Why Shipping Is a Cycle Business — Not a Growth Fairytale
Ships are not tech stocks. There is no hope story, no “we double every year.” Shipping is brutally cyclical: when rates are high, every owner orders new ships; three to four years later the glut arrives, rates collapse — until the excess tonnage ages out and the whole game starts again. That cyclical nature is the opportunity, not the risk. Whoever buys ships when everyone is euphoric buys the glut. Whoever buys when the market is boring buys the scarcity of the day after tomorrow.
Shipping is part of my hard-asset strategy: a real asset (steel on the water) that throws off plannable cashflow through charter contracts. The hub with all the individual analyses sits under shipping stocks.
The central lever is called TCE (Time Charter Equivalent) — what a ship earns per day after voyage costs. When TCE rises, cashflow and the (variable) dividend rise almost one-for-one. When it falls, the dividend is gone. That is why a variable tanker distribution is a cycle proof, not a guarantee — and that is exactly how you have to read it. If you want the mechanics, I break them down in TCE rates explained.
The Supply Side: The Ageing Fleet Is the Core
The most important argument does not sit on the demand side — it sits on supply. And here you have to be honest and differentiate, because the headlines only appear to contradict each other.
The Fleet Is Getting Old — and Almost No One Scraps
Fact: the VLCC fleet (the large crude tankers) averages roughly 10.8 years old across just under 900 trading units. Already today, a rough 16–20% are over 20 years old — and that share heads toward ~21% of the trading fleet over the coming years. Scrapping happens anyway almost not at all: demolition of large tankers ran near zero for two years, and total recycling sits at a 20-year low. As long as rates are good, owners keep their old ships — many of them drifting into the sanctioned shadow fleet (an estimated 900–2,000 ageing tankers) rather than to the breakers.
The Apparent Contradiction: The Orderbook Is Exploding
At the same time, the VLCC orderbook has gone vertical: from around 1% of the fleet (mid-2023) to 26–30% in just 15 months. In Q4 2025 and Q1 2026 alone, roughly 125 VLCC were ordered — more than in any full calendar year ever before (the old record was 108 in 2006).
Saying “the orderbook is thin” outright would simply be wrong in 2026. What is right is the time structure: the near delivery years are thin (only ~7 VLCC in 2025, ~40 in 2026, peak not until 2027 at ~58), because yard slots are booked into 2028 and build time has risen to ~3 years. So mid-term a lot of new tonnage is coming — near to medium term it is not. Exactly that window — old fleet ripe to exit, new fleet not yet here — is what can stretch a cycle into a supercycle. But the record contracting is at the same time the seed of the next downturn. Whoever is still buying in the 2027/28 euphoria is buying the glut.
The product tanker (MR) picture looks similar: a meaningful slice of the fleet sits in the 15–19 year age band and will soon run into the 20-year wall, beyond which many charterers and ports decline. The orderbook is low depending on the cut you take (Scorpio cites roughly 7% for pure MR — “lowest in a long time”). Demand can jump overnight; a fleet cannot be built overnight. That is the setup that makes a shipping supercycle possible in the first place.
Demand & Geopolitics: Why Ton-Miles Matter More Than Barrels
In shipping it is not how much oil is moved that counts, but how far. The right metric is called ton-miles: tonnes × distance. When the same cargo suddenly has to take a detour, the market needs more ships for the same volume — the fleet becomes de facto scarcer without a single ship disappearing.
The 2026 Hormuz Shock — and the GPS-Jamming Wave from June 13
Fact: the Strait of Hormuz has been effectively shut to commercial traffic since late February / early March 2026 (an IRGC closure declaration in early March). By mid-June the crisis is already running into its third month (around day 100-plus), with only a handful of ships per day instead of the usual ~94. VLCC crude exports out of the region recently ran roughly 36% below the pre-war level. From June 13, a wave of electronic interference (GPS jamming, roughly 970–1,000 affected ships per day, including ~27 VLCC) intensified the situation further — note that June 13 is the escalation, not the start of the crisis.
Fact: rates exploded. VLCC Gulf-to-China spiked at the peak (early March, roughly +94% over a single weekend) to an all-time high of about USD 423,000/day; the TD3C spot value multiplied from ~USD 3/barrel before the conflict to double-digit dollars per barrel. War-risk premiums climbed at times to 2.5–5% of hull value (around USD 5 million per VLCC transit) versus ~0.25% before the crisis. After the peak spike, VLCC earnings settled at a high level around USD 100,000/day.
You do not trade the rate spike itself — that is headline trading. The actual thesis is this: an old, scarce fleet now meets an environment in which geopolitics keeps ton-miles structurally elevated. The Hormuz spike is the accelerant, not the fire. Even if the strait reopens tomorrow, the fleet stays old and the near-term yard slots stay empty.
Sanctions & the Shadow Fleet
Russian barrels that once ran the short hop to Europe now go on long voyages to Asia — which drives ton-miles further. The clean, compliant part of the fleet benefits twice: it picks up cargo the sanctioned shadow fleet cannot move legally, and it runs the longer routes. Compliance thus turns from a cost factor into a competitive advantage — an argument for owners with young, clean, fully insurable fleets.
The Segments — Every Vessel Class Has Its Own Cycle
Shipping is not one homogeneous market. The four segments that matter for my portfolio each tick differently. The deeper dives sit in best tanker stocks 2026, tanker stocks and best LNG stocks 2026.
VLCC / Suezmax / Aframax
The most volatile segment, most exposed to the spot market and to geopolitics. The biggest upside leverage sits here — but so does the biggest rate risk to the downside. VLCC = the very large volumes over the long routes; Suezmax/Aframax more flexible on the medium hauls.
LR2 / MR
Carry refined products instead of crude. Benefit from the relocation of refining (new hubs in the Middle East and Asia) and from sanction-lengthened ton-miles. A touch steadier than crude, but with their own delivery risk.
LNG
The most plannable segment: long time-charter contracts, often over many years. Cashflow is most calculable here — the price is less spot leverage to the upside. The classic hard-asset profile with contractually secured utilisation.
LPG / VLGC
Driven by growing US exports and long US→Asia routes. The global VLGC fleet numbers around 427 ships; utilisation is projected above 85% out to 2030. A demand driver of its own, beyond the pure oil cycle.
Cycle Phase & My Angle
Where are we? Rates are high, sentiment is turning euphoric, and the orderbook is filling fast — those are really late-cycle signals. What stretches the cycle this time: the new tonnage only arrives from 2027/28, and until then the fleet keeps ageing out while geopolitics keeps ton-miles elevated.
My angle is to think counter-cyclically, but not naively. I do not chase spot rates and I do not chase Hormuz headlines. I want owners with a young fleet, a clean balance sheet and charter coverage — companies that earn in the scarcity and do not get pushed against the wall by the bank in the next downturn. The variable dividend is dearer to me than any promise. It is honest: high when the cycle delivers, low when it does not. Whoever can stomach that will not be ambushed in shipping by a cut “guaranteed” dividend.
My Shipping Strategy & Anchor Positions
Shipping is the heart of my portfolio — not a side dish. I do not bet on a single lucky hit, but on several segments in parallel, with a clear focus on fleet age, balance sheet and cashflow quality.
- Young, clean fleet over cheap old tonnage — ECO ships hold the rate advantage in the regulatory wave (EU ETS, FuelEU, CII).
- Weight charter coverage — if you want plannable cashflow, you look at the share of contractually secured days, not just spot hope.
- Balance sheet before yield — low leverage decides who survives the next downturn.
- Diversify across segments — crude, product, LNG and LPG do not move in lockstep.
My anchor positions (qualitative, not a recommendation)
Shipping is my largest sector weighting. The cornerstones:
- CMB.Tech — the largest position in my portfolio; a broadly positioned owner focused on modern, future-proof tonnage.
- TORM — product-tanker specialist; my example of how a focused segment delivers cashflow in the right cycle window.
- FLEX LNG — LNG carrier with long-term charter logic. Fact: FLEX LNG has its days for the remainder of 2026 100% under charter — exactly the kind of plannable utilisation that makes the LNG segment attractive to me.
- Dorian LPG — LPG/VLGC exposure with a modern ECO fleet; plays the standalone US-export ton-mile driver.
Note: I only show the positions held via Trade Republic and Scalable Capital, and only qualitatively / as a weighting — no euro amounts. Per-stock quarterly detail (revenue, margins, guidance, dividend safety of individual stocks) belongs in the premium analysis, not on this page.
Tools for Shipping Investors
Translate TCE and day-rates into the cashflow of a shipping position, and check your effective yield-on-cost on variable-paying shipping names, in the calculators hub.
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FAQ — Shipping Supercycle
Isn't the shipping market already too hot after the rate surge?
Short term, rates and sentiment are high — those are late-cycle signals. What matters is the structural supply-demand balance: the fleet is ageing out, scrapping is at a 20-year low, and the near-term yard slots are thin (peak of deliveries not until 2027). Temporary rate spikes like the Hormuz jump are not something you trade — the thesis is the scarcity beyond the headline day.
Doesn't the record orderbook contradict the scarcity thesis?
This is exactly where you have to differentiate cleanly. The VLCC orderbook jumped from ~1% to 26–30% of the fleet in 15 months — so mid-term a lot of new tonnage is coming. But the near delivery years are thin (only ~7 VLCC in 2025, ~40 in 2026), because yard slots are booked into 2028. Near to medium term it stays tight; long term, the record contracting is at the same time the seed of the next downturn. Claiming a “thin orderbook” outright would be wrong in 2026.
What is TCE and why is it the most important metric?
TCE (Time Charter Equivalent) is the daily rate of a voyage after voyage costs (port, bunkers). For tankers, TCE determines cashflow almost directly — and with it the variable dividend. Higher TCE means more distribution; lower TCE means less. That is why the variable dividend in shipping is a cycle proof, not a guarantee.
Why is the Strait of Hormuz so relevant for shipping investors?
Hormuz is the tightest chokepoint for oil transport. When it is disrupted or closed (effectively shut since late February / early March 2026, intensified further from June 13 by a GPS-jamming wave), tankers have to reroute — which lengthens ton-miles, sends rates and war-risk premiums soaring, and makes the fleet de facto scarcer. At the peak, VLCC rates Gulf-to-China marked an all-time high of roughly USD 423,000/day. Important: this is the accelerant, not the core of the thesis — the fleet stays old even without Hormuz.
Why no speculation on individual rate spikes?
Because that is gambling. I do not buy the daily jump; I buy owners with a young fleet, a clean balance sheet and charter coverage, who earn in the structural scarcity — and survive the next downturn. Cashflow quality beats spot hope.
Which shipping stocks does Marco Bozem hold?
CMB.Tech is the largest position in the portfolio, alongside TORM (product tankers), FLEX LNG (LNG) and Dorian LPG (LPG/VLGC). Shared publicly only qualitatively / as a weighting, no euro amounts. All held in the real portfolio — analysis is based on personal assessment and public sources. This is not investment advice.
Disclaimer: All content serves exclusively informational and educational purposes and does not constitute investment advice. Figures cited reflect public market reporting at the time of writing and can change. Always conduct your own due diligence before investing. Full disclaimer →