A FAMILIAR swagger is evident at Posidonia, but beneath the ritualised optimism there is something new this year: fear. Not panic, not yet — but a quiet, stalking awareness that the extraordinary run of disruption-fuelled earnings is nearing its end, and the industry may be drifting, eyes wide open, towards another self-inflicted imbalance.

Rates remain at record levels, but the forces that created them are unwinding. Trade routes are recalibrating, geopolitical detours may shorten and the orderbook — swollen to a 17-year high — is preparing to hit the water. The economic damage is not visible yet, but overcapacity is no longer a distant threat; it is a shadow stretching across many of the conversations in Athens this week.

The danger is not an imminent crash. Shipping never collapses cleanly. Owners cling to hope long after earnings slip below operating costs, idling or trading at a loss in case volatility throws them just one more windfall.

Cash-rich players, in particular, will not scrap simply because spreadsheets say they should. That is not how this industry thinks.

And yet, even as chief executives warn of a downturn should the Strait of Hormuz reopen or oil prices fall, many will spend this week signing newbuilding contracts.

Cognitive dissonance is not a bug in shipping psychology; it is a feature.

The problem is that things are simply too good. Freight rates across most segments sit well above historical norms, secondhand prices hover near cyclical highs and capital appreciation has kept owners content. Everyone knows these conditions are episodic — the product of disruption, not structural demand — but that knowledge has never stopped bad decisions before.

The fleet is ageing fast: vessels more than 20 years old now make up 13% of global capacity, nearly double the share in 2020. A meaningful scrapping wave is inevitable once conditions normalise. But it will not be enough. The orderbook has surged from 7% to 20% of the fleet in six years. If sailing distances shorten, the surplus will swell further. In several segments, demolition would need to reach into younger, economically viable ships to restore balance.

When that adjustment comes, secondhand prices will feel the strain first — pressured by falling earnings and shrinking economic lifetimes. The market is not collapsing yet. But the heat is unmistakable, and the industry’s old reflexes are already steering it towards familiar trouble.

Richard Meade
Editor-in-chief, Lloyd’s List 

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