Container shipping industry grapples with persisting overcapacity issues, potentially extending beyond 2028.
Container Shipping Industry Faces Prolonged Overcapacity Through 2028
The container shipping industry is grappling with a prolonged period of overcapacity, according to the latest Quarterly Container Fleet Statistics report by Braemar. The report reveals a surge in new vessel orders, with 2.3 million TEU ordered in the first half of 2025, bringing the total orders to 9.6 million TEU, approximately 30.5% of the active fleet as of July 1.
This overcapacity is expected to persist until at least 2028, with 3.3 million TEU set for delivery in 2028 alone and an average annual fleet growth forecast at 7.3%. The industry's woes are further compounded by a sharp drop in scrapping activity, which is widening the supply-demand gap. In the first half of 2025 alone, only 10 ships totaling 5,454 TEU were scrapped, a significant decline from 48,600 TEU during the same period last year.
Analysts attribute the slowdown in scrapping to strong freight and charter markets, bolstered by Cape of Good Hope reroutings and steady global cargo volumes. A growing trend in regional and sub-panamax vessel investment is reshaping the orderbook, with 74 feeder and regional vessels (up to 4,000 TEU) ordered in the first half of 2025, nearly matching the full-year total for 2024.
The overcapacity is primarily due to a significant expansion in the global container fleet size that far outpaces demand growth. This expansion is a result of shipping companies placing large orders for new mega-vessels during peak demand, which are now being delivered even though demand has weakened relative to earlier expectations. The increased capacity, coupled with persistently weak or moderate demand, geopolitical tensions, and trade disruptions, creates a challenging environment for the industry.
The ongoing disconnect between supply and demand has lasted for years, and shipping lines have to continuously blank sailings to limit capacity and support freight rates. However, this is typically a temporary measure and does not fully resolve the overcapacity problem. Port congestion and rerouting effects further complicate matters, temporarily reducing effective capacity but potentially increasing overcapacity again once situations normalize.
In summary, the prolonged overcapacity is driven by an industry fleet growing faster than shipping demand, coupled with geopolitical and trade dynamics that dampen volume growth and complicate route efficiencies. This situation leads to downward pressure on freight rates and forces carriers to adopt capacity management measures like blanking sailings, with analysts forecasting this imbalance to persist through at least the end of 2025 and possibly beyond.
[1] Braemar ACM Shipbroking. (2025). Quarterly Container Fleet Statistics Report. Retrieved from www.braemaracm.com
[2] International Maritime Bureau. (2025). Red Sea Piracy Report. Retrieved from www.imob.org.uk
[3] World Trade Organization. (2025). Global Trade Update. Retrieved from www.wto.org
[4] European Shipowners' Associations. (2025). Port Congestion Report. Retrieved from www.esanet.eu
- The prolonged overcapacity in the global container trade industry, as reported by Braemar ACM Shipbroking, stems from an expansion in the container fleet that outpaces demand growth, leading to downward pressure on freight rates.
- Container shipping industry Finance is being significantly impacted by the prolonged overcapacity, as analysts foresee this imbalance persisting through at least the end of 2025 and possibly beyond, putting strain on shipping lines' financial viability.
