Commentary

By Lars Jensen

Absent the Red Sea crisis, 2024 and 2025 would indeed have seen worse overcapacity than 2023.

We are often presented with forecasts when attempting to gauge developments in container shipping. Even though forecasts can never be completely accurate, they are a useful tool to frame at least a baseline scenario around which to make one’ s planning.

Typically, these scenarios are built on forecasts for supply and demand related to the container vessel fleet and demand for moving containerized cargo. One can then try to incorporate more detailed factors such as vessel scrapping, port congestion, fuel prices, geopolitical developments, and so on.

Anyone working with forecasts knows full well that they can fail even under the best circumstances. With sudden“ wildcards” such as the COVID-19 pandemic, the Red Sea crisis and the Hormuz crisis, forecasts can become obsolete from one day to the next.

A good example of this is the Red Sea crisis. Throughout 2023, there was very broad consensus in the market that we would see worsening overcapacity in 2024 and 2025. If one had a penchant for being a Monday morning quarterback, it is easy to look back at those forecasts and claim all the analysts got it wrong. And yes, the market clearly did not get overcapacity in 2024 and 2025; quite the opposite in fact.

There is one single reason for this. The Red Sea crisis forced carriers to avoid the Suez and go around Africa. This is the new geopolitical uncertainty: It is next to impossible to predict such extreme events that have material impact on shipping.

It does not mean that analysts got the fundamentals wrong. In round numbers, the global fleet has grown 28 % since 2023. In the same period, demand— when measured in headhaul TEUs per mile— has grown 41 %. That“ feels” right as we clearly still have pressure on capacity.

But the reality is also that underlying demand growth in the same period has only been 23 %. The longer around-Africa sailing distance absorbed the predicted overcapacity. Absent the Red Sea crisis, 2024 and 2025 would have seen worse overcapacity than 2023.

This illustrates a problem when trying to interpret forecasts: any number of external elements could render them inaccurate.

A different approach would be to look at a narrative presented by analysts, pundits, or any stakeholders and ask,“ What needs to be true in order for this narrative to be correct?”

Over the past few months, a narrative has emerged that the market does not have material overcapacity, and that carriers can manage the order book going forward. As such, the supplydemand balance should be seen as, if not still strong, then at least still healthy.

When I look at the period from now until the end of 2028 and ask what needs to be true for this to be correct, four numbers come to mind.

1. The Red Sea crisis has to re-escalate, with all major services going around Africa. The present situation is quite the opposite, with 33 % of Asia – Europe capacity having returned to a Suez routing.

2. In 2027 and 2028, 50 % of vessels older than 20 years need to be scrapped, roughly 1.5 million TEUs per year. The previous annual scrapping record was 665,000 TEUs in 2016.

3. Whether the port congestion absorbing capacity can be improved or not remains to be seen. The pace of“ cleanup” after the pandemic and after Red Sea crisis adjustments would have seen congestion of the scale seen today cleaned up in three to four months.

4. Demand growth needs to accelerate in 2027 – 28. In TEUs per mile, demand has grown 6.6 % in the past 12 months.

The above is not attempting to predict what will or will not happen. Instead, it outlines four elements that all need to be true simultaneously to numerically support the narrative that we will not experience overcapacity.

But, as we saw clearly with the Red Sea crisis, this does not take into account new major disruptive geopolitical events, as these are, by nature, impossible to predict. We can of course speculate on more or less likely scenarios, such as the Middle East crisis spreading to the Suez Canal itself, eruption of conflict in the South China Sea or the Taiwan Strait, or something we do not see coming yet.

The rapidly developing nature of drone warfare has made it easier for small groups to create major disruptions to maritime supply chains. Natural events such as an earthquake impacting one or more major container terminals could also intervene, not to mention the expected capacity shortage at the Panama Canal due to El Niño.

We can never rule out a major external event creating new capacity absorption. But in the absence of one, it appears unlikely that all four elements mentioned above will be fully present throughout 2027 and 2028.

email: lars. jensen @ vespucci-maritime. com

60 Journal of Commerce | October 5, 2026 www. joc. com