Container Shipping Faces Prolonged Excess Capacity

The container shipping industry is set for several years of structural oversupply, which will put significant downward pressure on rates, with fleet growth consistently outpacing cargo demand until the end of the decade.

Analysts point to a combination of record vessel orders and limited scrapping as the primary drivers of the imbalance. By mid-2025, global carriers had ordered 2.3 million TEU of new capacity, only slightly below the record levels set in late 2024. The current order-book now totals 9.6 million TEU, equivalent to more than 30% of the active fleet. With 3.3 million TEU scheduled for delivery in 2028 alone, average fleet growth is forecast to remain above 6% per year.

The composition of new orders is also shifting. While demand for ultra-large ships of 14,000 TEU and above remains strong, the most striking increase has come in smaller units. Seventy-four feeder and regional vessels of up to 4,000 TEU were ordered in the first half of 2025, almost matching the entire 2024 total. This investment comes despite the fact that nearly a third of the world’s smaller ships are already over 20 years old, a share set to rise to around half by 2030.

Scrapping activity has stalled at the same time. Just ten ships totalling 5,454 TEU were demolished in the first six months of 2025, compared with nearly 49,000 TEU a year earlier. A strong charter market and resilient cargo flows, combined with continued diversions via the Cape of Good Hope, have encouraged carriers to hold on to older tonnage. Many remain wary of cutting capacity after recent shocks, including the pandemic and Red Sea disruptions, demonstrated the strategic value of surplus vessels.

On the demand side, global throughput is expected to rise 2.6% in 2025, supported by front-loading, fiscal stimulus, and lower effective tariff rates. But growth is forecast to slow to 1.7% in 2026 as inflationary pressures, higher costs, and weaker US job growth weigh on consumption. Asia–Europe routes, where the largest vessels are being deployed, are expected to feel the oversupply most acutely, while transpacific trades face uncertainty once front-loading unwinds.

The imbalance has clear financial and regulatory implications. Analysts expect profitability to bottom out in 2028, when the largest wave of deliveries coincides with a likely return of normalised Red Sea transits. At the same time, retaining older tonnage raises questions around emissions compliance and fuel efficiency as IMO decarbonisation rules tighten.

Industry projections suggest average overcapacity of around 27% through 2028. While unforeseen shocks may disrupt the outlook, the medium-term picture points firmly to a prolonged period of structural pressure on global container shipping.

With vessel supply set to outpace demand for years ahead, oversupply will continue to distort schedules and pressure rates. In this environment, booking space is no longer enough. You need visibility, agility, and the ability to adapt as conditions change, with blanked sailings and service adjustments likely without notice.

Metro’s MVT platform continuously tracks carrier KPIs and vessel position, comparing actual performance across alliances and adjusting supply chains in real time. This data-led approach maintain supply chain resilience, minimises disruption, optimises inventory planning, and safeguards service levels.

EMAIL Andrew Smith, Managing Director, to discuss how we can support your supply chain.