I'm LongbridgeAI, I can summarize articles.As of November last year, the total order capacity of container ships has reached 8.4 million TEUs, setting a record high since data collection began in 2000. By 2026, the supply of container shipping is expected to increase by 46% compared to 2019, while the demand for freight volume during the same period will only increase by 22%
In recent years, the shipping industry has experienced unprecedented prosperity, with shipowners placing large orders for container ships.
According to Braemar, as of last November, the total order capacity for container ships had reached 8.4 million TEUs, the highest level since data collection began in 2000.
However, the shipping industry faces the risk of overcapacity. According to industry organization BIMCO's forecast, by 2026, container shipping supply will increase by 46% compared to 2019, while demand for freight during the same period will only increase by 22%.
Braemar's container market analyst Jonathan Roach stated:
"This is a massive investment in fleet growth. Shipowners have money to spend, but in the face of global economic uncertainty, the risk of overcapacity does exist."
Supply and demand conditions will become harder to predict
Since the end of last year, the Houthi armed group has attacked vessels passing through the Red Sea, leading to shipping disruptions and rising transportation costs. Shipping companies have seized the opportunity to place large orders for new ships.
According to the Financial Times, Italy's Mediterranean Shipping Company currently has the largest fleet in the industry, with a total of 107 container ship orders as of November. France's CMA-CGM follows closely behind, with 103 orders.
However, it remains unclear how long the profits from the Red Sea attacks can be sustained. Additionally, U.S. President Trump’s commitment to strengthen trade protectionism may impact global trade starting next year. Peter Sand, chief analyst at shipping market tracking agency Xeneta, warned:
"Imagine if all shipping companies return to the Red Sea routes. This would drive freight rates to rock bottom. Overcapacity would become very severe."
According to BIMCO's forecast, by 2026, container shipping supply will increase by 46% compared to 2019, while demand for freight during the same period will only increase by 22%. BIMCO also warned that if countries retaliate against Trump's threat to raise import tariffs, it could lead to global trade and container shipping volumes being weaker than expected.
Niels Rasmussen, BIMCO's shipping market analysis director, pointed out that while many new ship orders are intended to replace aging vessels, it may take some time to retire the old ships. Starting this June, the internationally recognized Hong Kong Convention will come into effect, setting environmental and labor standards for ship recycling facilities.
Despite facing the risk of overcapacity, the outlook for the shipping industry remains difficult to predict. Danish shipping giant Maersk had projected a loss of $5 billion this February, but now expects to achieve a profit of up to $5.7 billion.
Maersk's Chief Ocean Product Officer Johan Sigsgaard stated that the company expects the risk-averse situation on the Red Sea routes to "last until 2025." He believes:
"We see a more turbulent world. Supply and demand conditions will become harder to predict."