The rise and fall of container spot rates — and what it means for 2026
- SCFI Shanghai-US west coast index has dropped to just $1,460 per feu, its lowest point since July 7, 2023
- Spot-rate assessments for east-west lanes by multiple index providers have fallen back to price levels that pre-date the Red Sea crisis
- Supply dynamics for carriers are worse now than they were prior to the Houthi attacks, underscoring the need for capacity management
Two years is a lifetime in shipping markets. It’s worth looking back to the pre-Red Sea crisis situation in the autumn of 2023, because today’s container shipping market appears ominously similar
CONTAINER shipping spot rates have failed to find a floor and are now back to where they were before the Red Sea crisis rescued liners’ bottom lines.
This week, the global composite of the Shanghai Containerized Freight Index sank to its lowest point since December 15, 2023.
The second half of 2023 — just before the Houthi attacks — was a perilous time for carriers.
On November 3, 2023, Maersk announced 10,000 layoffs, reducing its headcount by 9%. “This is not a diet. This is a reset of the baseline,” said Maersk chief executive Vincent Clerc during a conference call that day.
“We are in a very uncertain trading environment with significant further downside risk potential, one that could stay with us for quite a while,” warned Clerc.
Maersk chief financial officer Patrick Jany said: “We do see scenarios where we start to be cash negative, as we guide for Q4 already. In the direst path of the scenarios, you do have a cash burn that you need to prepare for.”
At the time, Maersk was concerned that low spot rates going into the end of the year would pull down annual contract rates in the following year.
“What happens with spot rates during the next three months is going to determine how much of an impact there will be from contract renegotiations,” said Clerc.
“One of the reasons we are taking these [cost-cutting] measures is that we don’t have the visibility yet on where contracts will reset — on where spot rates will be and what type of premium we can achieve on our contracts.
“If contract rates were to come down to what the prevailing spot rates are today, that is not an insignificant gap.”
Clerc was also very worried about overcapacity in November 2023.
“We expect market conditions in ocean to worsen further due to the additional capacity coming into the market and due to the fact that mitigating measures such as ship idling and ship recycling have not been effective,” he said prior to the Red Sea crisis.
“If you simply look at the amount of tonnage that is in the process of being built at the yards, these difficult market conditions are likely to stay with us, not only for next year, but also for longer.”
Market dynamics in 2025 vs 2023
The overcapacity risk Clerc highlighted two years ago is still very much present, if not worse.
Liners never stopped ordering ships. The orderbook-to-fleet ratio is now at 31.6%, according to Clarksons Securities. At this time in 2023, it was 27.5%.
On a positive note, deliveries will decline sequentially next year, from 2.1m teu in 2025 to 1.7m teu in 2026. But then deliveries will surge again, to 2.8m teu in 2027 and 3.5m teu in 2028, according to Clarksons’ data.
Next year’s newbuildings will enter a market that is already saturated with capacity. The fleet is much larger than it was before the Houthi attacks. Global containership capacity has increased by 5.1m teu or 19% since 3Q23, according to data from Maritime Strategies International.
The good news is that shipping demand has also increased over the past two years. Tonne-miles are higher because the Red Sea remains effectively closed to liner operations. Global volume in January-July was up 12% versus the same period in 2023, according to Container Trade Statistics.
The bad news is that a portion of this year’s volume strength was due to tariff front-loading, that is, timing not higher demand. During the first Trump administration, when tariffs were vastly lower, front-loading in 2018 led to a sequential drop in US imports in 2019.
Tariffs are expected to have a much more negative effect on economies in 2026 than they did year, according to the Organisation for Economic Co-operation and Development and Moody’s Analytics.
