Letter from the Editor

By Mark Szakonyi

Factors blunting functional tonnage will grow in importance as overcapacity is set to expand next year.

The widening imbalance between what China exports and imports is beginning to absorb functional container ship tonnage, requiring more container equipment and handling.

Manufacturers in China have been able to find new export markets outside of the United States since Washington launched an onslaught of tariffs in April, and, notably, kept growing those markets even as domestic consumption lags. The ratio of China exports to imports in the last two years has steadily risen from 3.12 to 3.29, according to a 12-month rolling analysis of data from Container Trade Statistics( CTS).

“ The momentum [ out of China ] is strong,” Maersk CEO Vincent Clerc said during the carrier’ s Nov. 6 third-quarter earnings call.“ The consequence for us is not only the resilience of demand growth, which will contribute to absorbing some of the new capacity coming online, but also the increased trade imbalance that it is causing, which over time will lead to higher production costs and lower asset intensity for the industry.”

The yawning imbalance between China’ s import and exports is another way functional ocean capacity, like with port congestion, is being sapped by forces beyond the control of ocean carriers. Those factors blunting functional tonnage will grow in importance as overcapacity— at least as measured conventionally in terms of deployed tonnage and ocean demand— is set to expand next year, deepening the industry downcycle.

Global volume demand is forecast to expand 2.5 % to 3.5 % next year, compared with the 4.5 % to 5.5 % expected growth in 2025, according to shipowner association BIMCO. Global container capacity will be up 7.3 % by the end of this year compared with 2024 and will grow 3.1 % year over year in 2026, BIMCO says.

China continues to drive container volume growth. The country’ s export volumes through the first nine months of this year and last have jumped 20 % year over year, according to CTS. In the face of US tariffs of approximately 47 %, exporters in China have expanded their reach and depth into Latin America, the Middle East, Africa and Europe.

But the Chinese government’ s efforts to increased domestic consumption, fueling imports, have yet to spur consumers to significantly up their spending. China’ s domestic consumption accounted for 39 % of gross domestic product in 2023, according to the

Hinrich Foundation, a nonprofit supporting trade. Comparably, US domestic consumption accounted for 68 % of GDP in 2023.

Notably, China’ s manufacturing output and retail sales in October expanded at their slowest pace in a year, according to the country’ s National Bureau of Statistics( NBS).

Chinese container trade is growing 4 %, driven by exports expanding 7 %, thus creating“ this dichotomy that there is between head-haul growth and average growth... absorbing a lot more capacity,” Clerc said. As a result, the delivery this year of new tonnage— more than 2.2 million TEUs, according to the global order book— isn’ t increasing overcapacity“ as brutally as one would suspect” Maersk’ s CEO said.

Meanwhile, the imbalance of import and export flows is expanding globally, with 41 % of containers moving without cargo, according to Sea-Intelligence Maritime Analysis’ Sept. 14 Sunday Spotlight newsletter. Just six years ago, a little less than one-third of container equipment was shipped without cargo, according to the analysis of CTS data.

“ Clearly, the Red Sea crisis has made a strong impact on the average sailing distance for an empty container, showing that it is not just a relative increase versus the full loads, but also an additional absolute increase in the work needed,” wrote Sea-Intelligence CEO Alan Murphy.

Given that, the cost of handling empty containers, from having to reposition them more often and ultimately needing more equipment in total to support laden containers, has increased, Murphy said.

The impact of China’ s growing import-export imbalance in terms of soaking up tonnage and container equipment capacity, however, may have limited staying power. And the industry has its own levers still to pull, said Clerc. For example, just eight vessels, totaling 4,130 TEUs of capacity, have been scrapped thus far in 2025, according to BIMCO.

“ There is pent-up demand for [ scrapping ],” Clerc said.“ And so I think over time, we will see that some of the levers that so far have come at us, whether it was higher demand from China or sailing around the Cape of Good Hope or COVID, this will fade away, and we’ ll be back to having to use the tools that we normally use in the industry, which [ are ] scrapping, idling, slow steaming and so on.”

email: mark. szakonyi @ spglobal. com

4 Journal of Commerce | December 1, 2025 www. joc. com