By Eric Huang.    Photo：Tom Fisk

Analysis firm Sea-Intelligence from Denmark predicts that the container shipping market is confronting long-term challenges, requiring at least four years to achieve equilibrium, and possibly extending to 2030 or beyond. According to their analysis, there is currently a severe surplus of container space, and this surplus may worsen in the coming years. 2023 is foreseen as a traditional market downturn period, and it indeed sees a significant excess capacity, with a similar situation likely to emerge in 2024. Alan Murphy, CEO of Sea-Intelligence, raises concerns about when the current surplus capacity will reach balance and how the industry will overcome these challenges.

Many industry experts anticipate that the worst period of price collapse in the container shipping market will be overcome later this year, but surplus capacity issues persist. It is increasingly predicted that the industry will be compelled to take more proactive measures because relying solely on slowing down and inadequate blank sailings won't be enough to balance the additional container capacity set to inundate the industry over the next three years. Even with substantial new ship deliveries completed this year, major shipping companies still have about 7 million TEUs (Twenty-foot Equivalent Units) of vessels awaiting delivery in their remaining orders. This, excluding potentially scrapped vessels, will increase container supply by about 25%. According to BIMCO's market analysis, the container shipping market retains many ships. As a result, the average age of the overall fleet has exceeded 14 years, making the container fleet older than bulk carriers or tankers.

Sea-Intelligence points out that the most severe surplus capacity period is expected to occur in 2024, with over one-third of the surplus capacity absorbed by 2026. However, Sea-Intelligence also notes that if demand growth remains low or major shipping companies continue to place more orders for new vessels, market equilibrium will continue to be delayed. This report reveals the current predicament facing the container shipping industry, namely, an excess of container space. According to Sea-Intelligence's analysis, resolving this surplus may take several years and could potentially extend into 2030 or beyond. This poses a formidable challenge for the entire container shipping industry, necessitating more proactive measures from major shipping companies.

The surplus capacity in the container shipping market exerts pressure on freight rates and transportation efficiency. Excess capacity leads to intensified price competition, posing a threat to the profitability of transportation companies. Furthermore, long-term surplus capacity may result in the scrapping of vessels that have not yet reached retirement standards, further wasting resources.

To address this challenge, the container shipping industry needs to take a series of measures. First, shipping companies can consider postponing or canceling new vessel orders to reduce supply growth. Second, they can enhance vessel management, including improving transportation networks and efficiency to minimize unnecessary waste. Additionally, the maritime industry can explore new transportation solutions, such as intermodal transport, to improve efficiency and reduce costs.

Governments and international organizations can also participate by formulating policies and regulations to encourage sustainable container shipping practices. This may include limiting excessive capacity growth, promoting the green transformation of shipping companies to reduce environmental impacts, and providing fiscal incentives to support industry adjustments and innovation.

In conclusion, the container shipping market is facing long-term challenges of surplus capacity, which require collective efforts from industry stakeholders to take proactive measures to achieve supply-demand balance and ensure the industry's sustainable development. This has significant implications for global trade and logistics, making it deserving of our continued attention and concern.

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