Overcapacity May Be The Next Defining Force For Ocean Freight

Overcapacity is emerging as a key factor that could shape the future of ocean freight, as new ship orders continue to surge.

While demand for mega-ships above 20,000 TEU has slowed, orders for mid-sized and feeder vessels remain strong. The global order book now stands at about 10 million TEU - the highest in 15 years.

In just the past two to three years, carriers have poured billions into fleet expansion, fueling capacity growth at a pace rarely seen before.

At the same time, demand growth has faltered. On the massive Asia–North America trade lane, volumes have dropped since the US imposed tariffs during the Trump administration. Despite new trade deals, tariffs remain well above previously levels, dampening demand and reinforcing oversupply.

Asia–Europe has shown some growth this year, but the muted peak season suggests that surplus capacity may be holding back stronger gains.

In recent years, extraordinary global events have been at the centre of supply and demand. The COVID-19 pandemic, the Suez Canal blockage, and most recently, Houthi attacks in the Red Sea, all created sudden mismatches where demand outstripped available capacity, sending freight rates sharply higher.

Looking ahead, if Middle East conditions were to stabilise and carriers once again sail through the Red Sea, overcapacity pressures may intensify quickly. Roughly 25–30% of the vessels currently needed for Cape of Good Hope detours would no longer be required.

Forecasting the future remains challenging, but overcapacity may well be one of the defining forces in the global ocean freight market over the next couple of years.

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