bunker surcharge impact should have been measured in hundreds of dollars what has happened is freight rates have more than doubled. On Asia - Europe rates have moved up to around $5,000 per feu compared to $2,500 per feu pre-conflict, and for Asia – US West coast to around $6,000 per feu from around $2,000 - $2,500 per feu previously.
“So, it's been a far more explosive response in markets than many would have expected,” Richards says.
No single driver is seen causing the ramp up in freight rates, rather a cocktail of factors – continued demand growth of around 5%; some slower steaming due to higher bunker prices; supply chain disruption from loss of key hubs such as Jebel Ali; and some front loading of shipments by importers into the US.
On top of this has come port congestion that has spread across South Asian and Southeast Asian hubs and is now focused on Shanghai. “I think that this has been the third instance of that explosive response of freight rates to events following the Covid 19 pandemic and then the Red Sea crisis a few years ago.”
Will high freight rates continue in H2?
While Richards notes some evidence of weakening of freight rates on the Transpacific he says: “For the moment they're not likely to collapse, perhaps partly because the bunker 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 Iran war kicked off.”
MSI is relatively optimistic on the demand side driven by Chinese exports. “The big 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 draw a positive supply shock to the global goods industry or manufactured goods industry. So for the moment we don't see that dynamic as particularly changing.” Richards explains.
On the supply side, at least for the moment, growth is seen as relatively manageable in the first half of the year at 5%, equal to demand growth. The second half of 2026, you're going to start to see deliveries ramp up a bit. But overall, it's not going to be yet this expected flood of new capacity, but that will arrive in 2027 and beyond. So, we think that frame rates probably have peaked. Barring other unforeseen events, but we're not expecting a collapse in the near term.”
Charter market dynamics
“The charter market continues to fare incredibly well. it remains very much a vessel owners’ market,” Richards states. Time charter rates remained highly elevated as they have been since increasing in the first half of 2024 and continue to strengthen if changes are relatively small.
Driving the market is liner companies continuing to try and add ships to their networks especially in the sub-8,000 teu segment. With relatively limited fleet growth in this segment and he says, “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.”
Even if the freight rate market does weaken MSI expects a lag with the charter market and secondhand prices.
The newbuilding orderbook
The ordering seen at present isn’t going the problem with around 1.9 million teu of capacity contracted this year so far compared to 5 million teu in 2025, and a shift towards smaller vessels where supply is tight. Richards notes a lot of ordering from Greek owners as well as some obscure Chinese shipowners. “What we're seeing is that this increase in ordering for the smaller to mid-sized ships, it is generally speaking still consistent with the ageing profile of that fleet.”
“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,” he says.
The issue here is the number of very large and ultra-large newbuildings coming into the fleet with no corresponding elderly fleet to be scrapped.
“How do you find homes, all the large ships that we're coming to see online, like you saw in 2015, 16, is there going to be a point where there's a pinch point in the containership cascade where the volume of larger ships is too much for smaller trade lanes to absorb? So, it's a really interesting picture.”
