- Liner overcapacity is expected to average 27% through 2028, driven by heavy newbuilding orders and a sharp decline in vessel demolition.
- Smaller vessels—particularly sub-panamax and feeders—are seeing renewed investment, while demolition has slowed due to strong freight and charter markets.
- Analysts forecast a market low in 2028, with carriers navigating a difficult earnings cycle amid ongoing disruptions and fleet expansion.
As reported by gCaptain, Liner analysts warn that the container shipping market is heading toward a prolonged supply-demand imbalance, projected to peak in 2028. Braemar’s latest Quarterly Container Fleet Statistics report reveals that vessel orders remain strong, with 2.3 million TEU ordered in the first half of 2025—only slightly down from the 3.8 million TEU ordered in the second half of 2024. Despite some moderation in the pace of ordering, the appetite for new capacity continues to be robust, particularly among regional and sub-panamax vessels.
Shift Toward Smaller Ship Investments
While neo-panamax and ultra-large container ships (ULCS) continue to be ordered in 2025, the industry is increasingly shifting focus to smaller vessels. According to Braemar, the number of large ship orders (14,000 TEU and above) fell from 159 in 2024 to 77 in the first half of 2025. In contrast, orders for feeder and regional boxships up to 4,000 TEU rose significantly, with 74 ships ordered in just six months—nearly matching 2024’s full-year total of 80. This trend reflects growing interest in smaller, versatile vessels as global trade patterns evolve.
Fleet Growth Outpacing Demand
As of 1 July 2025, the global container vessel orderbook stands at 9.6 million TEU, equivalent to 30.5% of the operational fleet. This growth is expected to continue, with 3.3 million TEU scheduled for delivery in 2028. Braemar projects average net fleet growth of 7.3% during this period. Jonathan Roach, container market analyst at Braemar, notes that such expansion, combined with sluggish trade growth, will further widen the supply-demand imbalance.
Demolition Activity Falls to Record Lows
Compounding the overcapacity issue is the dramatic slowdown in vessel demolition. Alphaliner reported that only 10 container ships, totaling 5,454 TEU, were scrapped in the first half of 2025—down sharply from 48,600 TEU in the same period in 2024. This near-standstill in recycling activity reflects strong market conditions and a reluctance among shipowners to dispose of older tonnage.
Charter Market Strength Deters Scrapping
Shipowners are holding on to aging vessels due to buoyant charter and freight rates, largely supported by ongoing Cape of Good Hope diversions and consistent global cargo demand. Alphaliner also pointed to the lack of available charter tonnage and recent experiences with global disruptions—from COVID-19 and the Red Sea crisis to supply chain congestion—as reasons for maintaining surplus capacity. Older vessels, though aging, offer carriers operational flexibility in an unpredictable market.
Market Bottom Expected in 2028
Braemar forecasts that the liner shipping sector will reach the lowest point of its earnings cycle in 2028. This coincides with a surge in new vessel deliveries and a potential return to Suez Canal transits, which would reduce current TEU-mile demand. Mr. Roach emphasized that the next few years will be shaped by heightened uncertainty, and unexpected global developments are likely to significantly affect the shipping industry’s financial performance.
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Source: gCaptain
