The transition to the next phase in container shipping has begun

Let us first take a closer look at the Red Sea, before turning to the issue of overcapacity.

It is well known that smaller niche carriers have continued to operate via the Red Sea throughout the conflict, albeit with limited deployable capacity. In recent years, CMA CGM has also gradually routed an increasing number of large container vessels through the Suez Canal.

This was not, however, regarded as a broad normalization of the situation. CMA CGM is not considered a target by the Houthis and has, throughout the conflict, adopted a risk approach in the region that differs from that of the other major global carriers.

The first tangible steps towards a return to the Suez Canal

The clearest signals came from Maersk and Hapag-Lloyd. On 19 December, Maersk routed its first vessel back through the Suez Canal, followed by two trial sailings in the first half of January. Shortly thereafter, it was announced that the MECL service between the Middle East and the east coast of the United States would henceforth be permanently routed via Suez.

At that stage, the decision was taken solely by Maersk, as the MECL service does not form part of the Gemini network. Only in February did Maersk and Hapag-Lloyd jointly announce that three Gemini services would once again be routed via Suez.
The service between India and the Mediterranean has been rerouted since early February. Two further services between Asia and the Mediterranean will also return to this routing, although no clarity has yet been provided regarding the exact start date.

It is important to emphasize that these Gemini services are operated exclusively with vessels deployed by Maersk and not with ships belonging to Hapag-Lloyd.
Nevertheless, it is unmistakably a joint decision to reroute these services. In doing so, both carriers are sending a clear signal to the market (and to their customers) that their assessment of the risk has been revised.

A return to Suez can, however, still be reversed should the situation involving Houthis deteriorate. This is closely linked to developments in Iran, where a potential US intervention could trigger renewed action by the Houthis.

Despite this risk, the most likely scenario we should factor into our planning is gradual normalization and a return to Suez over the coming months.
The ideal operational window for carriers lies in the period following Chinese New Year and before the start of the 2026 peak season.

Shippers should therefore prepare for a reconfiguration of their supply chains and factors in a period of several months during which congestion in European ports will be unavoidable, regardless of how carefully the carriers manage the transition.
This also implies that, during the transitional period, one should anticipate significant fluctuations in freight rates. Once the switch has been fully implemented and both the networks and the ports are operating smoothly again, we will, however, enter a phase of structural overcapacity.

The question of how large the overcapacity will be is frequently raised. However, it is difficult to quantify this with precision: it is rather like measuring a piece of elastic, depending on how you approach it, you arrive at different outcomes.

Effective capacity is determined by several factors: the distance over which the cargo is transported (which becomes significantly shorter with a return to Suez), vessel sailing speeds, the extent of built-in buffer time within port call schedules, and various other operational parameters.

How large is the actual overcapacity?

In the fourth quarter of 2023, there was a clear situation of overcapacity worldwide. This was acknowledged at the time by both carriers and shippers. Freight rates had fallen sharply, and the major carriers were operating at a loss.

This was just before the Red Sea crisis absorbed the surplus capacity, as services were rerouted around Africa via the Cape of Good Hope.

We have just received full-year 2025 volume figures from Container Trade Statistics. Compared with 2023, the number of containers transported increased by 11.5%. When comparing the fourth quarter of 2023 with the fourth quarter of 2025 alone, growth stands at 11.3%.

Over the same period, the capacity of the global container fleet expanded by 17.7%. This is a crucial comparison at a time when services are being routed back through the Suez Canal.

In other words, we are seeing fleet growth of nearly 18%, versus an increase in transported volumes of only 11–12% over the past two years. If there was already clear overcapacity in the fourth quarter of 2023, it follows logically that this imbalance will widen further once full transit via Suez has been restored.

For 2026, fleet growth of approximately 4% is projected. Although relatively moderate, this will not be sufficient to reduce the existing overcapacity; rather, the effect is likely to be that it remains broadly intact. In 2027 and 2028, by contrast, annual growth of around 8% is expected once again significantly above current forecasts for growth in containerized volumes.

While part of the surplus will be mitigated by the accelerated scrapping of older tonnage, this is unlikely to be enough to restore a fundamental market balance. The underlying trend continues to point towards structural overcapacity once routed via Suez becomes fully operational again.

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