CMSC has released a research report outlining key themes for the shipping market in the second half of 2026, focusing on potential tanker rate increases following a de-escalation of US-Iran tensions, improved profitability for container lines in Q3, and the impact of El Niño on the dry bulk sector in Q4.
The report identifies two primary investment themes for the latter half of 2026: 1) improved traffic through the Strait of Hormuz and a corresponding rise in freight rates if US-Iran tensions ease, and 2) continued tight container shipping capacity supporting firm rates.
The main points from CMSC's analysis are as follows: The shipping sector outperformed the broader transportation index significantly in the first half of 2026, also surpassing cyclical industries within the CSI 300. A strong positive correlation was observed between high-frequency freight rates and stock prices.
Since the start of 2026, shipping stocks have been influenced by geopolitical conflicts, including those between the US and Iran, leading to structural opportunities across sub-sectors. The tanker segment has seen the most pronounced improvement in market conditions.
Key Market Dynamics
In container shipping, a combination of trade protectionism trends and high energy prices linked to US-Iran tensions triggered a wave of front-loaded shipments starting in April 2026. This caused a sharp, short-term spike in freight rates, bringing them close to 2024 highs.
For tankers, the blockade of the Strait of Hormuz due to US-Iran conflict initially sent rates soaring before they retreated, though the overall rate floor has been elevated, with one-year time charter rates reaching new highs.
The dry bulk market has seen improving conditions since March, with congestion in the Panama Canal further catalyzing rate increases.
Year-to-date, the Shenwan Shipping Index has risen 12.3%, outperforming the broader transportation index by 23.6 percentage points. Tanker companies have led gains due to a clear improvement in their operating environment.
Container Shipping Outlook
For 2026, attention should be paid to changes in tariff policies and the impact of regional conflicts. In the first half, demand for ton-miles on key Europe-US routes recovered due to front-loading, while demand growth in emerging markets remained robust.
Container shipping volume demand is forecast to grow 2.3% in 2026 and 3.0% in 2027. Continued Red Sea diversions combined with Middle East route disruptions are increasing average sailing distances in 2026. Assuming a resumption of Red Sea traffic by mid-2027, ton-mile growth is projected at 3.4% for 2026 and -1.2% for 2027.
On the supply side, fleet capacity is expected to grow 3.9% in 2026 and 7.5% in 2027. The rate outlook suggests that 2026, being a lighter year for new vessel deliveries, could see rates pushed higher by concentrated front-loaded demand. With more ample supply in 2027, rates may decline in a stepwise fashion.
Tanker Shipping Outlook
The reshaping of energy supply chains is creating a favorable supply-demand balance for tankers. The blockade of the Strait of Hormuz in March 2026 caused a sharp drop in oil shipment volumes. However, with an anticipated easing of US-Iran tensions and improved Strait passage, seaborne oil volume is forecast to decline 4.9% for the full year 2026, with ton-mile demand growth narrowing to -3.1% due to trade route adjustments lengthening voyages.
If inventory replenishment demand persists into 2027, ton-mile demand growth could recover to +6.9%. Fleet supply is expected to grow 5.0% in 2026 and 5.7% in 2027, with VLCC growth at 4.2% and 6.0%, respectively. However, effective capacity remains tight due to factors like sanctioned and older vessels being phased out, with vessels over 25 years old accounting for 9.6% of the fleet in 2026 and 12.6% in 2027.
The rate outlook points to a potential significant increase in Q3 2026 as Middle Eastern cargoes are released following improved Strait access. Rates are expected to remain elevated in 2027.
Dry Bulk Shipping Outlook
Over the medium to long term, increased trade volumes for iron ore and grains are expected to support the dry bulk market. Accelerated shipments from the Simandou iron ore project, improved coal transport demand, and the renewal of US-China grain trade agreements are positive factors.
Dry bulk shipping volume is forecast to grow 1.3% in 2026 and 1.4% in 2027, with ton-mile demand growth at 2.1% and 1.7%, respectively. Fleet supply is projected to grow 3.5% in 2026 and 3.8% in 2027, with relatively limited growth in Capesize vessels.
If US-Iran tensions ease, market conditions may see a marginal pullback in Q3. However, the El Niño phenomenon could lead to accelerated coal destocking and drought conditions in the Panama Canal, potentially driving a rebound in rates in Q4. The medium-term outlook suggests a steady, gradual increase in the dry bulk freight rate floor.
Risk Factors
The report highlights several risks, including a macroeconomic downturn, major natural disasters, slower-than-expected production recovery in key oil-producing nations, geopolitical risks, and a deterioration in US-China trade relations.
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