Will Container Shipping Face Overcapacity in 2025?
Container shipping faces potential overcapacity according to market outlook assessments. S&P Global reported that carriers expect a 9% growth in capacity against a 3% rise in cargo volume in 2025. BIMCO’s forecast indicates capacity could expand by 16%, while cargo volumes may grow only 4-5%.
Despite these figures, Maersk CEO, Vincent Clerc said concerns over a supply-demand imbalance is not warranted. He explains that even if vessels could transit the Suez Canal in 2025 and all absorbed capacity returns, the market will not face severe oversupply. Clerc observed that demand has remained robust. He said, “The fact that there is no sign of an inventory correction or a sharp decrease around the corner is maybe more optimistic than it was a year ago.”
Additionally, vessel scrapping is expected to reduce supply. With many older ships nearing the end of their life, about 2-3% of capacity will likely be scrapped each year as freight rates normalize. Clerc said that would significantly remove capacity from what is coming in the year ahead. Only 75,998 TEUs of capacity have been scrapped so far in 2024, compared to 2.5 million TEUs delivered. Parash Jain, HSBC’s global head of transport and logistics research, highlighted Maersk’s strategy to manage supply with slow steaming, blanked sailings, and scrapping.
Delays at Asian and European ports are also absorbing capacity. Sea-Intelligence noted that these issues predate the current Red Sea disruptions. Drewry projects 2024 container shipping profits could hit $50 billion, giving carriers financial resilience for an uncertain 2025.
Source: Journal of Commerce