News / Too many ships, too little love: will container shipping face a ‘reckoning’?

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Opinion is split on whether the current environment in ocean freight could prompt a new wave of mergers, and even trigger a collapse within container shipping, but certainly there appears to be a healthy dose of schadenfreude going on following pandemic-era excess.

Speaking to The Loadstar recently, director of the Global Shippers Forum (GSF) James Hookham went so far as to state that by June we would see the beginning of a period of “reckoning” for carriers.

“I think it will be a really critical year, and one which could put a lot of pressure on some of the less-resilient lines, bringing its own problems of possible further mergers or even business failures,” Mr Hookham said, citing excess capacity and new orders.

Over the past 12 months, 633 new box ships, representing 5m teu, have been ordered, surpassing 2024’s then record orderbook of 4.8m teu, with market analysts pointing out that the orderbook-to-fleet ration had now surpassed 33%.

Shipping executive Hans-Henrik Nielsen pointed out that part of the problem concerned the size of the ships ordered, noting that “sometimes, big really is too big”, singling out the rampant acquisition of ultra large container vessels.

“Watch as the 24,000 teu mastodons become irrelevant in a port-port service over the next two years; they will justify themselves in a hub and spoke service pattern, but there are way too many of that size by now; someone will fail,” said Mr Nielsen.

“Lots of good money chasing size without considering even ‘little black swans’ throwing spanners into the works. Nimble will survive, there’ll be a transition process, but small and nimble will have its place too.”

There is a dearth of love lost between carriers and customers, with forwarders having told The Loadstar that they “just cannot trust them anymore”, following what was seen as coercive and opportunistic practices during Covid-19.

General manager for 1Up Cargo in South Africa Cindy Luyt said the carriers had made it clear that they were looking to “eliminate forwarders where they were able to”, and it seemed that perception remained, she added.

Another forwarder told The Loadstar that while they had managed to maintain a positive working relationship with their carrier partners, it was clear that this was not the case across the board.

Resultantly, there appears a sense that if some carriers did go to the wall, amid the plummeting demand for capacity, just as additional space is hitting the market, that would be deserved – much of that capacity bought with “ill-gotten gains”.

Not everyone agrees that the picture is gloomy for carriers, with one shipping expert claiming they thought the cash windfalls of the pandemic era would offer some support, at least for the lines customers are most keen to see punished.

“I really do have a hard time seeing any of the major lines going bust anytime soon on the back of their earnings from the past disruptive years,” the shipping source told The Loadstar.

“I could, however, certainly see a new wave of consolidation once the market enters overcapacity and loss-making rates, with small and mid-sized regional carriers being targets for acquisition.”