Moffatt & Nichol’s latest market analysis finds that:
• Global trade demand grew approximately +6.0% year-on-year in 2024, with many regions seeing double-digit volume growth.
• Despite this, a growing supply-demand imbalance in container shipping capacity is currently being absorbed by vessels re-routed around Africa.
• Any resumption of the Suez trade route to pre-Red Sea crisis levels, and increased capacity from new vessel orders driven by demand for cleaner fuels, risks medium term market performance.
The latest Global Container Market quarterly analysis from Moffatt & Nichol reveals that while the container market is poised for a strong start in 2025, emerging risks – such as a widening supply-demand gap in vessel capacity – threaten medium-term stability.
Q1 2025 is expected to maintain positive market performance, driven by increasing intra-Asian trades and Far East exports. While European overall container trade may continue to be impacted by weak economic conditions in wider regional economies, imports are expected to remain positive. The risk posed by potential trade barriers is driving increased volumes, as shippers seek to avoid any tariff hikes anticipated as early as this year.
Global volume growth was +6.0% in the first 11 months of 2024 versus the previous year. This is the second highest growth rate seen since 2013, with the highest being in 2021 (and the economic recovery that followed as the global economy reduced restrictions caused by the Covid-19 pandemic). The strongest growth in headhaul volumes are for North America and Oceania: +12.6% and +10.5% growth in imports in 2024 respectively.
Global container vessel fleet capacity grew significantly in 2024, by 10.7% comparing the fleet size at the end of Nov 2024 versus 2023. However, more than 8 million TEU of container shipping capacity is currently on the orderbook for delivery by or before 2029, representing 26% of the current fleet. The majority of the current orderbook consists of vessels in the 10,000+ TEU range, requiring more ports in secondary trade routes globally to prepare for handling larger ships as they cascade into these trades. This is also impacted by ordering of vessels with dual fuel capability with shipping lines looking toward alternative fuels and transitioning away from traditional bunker fuels, while being mindful that the long-term future of which alternative fuels will prevail remains unclear.
The consequence of this is despite robust growth in demand, the gap between cargo volumes and the supply of container vessels is widening. Since the beginning of 2011 demand has increased by 41%, while supply has doubled. This gap will continue to widen with the large orderbook over the next few years, which Moffatt & Nichol believes will not be met by growth in demand.
Doug Hansen, Global Director, Commercial Consulting at Moffatt & Nichol said: “With significant growth in container shipping capacity, the gap between supply and demand will continue to widen, which could put downward pressure on shipping rates. The growing capacity supply-demand imbalance may be further impacted with the transition to alternative fuels pushing orders for new vessels.
“While geopolitical issues such as the Red Sea Crisis have absorbed some of this excess capacity, when these issues are resolved the excess capacity could further compound this imbalance.”
