Container Shipping Quarterly

Special Report

Oversupplied ocean carriers sailing into new downcycle

By Greg Knowler

Container shipping is plunging into another downcycle with an oversupply of capacity and weakening demand hanging over the industry, leaving little to slow the slide in rates on major trades that analysts say has exceeded seasonal norms.

Despite a highly profitable 2024— industry operating profits totaled nearly $ 60 billion, according to estimates from Sea-Intelligence Maritime Analysis— analysts are predicting a sharp downturn beginning this year.

“ We think we are entering a multi-year period of losses as the industry grapples with overcapacity,” J. P. Morgan wrote in a market update on March 17, noting that the losses are likely even if capacity does not fully return to the Red Sea this year.

“ Our demand-supply analysis now points to a 30 % reduction in freight rates year over year in 2025 [ down from the previous estimate of negative 15 %],” the bank’ s transport analysts wrote.“ This leads to ocean EBIT [ earnings before interest and taxes ] losses emerging during 2025 and in our view persisting into the next three years, as vessel deliveries re-accelerate in 2027.”

On the trans-Pacific, North Asia – US West Coast rates have tumbled 67.6 % since the first week of January, falling to $ 1,700 per FEU in the week of March 21, according to Platts, a sister company of the Journal of Commerce within S & P Global. North Asia – US East Coast rates of $ 2,700 per FEU have fallen 59.7 % so far this year.

Similarly, Asia – North Europe spot rates were down 50 % since the beginning of the year $ 95 per FEU below the long-term contract rate at $ 2,422 per FEU, according to rate benchmarking platform Xeneta.

A‘ challenging backdrop’

Carriers levied freight-all-kinds( FAK) increases on Asia-North Europe on March 1, but it had little effect on the oversupplied market, according to Peter Sand, Xeneta’ s chief analyst.

“ The short-lived uptick in spot rates at the start of March suggests a weakness in the market and demonstrates the difficulties carriers will face in capacity management during 2025,” Sand said in a market update, adding that a similar weakening of rates can be seen on

20 Journal of Commerce | April 7, 2025 www. joc. com