Container shipping lines are urged to scrap older vessels as new capacity threatens profitability, with losses reported by major carriers.
Container shipping lines are under pressure to accelerate the scrapping of older vessels as new capacity floods the market, threatening profitability, reported London's S&P Global.
Maersk, Ocean Network Express, Hapag-Lloyd, and HMM have all reported losses or steep profit declines as oversupply weighs on rates. More than one million TEU of new capacity is due this year, followed by 2.3 million TEU in 2027 and 3.4 million TEU in 2028, according to Sea-web.
Despite the influx, scrapping remains negligible. Drewry stated that just 6,000 TEU was scrapped in 2025, while Alphaliner put the figure at 8,172 TEU, the lowest in 20 years. Bimco estimates that 500 ships of 20 years or older, totaling 1.8 million TEU, are overdue for recycling.
Maersk warned that overcapacity could reach eight percent this year and forecast a potential US$1.5 billion operating loss, its first in a decade. Chief Executive Vincent Clerc stated that scrapping levels would determine whether the carrier meets the upper or lower end of its guidance.
Alphaliner expects recycling to pick up in the second half of 2026 if carriers return to the Suez Canal, but warned that scrapping could be deferred until 2027-28 when massive new deliveries arrive. Drewry noted that over-ordering and limited demolitions have become entrenched industry habits.
Carriers are managing capacity through blank sailings and slow steaming, but Drewry cautioned that without higher scrapping levels, further speed reductions may be needed. Container shipping on east-west trades is now a buyers' market, though consultants warned that carriers will not allow conditions to drift against them without a response.
