GSL Q1 2026 Earnings Call Transcript

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DATE

Friday, May 22, 2026 at 10:30 a.m. ET

CALL PARTICIPANTS

• Executive Chairman — Georgios Giouroukos Youroukos
• Chief Executive Officer — Thomas A. Lister
• Chief Financial Officer — Anastasios Psaropoulos

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TAKEAWAYS

• Contracted Revenue -- Forward contracted revenues exceeded $2.1 billion with an average charter term of 2.8 years, ensuring 100% revenue coverage for 2026 and 86% for 2027.
• Balance Sheet Position -- Cash position reached $655 million, of which $156 million is restricted, with remaining unrestricted cash supporting covenant compliance, working capital needs, and operations amid geopolitical disruptions.
• Outstanding Debt -- Outstanding debt declined from $950 million at year-end 2022 to under $700 million, and is projected to fall well below $600 million by the end of 2026.
• Financial Leverage -- Leverage ratio reduced from 8.4x in 2018 to 0.3x at present.
• Dividend -- The company maintained an annualized dividend of $2.50 per share, declaring a yield of approximately 6% based on the prior day’s closing price.
• Ship Sales and Gains -- Forward sales of three vessels (all 25 years or older at delivery) were agreed at an aggregate price of $52 million, with an anticipated book gain of $25 million; the company will retain cash flows from charters until vessels are delivered between Q4 2026 and Q4 2027.
• Breakeven Rates -- Average daily breakeven rates remain just above $9,800 per ship.
• Order Book Ratio -- The order book to fleet ratio is 20% for sub-10,000 TEU vessel segments, in contrast to 60% for vessels above 10,000 TEU; the sub-10,000 TEU fleet is projected to shrink by 3.4% through 2030 if all vessels 25 years and older are scrapped and offsetting new deliveries.
• Dividend Policy and Capital Allocation -- The company highlighted its ongoing focus on deleveraging, maintaining dividend payments, and only pursuing disciplined, value-accretive fleet renewals, including occasional opportunistic asset sales.

SUMMARY

Geopolitical disruptions in the Red Sea and Strait of Hormuz have materially altered global trade routes, significantly increasing demand for midsize and smaller containerships. Charterers showed a willingness to accept longer contract durations due to vessel scarcity, resulting in multi-year contracts at firm rates for desirable ship classes. Management reinforced that capital is being conserved for both opportunistic fleet acquisitions and continued debt reduction, with share repurchases only considered when valuation disconnects are evident. Market fundamentals for vessels in the sub-10,000 TEU range remain tight, with minimal idle capacity and scrapping, enabling the monetization of aging assets while maintaining forward charter coverage. Older vessels are being divested at prices that unlock gains and capture remaining charter cash flows, indicating a disciplined asset management strategy.

• Anastasios Psaropoulos stated, "Our financial performance and cash flow have remained very strong," emphasizing the company's liquidity and resilience amid ongoing global volatility.
• Operator-reported congestion has arisen beyond the Middle East, with Lister affirming, "congestion in the Panama Canal of all places as lines look to redirect vessels and optimize their network."
• Discussion with charterers revealed, "in the context of heightened uncertainty, the charterers would probably prefer to go short rather than to go long. But given that there is such limited liquidity and availability in the charter market, If they want the tonnage, they have to move much closer to the terms that are being offered by owners like us," supporting favorable rate and duration negotiation outcomes.
• Management signaled that future fleet renewal will focus on vessels in the 6,000-10,000 TEU range, reflecting both flexibility and risk-return preferences for asset replacement.

INDUSTRY GLOSSARY

• TEU: Twenty-foot Equivalent Unit; a standardized maritime industry measurement for container capacity and vessel size.
• Charter Coverage: The percentage of total vessel days under fixed charters, indicating revenue visibility.
• Breakeven Rate: The daily vessel operating cost threshold; revenue above this point contributes directly to profit.
• Order Book: The total set of vessel orders placed but not yet delivered, often expressed as a ratio relative to the existing fleet size.

Full Conference Call Transcript

Thomas A. Lister: Thank you very much. Hello, everyone, and welcome to the Global Ship Lease First Quarter 26 Earnings Conference Call. You can find the slides as usual that accompany today's call. On our website at www.globalshiplease.com. As usual, slides 2 and 3 remind you that today's call may include forward-looking statements that are based on current expectations and assumptions and are, by their nature, inherently uncertain and outside of the company's control. Actual results may differ materially from these forward-looking statements due to many factors including those described in the Safe Harbor section of the slide presentation.

We would also like to direct your attention to the risk factors section of our most recent annual report on our 2025 form 20 F, which was filed in March 2026, You can find the form on our website or on the SEC's. All of our statements are qualified by these and other disclosures in our reports filed with the SEC. We do not undertake any duty to update forward-looking statements. The reconciliations of the non GAAP financial measures to which we will refer during the call to the most directly comparable measures calculated and presented in accordance with GAAP, please refer to the earnings release that we issued this morning, which is also available on our website.

I am joined as usual today by our executive chairman, George Euroukos and our Chief Financial Officer, Anastasios Psaropoulos. George will begin the call with high level commentary on GSL and our industry and then Tassos and I will take you through our recent activity. Quarterly results and financials, and the current market environment. After that, we will be very pleased to answer your questions. So turning now to slide 4, I will pass the call over to Georgios.

Georgios Giouroukos Youroukos: Thank you, Tom, and good morning, afternoon, or evening. to all of you joining today. The opening months of 2026 have been a continuation and, in fact, an escalation of the themes of geopolitical uncertainty and volatility that we saw in 2025. From the continued disruption of traffic in the Red Sea to the unprecedented disruption in the Strait of Hormuz, which has resulted in the humanitarian crisis of ~20 thousand seafarers being trapped in the Persian Gulf. The world has become more dangerous extraordinarily unpredictable, and complex. And this has ramifications throughout the supply chain. Trade routes have shifted, fragmented, and decentralized.

Ultimately becoming more inefficient, requiring even more containership capacity and more flexible ships, to transport a given volume of containers. In these conditions, we continue to see strong demand for our midsized and smaller container ships. Which provide valuable flexibility and reliability for our liner company customers. In this environment, we have worked hard to keep adding charters so that our contracted revenues now stand at $2.1 billion over 2.8 years. Our charter coverage is a 100% for 2026, 86% for 2027. We continue to deleverage and optimize our Fortress balance sheet all while paying an annualized dividend of $2.50 per share which is a dividend yield of ~6% on the basis of a stock price at the close yesterday.

As always, we are keeping an eye on opportunities for disciplined prudent fleet renewal that will allow us to continue generating strong cash flow through the medium and long term. As our existing cash cows age out. Fundamentally, we maintain a focus on resilience and optionality which has continued to serve us our shareholders well. And provides a sturdy foundation in a world of uncertainty from which to act decisively on completing opportunities as they arise. Compelling, excuse me, opportunities as they arise. With that, I will turn the call over to Tom.

Thomas A. Lister: Thanks, Georgios. Hello again, everyone. Please turn now to Slide 5, where you will see our diversified charter portfolio. As of March 31, we have over $2 billion in forward contracted revenues with 2.6 years of contract cover from a well diversified and top notch set of charterers. We have a 100% of our revenue days covered for 2020 and 86% covered for 2027. On slide 6, we go over our dynamic capital allocation policy, a steady stream of significant geopolitical events over the past several years has added further volatility into the already cyclical nature of our industry, creating an environment where resilience flexibility, and dynamism are critically important.

Maximizing long term shareholder value is at the core of what we do, and our combination of paying an attractive dividend building equity value through deleveraging and highly selective fleet renewal, which also includes the opportunistic monetization of older noncore assets, are all in the service of that goal. Slide 7 shows the cyclicality of our industry as well as our prudent and long term thinking when it comes to managing it. You can see our history of ship purchases, and how they have been clustered during market downturns, or have otherwise been structured to minimize downside risk while maximizing upside potential.

While not shown on this chart, it is worth noting that the flip side of choosing the right circumstances under which to buy ships is identifying the right opportunities to sell ships. All of this sounds simple enough to do in theory, but it is less straightforward in practice. And, hopefully, you will agree from our track record that we have managed to strike the right balance. With that, I will pass the call to Tassos to discuss our financials. Anastasios?

Anastasios Psaropoulos: Thank you, Tom. Slide 8 shows our financial highlights for the first quarter of 2026. I would like to emphasize a few key takeaways. Our financial performance and cash flow have remained very strong. Our cash position is $655 million which on paper bring us almost to net zero debt, although $156 million of this cash is restricted. The remainder ensures that we can fully cover our covenants working capital liens, and manage the potential financial implications of geopolitical disruptions and other macro events in an increasingly unpredictable world. It also provides dry powder both for CapEx to optimize the commercial value of our existing fleet and for disciplined investment in fleet renewal when the right opportunities present themselves.

Indeed, as Tom has referenced, we were pleased to agree the forward sales of 3 of our oldest ships, which will all be 25 years old or older by the time they are delivered to buyers for an aggregate price of $52 million, which we expect will unlock a book gain of around $25 million Added to which, will hand on to the cash flows to be generated by their existing charters until they are delivered between the fourth quarter of 2026 and the fourth quarter of 2027. And we achieved all this while also consistently paying a healthy and recently upsized dividend. Slide 9 shows our ongoing efforts to build resilience and equity value while delevering our balance sheet.

Our outstanding debt is shown on the left graph which stood at $950 million at the end of 2022, now sits at under $700 million and is on track to be well below $600 million by year end. The right graph highlights a similar result for financial leverage, but to an even greater extent. Which we have reduced from 8.4x in 2018 to 0.3x today. Slide 10 bears the progress out further. As seen in the left hand graph, we have been able to maintain a highly competitive cost of debt even as base rates have meaningfully increased.

Our breakeven rates have seen a similar trajectory as our progress in reducing interest expense has enabled us to absorb inflationary increases in vessel OpEx over time primarily related to rising crewing costs. With that, I will turn the call back over to Tom to discuss the market and our fleet.

Thomas A. Lister: Thanks, Anastasios. On Slide 11, we reemphasize our focus on containerships between 2,000 TEU and 10 thousand TEU. These ship sizes provide the backbone for containerized trade with around 3 quarters of global containerized trade volumes flowing in the non-mainlane trades which tend to require ships offering more flexibility and adaptability than the very big container ships. which are, I mean, the jumbos and A380s of the container shipping industry, that attract more media attention. These very big ships tend to be limited to the big East West main lane arterial trades requiring specialized port infrastructure, deepwater, and huge cargo volumes.

Meanwhile, midsize and smaller container ships, like those in our fleet, can go almost anywhere and are not reliant on any 1 region or trade. And as geopolitical uncertainty has increasingly become a fact of life in recent times, liner companies have prioritized operational flexibility and reliability. In addition, trade routes have fragmented and decentralized, leading to a larger percentage of trade occurring intra-region, further increasing the demand for these mid sized and smaller containerships that GSL provides. On slide 12, we go over the developing situations in the Middle East.

While we are not geopolitical experts by any means and cannot predict how these situations will unfold, we can provide some context about what we are seeing now and what we have seen in the past. Let's take the Red Sea first. Prior to the disruption, about 20% of containerized trade volumes moved through the Red Sea and Suez Canal. Since the disruption, ships have been forced to reroute around the Cape of Good Hope, a far longer voyage, and 1 that has absorbed about 10% of effective shipping capacity in the process. After a brief period of optimism that saw a limited return of ships to the area, the security situation in the region sharply deteriorated once again.

While, of course, we cannot know for sure, it certainly appears for the time being, that liner companies are unlikely to return to transiting at scale in the near term. Now onto the more recent conflict in the Strait of Hormuz where shipping traffic has been and continues to be seriously constrained. The beginning of the recent conflict, Most of the press coverage has focused on the significance of closing Hormuz to the energy sector and the growing risk of a global energy and fertilizer crisis. However, there is also an impact on container shipping as prior to the conflict, around 3% to 4% of global containerized trade volumes passed through the Strait.

Now major ports and shipping hubs in the area are seeing only a fraction of normal volumes with limited transshipments or overland freight options available to replace the lost trade volumes and cutting across all of this is the awful fact that ~20 thousand seafarers are currently estimated to be trapped in the Persian Gulf. The longer term implications of these disruptions remain unclear. For the time being, both situations remain highly dynamic, and offer yet another set of complex challenges for the shipping world to navigate while keeping seafarer safety at the forefront of any decision making. Slide 13 shows supply side and scrapping trends. The situation there remains largely the same as it has been for some time.

Idle capacity and scrapping activity both remain negligible. And with capacity constrained and trade routes in continual flux, the global fleet is consistently finding employment and often doing so at very strong rates that are keeping older ships on the water. Making money instead of being scrapped. We highlight the order book on slide 14. In recent years, the order book has grown meaningfully. Although the segments that GSL operates in have seen far less growth. The overall order book to fleet ratio stands at 37%, but this is dragged upwards by the 60% ratio for vessels over 10 thousand TEU.

For ships below 10 thousand TEU, in other words, the segments in which GSL primarily competes, the order book to fleet ratio stands at a somewhat more digestible 20%. Also, the sub 10 thousand TEU size segments are aging. If we were to assume that all ships 25 years and older were scrapped, through 2030 and netted out that capacity against new capacity delivering from the order book, then the sub 10 thousand TEU fleet would actually shrink by 3.4%. In the current market, which has minimal slack, GSL is happy to lock in charter coverage at highly supportive rates. And if the market were to experience a downward normalization, we would expect scrapping activity to pick up.

Meaningfully, offsetting the arrival of new vessels, in part or in whole or even more. Slide 15 shows the charter market. When looking at the market rates on the right side, I would like to reemphasize that our average daily breakeven rates are just above $9.8 thousand per ship. And the operating leverage in our business means that essentially everything over that point falls straight to the bottom line. In this environment, we have added charter coverage so that we are we now have more than 2 billion of contracted revenues spread over 2.6 years, offering us the comfort of forward visibility in an otherwise highly uncertain world.

And with that, I will turn it back to Georgios on slide 16.

Georgios Giouroukos Youroukos: Thank you, Tom. To summarize, we are focused on maintaining optionality, resilience, and operational integrity in a complex and uncertain world. As supply chains fragment, and shift from 1 day to the next, flexibility is key. And that is precisely what the GSL fleet provides to our liner company customers. We have extensive multiyear charter cover over $2 billion of contracted revenues spread over the next 2.6 years. We have built a fortress balance sheet and have highly competitive breakeven rates such that we are in a strong position for any circumstances. And we will continue to follow our mantra of staying patient, disciplined, and nimble regarding value accretive fleet renewal.

While also prioritizing the return of capital to shareholders via a $2.5 per share annualized dividend. Now with that, we will be very pleased to take your questions.

Operator: Thank you. And we will now begin the question and answer session. Again, if you would like to ask a question, please press 1 on your telephone keypad to join the queue. If you would like to withdraw your question, simply press 1 again. If you are called upon to ask your question and are listening via loud speaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. As of now, your first question comes from the line of Liam Burke from B. Riley Securities. Please go ahead.

Liam Burke: Thank you. Hello, Georgios. Tom, Tassos. How are you today?

Thomas A. Lister: Hi, Liam. Really well. Thank you. How are you?

Liam Burke: Just Fine. Thank you. If I look at your open charters for 2027, have there been -- could you gauge charterer interest in forward fixing those vessels and any kind of appetite for where the rates are going.

Georgios Giouroukos Youroukos: Yep. The market right now, Liam, is as healthy as it has been. There is demand. there is not enough ships. So whatever we see on the market right now is a result of, unavailability of tonnage, not a lack of demand. So the market is right now healthy. For ships opening in 2026, and, obviously, for ships that are large enough in 2027. When I say large enough, like I said, always the ships that are in demand forward more than anything else are ships that are in excess of 4 thousand TEU,. Or 3.5 to 4 thousand maybe.

Liam Burke: Great. You got great prices on the 3 2,000 TEU vessels you forward sold. And you have had some great prices on the purchases of the 8.5 thousands in the fourth quarter. But looking at the pricing that you got on the older vessels, are you seeing any opportunity to add assets here?

Thomas A. Lister: Well, Liam, as you know, having listened to our earnings call now for a number of years, I guess, we always keep our eyes open. And but we stick to the mantra that Georgios described at the tail end of his remarks. In other words, we are patient, we are disciplined, and we are nimble. So, we always keep our eyes open. We are always running numbers. We are always looking at opportunities. But we only move on the right opportunities So we are continuing to see interesting things, but none that have met our fairly stringent investment criteria. And, meet the right mix of risk and return. So as a result, we have not acquired anything.

Instead, we have monetized these older assets, and I know Tassos mentioned that on the call that we get not only the gain on book that we are estimating at roughly 25 million when they are eventually delivered to buyers, but we also get to hang on to the contracted cash flows, but now and the time of delivery, and the vessels are being delivered between, depending on the ship, between the fourth quarter of this year and the fourth quarter of 27. So we are pleased with the deal.

Liam Burke: Great. that is fair. And I just have a real quick 1 for Tassos. On the SG&A for the quarter, I know you have seasonal expenses that do not repeat the balance of the year. But even on a year over year basis, they were higher. Is there anything in there unusual?

Anastasios Psaropoulos: Nothing unusual. It has to do with the accounting method of the incentive plan that we have mentioned in the 20-F. It has to do with how this is being calculated and, of course, comparing to the share price versus the previous time that it was in 2021.

Liam Burke: Great. Thank you, Tassos.

Operator: And your next question comes from Stephanie Moore from Jefferies. Please go ahead.

Stephanie Moore: Great. Good morning. Thank you. Appreciate the question. I guess, you know, given your commentary, this charter market remains firm for now, but forward visibility is certainly limited and sentiment might be somewhat cautious. You know, how are your customers approaching duration today? Are they still looking to lock in multiyear charters? Are they increasingly favoring shorter tenures just given the uncertainty? Would love to give your get your thoughts on that. Thank you.

Thomas A. Lister: Sure. Stephanie, hi. This is Tom. I will-- for posing the question. I will kick it off and no doubt Georgios and possibly Tassos will add to it. You know, charter negotiations it is a it is a 2 way discussion. So you are absolutely right. I would say that, in the context of heightened uncertainty, the charterers would probably prefer to go short rather than to go long. But given that there is such limited liquidity and availability in the charter market, If they want the tonnage, they have to move much closer to the terms that are being offered by owners like us.

Which means that there is always a compromise found between us, between both rate and duration. And, you know, going back to Georgios's earlier comments, for the right ships, duration of several years is still possible and, at very firm rates. George, do want to add anything to-- No.

Georgios Giouroukos Youroukos: I just echo what you said. it is really a compromise between, a negotiation between the charters and the owners. The owners want the certainty of long employment. The charters want a good deal. So, you know, longer employment gets better charter rate, obviously, than short employment. So you might have an immediate ship opening let's say, in the next 6 months, might get double what she would get for you know, she might get double for, you know, a 6 month period than what she would get for a 3 year period. So it is it is just a matter of negotiation.

Stephanie Moore: Understood. Thank you. And then I guess you continue to talk about being selective and disciplined regarding fleet renewal. Can you maybe just highlight, you know, what your ideal replacement profile looks like So ship size, age, eco-specification, the and the like, and then maybe and then maybe timing or preferences that relate to vessel renewal in terms of your broader kind of capital allocation priorities?

Thomas A. Lister: Sure. I will I will kick this off. And, no doubt Georgios will weigh in. So, let's back into this. We are very comfortable with the size segments upon which we are focused, which we think provide the right combination of operational flexibility and an attractive risk return mix. By which I mean we are going to stay focused upon the roughly 2,000 to roughly 10 thousand TEU size segments when it comes to renewal. If you were to offer us the perfect choice, it would probably skew towards the mid and upper end of that. So call it somewhere between 6 and 10 thousand TEU or so. In terms of, age of asset, we are not dogmatic.

We look at every, project or every prospect on its own merits. So as you have seen, we are willing to look at ships with charters attached. We are look willing to look at ships on a speculative basis as long as the pricing is very much towards the bottom of the cycle and downside risk is minimal, and we are also willing to contemplate newbuilds. So there is no dogma on that. We will look at every deal on its merits, but we will continue to focus upon the same size range as is our current focus.

Stephanie Moore: Great. Well, thank you so much. My pleasure.

Operator: Your next question comes from Omar Nokta from Clarksons Securities. Please go ahead.

Omar Nokta: Thank you. Hi Georgios, Tom, and Tassos. I do have a couple of questions. And maybe just first kind of back on to the those 3 ship sales. Tom, you highlighted you know, $52 million combined price looks fairly decent, but then also you get to generate what looks like perhaps maybe 20 million or so of EBITDA in until you sell them. I think just looking at that, it suggests that ship values are quite a bit firmer than well, certainly than what the share price implies. Just wanted to get a sense from your angle, is this something broad based across all container ships?

Or is this perhaps an arb that you are you are able to capture just given that these vessels are maybe later in life? Yeah. So just wanted to get a sense you know, in terms of where you see values from here. Is it very firm on the back end? Versus what we kind of think? Yeah.

Thomas A. Lister: I mean, that is a sort of multimillion or multibillion dollar question. Omar. I do not have a sort of a clear and crisp answer for you. But what I can tell you is, obviously, from a an owning perspective, the option value on an asset reduces as that asset ages. So, typically, our view is that it is possible to make much more money from, holding and continuing to operate a vessel in the charter market.

And, you know, you will see from the chart in the pack which contrasts the way in which charter rates, asset values, and new building values fluctuate through the cycle, and there is always much more upside volatility and charter rates than there is even in secondhand values. So it generally makes sense to hold on to the ships, keep chartering them, and keep locking in additional revenues. However, when you get to ships which are these are gonna be between 25 and 27 years old by the time they are sold, That option value comes down somewhat.

So we liked the economics you have just laid out of retaining the contracted EBITDA until they are delivered and then divesting them at that price Whether you can draw anything broader from that on where asset values are today or are likely to remain very, very difficult to say. I think we are in a world where making, bets on what will happen in the future or even tomorrow, it would take a brave man, probably a braver man than me, But, Georgios, do you wanna add to that?

Georgios Giouroukos Youroukos: No. I mean, the golden rule for shipping is the entry point. So if you are buying an asset at the right price, then it is only upside potential that you have to worry about rather than downside. So the way we look at transactions is protecting the downside first and foremost. And then the upside will come if we have bought the asset at the right price. This is, in general, you know, our theory. Which I think it is the golden rule of shipping. Yeah. The GSL way.

Omar Nokta: Well, it certainly seems that the exit the exit point here is quite a bit appealing. And then just a follow-up, second question. You are now officially in a net cash position. And that looks to widen now as we move ahead here over the next several quarters with no real you know, major commitments Does buying back stock here make any sense Do you prefer to kind of go in that direction, or do you think it is best to maybe stay conservative, build a bit of cash, and continue to focus on maybe repaying debt? We think the latter of those 2 positions Omar, makes most sense.

Thomas A. Lister: I mean, it is not only a question of delevering, but it is also building dry powder for opportunistic acquisitions when the right opportunities arise. We do keep an eye on, share buybacks from an opportunistic perspective, and I think the average price at which we have bought back shares has been roughly 8 and a half, $18.50 or thereabouts through the cycle where we felt that there was a structural disconnect between where the business was being valued and the intrinsic value in the business. So, we pounced on it, But at the moment, we think delevering and building dry powder is the right strategy for where the market is in terms of both risk and opportunity.

At the moment. Thanks, Tom. that is a very good commentary.

Omar Nokta: Thanks, George. I will pass it back.

Operator: Before we proceed, again, if you want to ask a question and join the queue, simply press 1. And your next question comes from Climent Molins from Value Investor's Edge. Please go ahead.

Climent Molins: Hi. Good afternoon, and thank you for taking my questions. I wanted to follow-up on Liam's question regarding fleet renewal. A couple of the vessels are on the smaller sizes. And you have a few more vessels also on the older end on that side of the fleet. Would you be comfortable downsizing the feeder side further if you do not come across interesting acquisition opportunities? Or is there a, let's say, minimum size you would like to maintain there?

Thomas A. Lister: Hi, Climent. Thanks for the question. I mean, we sort of tried to address that at least in part in our answer to Stephanie a little earlier. So while we like the 2,000 to 10 thousand TEU segment, broadly speaking, if given our choice, we would wait our fleet renewal towards probably the upper half let's call it the 6 thousand to 10 thousand TEU range. We are not dogmatic about a particular size category. So once again, we will either invest or divest assets where we think the returns are likely to be most favorable for the company and for shareholders.

Climent Molins: that is helpful. Thank you. And I also wanted to ask a bit about the effect that Middle East situation is having on the market. Could you talk a bit about whether you have seen a sizable increase in congestion in regional ports outside the Strait? And are you seeing any other ripple effects?

Thomas A. Lister: Yes. I mean, it is it is hugely disruptive. We are seeing, ripple effects throughout, liner companies' networks, and 1 of the most recent ones we became aware of is congestion in the Panama Canal of all places as lines look to redirect vessels and optimize their network. So, yes, you are absolutely right. There is disruption in terms of congestion both at choke points like canals and also in ports. And there are also disruption associated with challenges for the liner operators getting fuel into the right places. And not only the challenge of getting fuel into the right places, but also the cost of fuel.

And as bunker costs rise, the ship the lines try to reduce fuel burn to reduce costs, and the only way to reduce fuel burn is to slow ships down. So we are seeing networks slowing down which means you need more ships to carry the same volume of cargo. And we are also seeing to your point, congestion both in ports and, transit locations. So, yes, big ripple effects.

Climent Molins: Thanks for the color. that is very helpful. I will turn it over. Thanks for taking my questions, and congratulations for the quarter. Thank you very much, Climent.

Operator: There are no further questions at this time. I would now like to turn the call back over to Thomas A. Lister for the closing remarks. Please go ahead.

Thomas A. Lister: Well, thank you very much everyone for joining our Q1 call. We wish you a very good summer and look forward to talking to you again on the event of our second quarter call. Thank you again. Bye.

Operator: Ladies and gentlemen, thank you all for joining, and that concludes today's conference call. All participants may now disconnect. Thank you.

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