The shipping industry may not be able to solve excess capacity until 28 years

Source：5688.cn

According to the latest Sea Intelligence report, the market is entering a traditional downward cycle as there will be a large amount of overcapacity in 2023, and the same situation is likely to occur in 2024.

According to the Danish maritime data analysis company, the question remains when the current and overcoming overcapacity market can be rebalanced. In their latest report, analysts have reasonably defined the most positive scenarios from the perspective of operators, as follows:

Starting from 2024, the annual growth rate of container volume is 3.8%, which is comparable to the average growth rate after the financial crisis and before the 2011-2019 pandemic

Based on current orders, supply growth from 2023 to 2026

The supply growth after 2026 is only 1.3%, which is equivalent to the lowest level in the past 10 years (2016).

A 'structural factor' - that is, how much faster supply can grow than demand while the market remains balanced - is 2.2 percentage points.

Source: Sea-Intelligence.com, Sunday Spotlight, Issue 637

This graph shows the degree of global oversupply between 2020 and 2030, compared to the normal before the 2019 pandemic, under the above assumptions.

Alan Murphy, CEO of Sea Intelligence, pointed out: "Therefore, without the explosive growth of global container demand, another pandemic devouring capacity, or carriers occupying a large share of the global fleet and no longer ordering ships, we can see the supply and demand balance level in 2019 in 2028

He pointed out that achieving this balance in 2028 means it will take 8 years - the same cycle as restoring balance from the financial crisis to 2017

According to analysis, 2024 will be the year with the most severe overcapacity, and by 2026, one-third of the overcapacity will be absorbed. However, if the assumptions supporting this positive scenario are threatened by slowing demand growth, even moderate supply growth, or a decrease in structural factors (all of which are likely to occur), then the equilibrium level in 2019 may be postponed to 2030 or later.

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