The peak of the container transport overcapacity crisis, which is already underway, will be reached in 2027. By that year, the levels already seen in 2016 will be reached, when the sector went through a phase of very strong competition on freight rates (in the presence of weak demand and excess hold capacity) initiated by the companies to gain or defend market shares at the expense of profitability.
This is stated by Sea-Intelligence following a forecast that, it explains, in addition to estimates relating to demand (developed based on the expected evolution of global GDP) and supply, has taken into account several ‘real’ operational factors such as the possible slowdown of ships, the impact of port congestion, forecasts on demolitions, the capacity absorption generated by the Red Sea crisis.
As mentioned, the Sea-Intelligence model estimates a peak in excess hold capacity in 2027, which analysts say is on par with that of 2016 but still lower than what was observed coinciding with the 2009 financial crisis. Different, warns the same analysis company, are the underlying assumptions, which may need to be revised. The first is that the Red Sea crisis will be resolved by mid-2026, leading to the reintroduction of significant amounts of hold capacity to the market. Another is that in the same year, capacity removal, due to demolitions, will reach 13% of the global fleet that will have reached or exceeded 20 years of age. Another element to take into consideration, explains Sea-Intelligence, is the trade war initiated by the USA, which could have significant effects on transport demand, depressing it.
In the meantime, what can be observed is that according to some observers like Linerlytica, the competition on freight rates is already leading to decreases such that on some routes it is no longer possible to reach the break-even point.
