Briefing

Container shipping’s search for a new equilibrium

The container shipping market presents a mixed picture. Global trade volumes have reached record levels, yet demand growth is slowing, freight rates on key inbound Europe trades are coming under pressure, the containership orderbook continues to expand and port congestion is absorbing significant capacity. At the same time, carriers are gradually returning to the Suez Canal after more than two years of Cape of Good Hope diversions. Taken together, these developments raise the question of whether the market is moving towards softer conditions or whether one set of pressures is being replaced by another.

Looking back: a market that has rarely settled

In mid-2025, overcapacity was a principal concern, with the orderbook at around 30% of the global fleet.

By November 2025, it had grown to more than one third of the active global fleet, a level not seen since the 2008 financial crisis while rate increases appeared driven more by carrier-led tender season positioning than genuine demand recovery.

Conflict in the Middle East briefly supported rates in early 2026 through emergency surcharges and fuel levies, but by late April 2026 Asia-Europe spot rates had largely returned to pre conflict levels, suggesting carriers were struggling to sustain higher rates without stronger underlying demand.

Disruption therefore postponed, rather than removed, the capacity question. Cape diversions absorbed capacity that would otherwise have been available, while the fleet and orderbook continued to grow in the background.

Demand: resilient, but losing momentum

Demand has proved more resilient than expected. Global container trade reached almost 17.5 million TEU in August 2026, the highest monthly total on record according to Container Trades Statistics (CTS), although CTS estimates that disruption in the Middle East Gulf has reduced global container volumes by a total of approximately 2.6 million TEU compared with 2025.¹

However, record volumes do not necessarily mean accelerating demand. Monthly growth slowed to just 0.5% in August 2026, European imports lost momentum and Far East-Europe volumes fell by 5.7% month on month (although year to date growth has been relatively strong). The Middle East remained the weakest performing region, reflecting broader economic weakness, and continuing conflict-led disruption.²

Demand is not collapsing. Rather, previously strong growth is losing momentum, particularly on Asia-Europe volumes.

Freight rates: downward pressure continues

Asia-Europe spot rates have fallen. Some of the apparent increase in capacity around China’s Golden Week may reflect vessels bunching because of congestion delays and rates could come under further pressure once that backlog clears and the temporary bunching unwinds.³

As more capacity returns to the market, weakening demand growth could make it harder for carriers to sustain or restore higher rates. Seasonal demand and disruption may create temporary periods of tighter supply and rate volatility, but underlying pressure appears increasingly downward.

The newbuilding wave: supply that keeps on coming

Supply continues to grow. September 2026 alone saw seventy-three new containerships ordered, representing a combined capacity of approximately 1.05 million TEU.⁴ This latest wave sits against the backdrop of a global orderbook now standing at around 16.2 million TEU across more than 1,800 ships, representing roughly 46.5% of the current global fleet.⁵

Relatively little of this has been offset by scrapping. Only eight containerships, representing approximately 18,000 TEU, were sold for recycling so far this year, despite around five hundred vessels over 25 years old remaining in service.⁶

This continued ordering may reflect expectations of trade growth and fleet renewal needs, but with little older capacity leaving the market, the risk of fleet growth outpacing demand remains.

Congestion: a constraint with its own momentum

Port congestion has become a significant constraint, absorbing a substantial share of effective global capacity. The amount of capacity tied up by congestion rose from an estimated 1.7 million TEU in mid-August 2026 to approximately three million TEU by late September 2026, equivalent to around 8.5% of the global fleet.⁷

The impact is also evident in schedule reliability. Global on time performance fell to 27% in September 2026, with average delays of six days, and conditions were considerably worse on the Far East-Europe trade, where only 4% of services arrived on time and average delays approached ten days.⁸

For shippers, the consequences extend beyond freight rates. Delays reduce certainty over delivery schedules, inventory planning, and onward transport.

The return to Suez: a cautious, partial shift

Against this background, carriers are making a cautious return to the Suez Canal. Containership transits through the Bab el Mandeb Strait reached 314 in September 2026, the highest monthly figure since the Houthi attacks began in 2023.⁹

The financial benefit of this return may be narrower than might be assumed. Drewry estimates that using Suez rather than the Cape could save approximately US$1 million per round voyage for a 24,000 TEU vessel. However, that calculation excludes both war risk premiums and any discretionary Suez Canal discounts.¹⁰ Shorter transit times, improved vessel utilisation and faster service may matter as much as the direct voyage cost saving, and a fuller return would leave carriers to redeploy, idle or otherwise manage vessels no longer required on Cape-routed loops.

Outlook: several pressures converging at once

Resilient but slowing demand, falling rates, continued fleet growth, persistent congestion and a partial return to the Suez Canal do not operate in isolation, and none alone determines where the market goes next. Together, they point towards a period in which operational disruption and growing capacity may coexist.

Rates could remain volatile as congestion and seasonal demand temporarily tighten effective supply. Over time, however, shorter voyage patterns, continued vessel deliveries and limited recycling may place increasing downward pressure on Asia-Europe rates as more capacity becomes available. Much will depend on whether demand remains resilient and how effectively carriers manage that additional capacity.

The likely direction is therefore towards softer market conditions, but not necessarily greater predictability. Lower rates could be accompanied by blank sailings and service changes as carriers seek to manage capacity and protect earnings.

Contractual considerations

These dynamics carry direct contractual implications for shippers around pricing, service performance, surcharges, and responsibility for delay.

Index-linked or shorter-term contracts may offer an alternative to annual fixed-rate arrangements, although uptake has historically been gradual. Any pricing mechanism should be clearly defined, based on an appropriate index, and accompanied by a workable adjustment mechanism.

Shippers should also consider how their contracts would respond if carriers sought to pass on additional congestion or disruption related costs. Relevant safeguards may include clear notice of any proposed surcharge, an explanation of its basis, good faith negotiation and a reasonable lead time before any agreed charge takes effect.

Given the deterioration in schedule reliability, shippers should consider service performance alongside price when negotiating freight arrangements. They should also review how their contracts allocate responsibility for delay, since carriers’ rights to alter routings or impose charges are likely to operate differently from any force majeure provision.

Flexibility, clarity, and good faith negotiation remain key. Market conditions may soften, but predictability is unlikely to return in the near future.

Oscar Podlewski, Trainee Solicitor, assisted in the preparation of this briefing.

Footnotes