Overcapacity looks set to play a defining role in ocean freight markets over the next several years as ship orders continue to rise faster than volumes.

Although demand for ultra-large vessels above 20,000 TEU has slowed, orders for mid-sized and feeder ships remain robust. The global order book now totals about 10 million TEU, the highest level in 15 years.

In the past two to three years, carriers have invested billions in new tonnage, creating capacity growth at an unprecedented pace. However, demand has not kept pace. On the Asia–North America lane, trade volumes remain muted following tariffs introduced under the Trump administration. Even with new trade agreements, duties are still well above pre-2024 levels, curbing growth and fueling oversupply.

Asia–Europe trade has shown some growth this year, but excess capacity has dampened peak season activity. Temporary shocks – including the pandemic, the Suez Canal blockage, and more recently, Red Sea disruptions – have at times reversed the balance, pushing freight rates upward.

If or when Red Sea transits normalise, an estimated 25–30% of vessels currently required for Cape of Good Hope detours will become surplus.  This would accelerate overcapacity pressures, making it a central challenge for carriers in the near term.

The team at Global Logistics are monitoring developments closely.