Container shipping 2026: the newbuild glut, the Red Sea reroute, and the tariff stack

The 31.6 million TEU fleet and the orderbook hangover #

Clarksons Research closed 2024 with the global cellular container fleet at roughly 31.6 million TEU across about 6,400 ships, a 10.5 percent capacity increase against year end 2023 and the largest annual step in the history of the trade. Calendar 2024 deliveries hit 2.9 million TEU, beating the prior record of 2.35 million TEU set in 2023, with HD Hyundai Heavy Industries, Hyundai Samho, Samsung Heavy Industries, Hanwha Ocean, Yangzijiang, New Times Shipbuilding, and Jiangnan dominating the slipway. The orderbook to fleet ratio sat near 24 percent at end 2024, the highest cover since the 2008 peak, and Alphaliner kept it above 22 percent through Q1 2025 even after fresh contracts from MSC, CMA CGM, and ONE. MSC alone passed 6.4 million TEU of in service capacity in early 2025 with another 1.5 million TEU on order, a fleet larger than the next two carriers combined.

Demolition has been negligible against this delivery wave. Clarksons logged container scrapping of about 0.1 million TEU for full year 2024, a multi decade low, because the Cape diversion kept tonnage employed and freight earnings underwrote the deferral of recycling decisions on vessels above 20 years. The supply absorption math is not symmetric: when the Red Sea reopens at scale, the lay up and demolition queue snaps back into a fleet that has already taken 4.9 million TEU of net additions over 2024 and 2025. Drewry, Linerlytica, and BIMCO all flag a 2026 to 2027 oversupply window with overcapacity in the 5 to 10 percent range absent further rerouting, slow steaming, or a structural lift in demand.

The Red Sea detour and the vessel mile shock #

Houthi Ansar Allah attacks on commercial shipping from November 2023 through 2024 collapsed Suez Canal container transits by roughly 55 percent year on year through Q4 2024, by Suez Canal Authority and IMF PortWatch tallies, and pushed virtually all Asia to North Europe and Asia to Mediterranean services around the Cape. Maersk, Hapag-Lloyd, ONE, ZIM, Evergreen, and Yang Ming pulled their Red Sea services. CMA CGM and MSC ran selectively with armed escort. The Cape detour added roughly 14 days round trip on Far East to North Europe and 7 to 10 days on Far East to Mediterranean, lifting bunker burn per voyage by 15 to 20 percent. Clarksons estimated container vessel mile demand at plus 18 percent year on year for 2024 against effective volume growth of about 6 percent, which is how a fleet absorbing record deliveries simultaneously delivered record carrier earnings.

The reopening assumption is the central scenario variable for 2026. The January 2025 Israel and Hamas ceasefire and the March 2025 United States strikes on Houthi positions reduced incident frequency without delivering a reliable corridor, and the major lines maintained Cape routings into Q2 2025 with insurance war risk premia still elevated. Drewry, Linerlytica, and Sea Intelligence all model a phased reopening: Mediterranean dedicated services first, a 6 to 9 month observation window for Asia to North Europe loops, and full reversion contingent on Joint Maritime Information Center incident counts holding below pre 2023 baselines for two consecutive quarters. A full reopening compressing loop length back to pre 2023 levels would release roughly 1.5 to 2.0 million TEU of effective capacity into a market simultaneously absorbing 2.0 million TEU of fresh deliveries, the canonical setup for a 2026 rate collapse.

Spot rates and the 2024 carrier earnings cycle #

The Drewry World Container Index composite spot rate moved from a USD 1,300 per FEU baseline in late 2023 to about USD 8,700 per FEU on Shanghai to Rotterdam in early July 2024 and USD 7,200 per FEU on Shanghai to Los Angeles in the same window, with Asia to East Coast North America topping USD 9,600 per FEU. SCFI, NCFI, and Xeneta XSI all tracked the same arc. The peak reflected the Cape detour, an early 2024 frontloading wave ahead of expected Trump tariffs, and a Lunar New Year capacity unwind that did not materialize. Rates fell from August 2024 as deliveries hit the water and entered Q1 2025 in a USD 3,500 to 4,000 per FEU corridor on Asia to North Europe and USD 4,200 to 5,000 on Asia to United States West Coast, still above pre pandemic levels but below breakeven for the highest cost operators on the Transpacific.

Carrier earnings followed rates. Maersk posted H1 2024 EBIT of USD 2.0 billion against a low H1 2023 base, Q3 2024 EBIT of USD 3.3 billion, and full year 2024 EBIT of USD 6.2 billion on revenue of USD 55.5 billion. CMA CGM, private and semiannual, posted 2024 net income of USD 5.7 billion. Hapag-Lloyd reported 2024 EBITDA of USD 5.0 billion. ZIM, most exposed to Red Sea volatility and Asia to United States East Coast, swung from a 2023 net loss to 2024 net profit above USD 2.1 billion. The Aponte family controlled MSC does not publish consolidated financials, but Alphaliner and Linerlytica estimates put 2024 container EBIT above USD 12 billion, the largest single year profit ever earned by a private liner operator.

Alliances reset: Gemini, Premier, Ocean, and MSC standalone #

The 2M alliance between Maersk and MSC formally dissolved on January 31, 2025 after a two year wind down announced in January 2023. The replacement went live the next day. Gemini Cooperation, the Maersk and Hapag-Lloyd partnership, launched on February 1, 2025 with a hub and spoke design across 26 main line services and feeder loops, targeting 90 percent schedule reliability against a 2024 industry average near 55 percent on Sea Intelligence numbers. The Premier Alliance, formed by ONE, HMM, and Yang Ming after Hapag-Lloyd exited THE Alliance, signed a separate Asia to North Europe vessel sharing arrangement with MSC, an unusual hybrid that gives MSC slot capacity without multilateral commitment. The Ocean Alliance, the longest standing of the four, renewed among CMA CGM, COSCO Shipping, Evergreen, and OOCL through 2032, providing the most stable capacity pool on the Transpacific and Asia to Europe trades.

MSC's standalone position is the most consequential industry shift since the original three alliance system formed in 2017. With 6.4 million TEU of in service capacity, the largest orderbook in the industry, terminals through Terminal Investment Limited (TIL), inland reach via Medlog, and air freight via MSC Air Cargo, MSC can now operate the equivalent of an internal alliance against external partnerships. Incremental supply discipline from MSC has become the single most important variable in the global rate cycle. Drewry and Linerlytica both treat MSC capacity choices as the marginal supply input in their 2026 and 2027 base case forecasts, more important than aggregate orderbook delivery schedules or alliance reliability targets.

The tariff stack: Trump reciprocal, Section 301 China shipbuilding, and decarbonization charges #

Trump 2.0 reciprocal tariffs announced on April 2, 2025 and amended on April 9, 2025 produced an immediate frontloading and rerouting wave on container flows into the United States. The April 2 baseline of 10 percent on most origins, with higher rates on China, Vietnam, Cambodia, Bangladesh, Indonesia, and Mexico, compressed Transpacific bookings into a narrow window before April 9. Sea Intelligence and Container Trades Statistics reported Asia to United States volumes up 15 to 20 percent year on year in March and early April 2025 and a sharp decline thereafter. Routing also shifted: intra Asia transshipment through Singapore, Port Klang, and Tanjung Pelepas rose as exporters claimed non China origin, and Houston and Mobile gained share against Los Angeles and Long Beach in the post April 9 booking pattern.

The USTR Section 301 China shipbuilding remedy of April 17, 2025 layered a vessel level fee on top of the cargo tariff. It imposed USD 1.5 million per United States port call for China built vessels, scaled down from the originally proposed USD 1 million to USD 3.5 million structure, with phased application from October 14, 2025 and exemptions for vessels under 4,000 TEU and certain short sea services. Carriers with the lowest China built share (Maersk, Hapag-Lloyd, MSC) gain a Transpacific cost edge over carriers with China heavy fleets (CMA CGM, COSCO, OOCL, Evergreen). MEPC 83 in April 2025 finalized the Greenhouse Gas Fuel Intensity levy with a base charge near USD 100 per tonne of carbon dioxide equivalent and a tier 2 charge near USD 380 per tonne, on top of EU ETS shipping (40 percent of emissions in 2024, 70 in 2025, 100 in 2026) and FuelEU Maritime, which entered into force on January 1, 2025.

Recommendations and the 2026 to 2028 corridor #

Shippers should rebuild contracts around three clauses for 2026: a Red Sea routing surcharge with disclosed pass through, a Section 301 vessel fee allocation rule tied to build origin, and a CBAM and FuelEU pass through schedule aligned with EU phase in dates. Vessel level fees and emissions charges will produce a durable 8 to 12 percent uplift in landed Asia to Europe and Asia to United States freight against pre 2024 baselines. Procurement that moves from fixed price annual contracts to Drewry WCI or Xeneta XSI linked formulas with caps and floors will reduce variance materially.

Carriers face a discipline test. With orderbook to fleet at 24 percent and Red Sea reopening as a supply side tail risk, accelerated demolition of vessels above 20 years, slow steaming on long haul Cape routings, and deferral of speculative 2027 and 2028 orders are the operational equivalents of capital discipline. The Gemini hub and spoke design hedges this scenario by separating long haul utilization from feeder volatility. MSC's standalone optionality, the Ocean Alliance's Transpacific scale, and Premier's North Asia anchoring offer three different supply discipline templates that will be tested across 2026.

Port authorities and governments have policy room. Suez Canal Authority revenue fell from USD 9.4 billion in fiscal 2022 to 2023 to about USD 4.0 billion in fiscal 2023 to 2024 on the diversion, and a sustained reopening will recover that base. The Panama Canal, which entered fiscal 2024 with reduced daily transits on El Nino driven Gatun Lake water shortfalls, and which faced President Trump's December 2024 territorial rhetoric and President Mulino's reaffirmation of Panamanian sovereignty the same week, has rebuilt to roughly 36 daily transits as the 2024 wet season restored reservoirs. United States policy should pair the Section 301 remedy with explicit shipbuilder support (the SHIPS for America Act, introduced December 2024) if industrial substitution is the goal. Bangladesh, Vietnam, and other export economies should hedge tariff and freight exposure through dual sourcing via Cambodia, India, and Mexico.

Sources #

• Clarksons Research, Container Intelligence Monthly, January 2025
• Clarksons Research, Shipbuilding Monitor, Q1 2025
• Alphaliner Weekly Newsletter, Issues 1 to 16 of 2025
• Drewry World Container Index, weekly archive
• Sea Intelligence Sunday Spotlight reports on schedule reliability and capacity
• Suez Canal Authority traffic statistics and IMF PortWatch dashboard
• A.P. Moller Maersk Annual Report 2024
• CMA CGM 2024 Annual Results press release
• Hapag-Lloyd Annual Report 2024
• ZIM Integrated Shipping Services Form 20-F 2024
• Ocean Network Express 2024 Annual Report
• Gemini Cooperation network announcement, Maersk and Hapag-Lloyd
• USTR Section 301 China Shipbuilding final remedy, April 17, 2025
• White House Executive Order on Reciprocal Tariffs, April 2, 2025
• IMO MEPC 83 outcomes, GHG Fuel Intensity levy, April 2025
• European Commission, FuelEU Maritime and EU ETS shipping phase in
• Reuters and Lloyd's List coverage of Red Sea diversion and alliance reset