Can black swan events continue to save the container shipping industry from overcapacity?

Introduction

Since the outbreak of the COVID-19 pandemic in 2020, the container shipping industry has repeatedly been saved by sudden black swan events just when it seemed on the verge of an overcapacity crisis. From the supply chain disruptions triggered by the pandemic, to the rerouting caused by the Red Sea crisis, and then to the Iran war in early 2026, each geopolitical shock has unexpectedly absorbed excess capacity, driving freight rates to soar and bringing record profits to liner companies. However, the industry's own continuously expanding newbuilding orders are becoming a Sword of Damocles hanging overhead.

Key Dynamics

1. The pandemic created historic prosperity: In March 2020, Sea-Intelligence predicted that container shipping might face a 10% volume decline similar to the 2009 financial crisis, even posing bankruptcy risks. But the subsequent home consumption demand driven by pandemic lockdowns pushed spot freight rates to historical peaks. In the third quarter of 2021, the total profit of the container shipping industry reached $48.1 billion, surpassing tech giants such as Facebook, Amazon, Netflix, and Google. 2. The Red Sea crisis came to the rescue again: In the fourth quarter of 2023, Maersk reported an EBIT loss of $537 million, and the market expected the industry to be near breakeven in 2024. However, in November 2023, the Houthi seizure of the "Galaxy Leader" vessel was followed by the disruption of Red Sea routes, forcing liner companies to divert around the Cape of Good Hope, adding 10–14 days per voyage and consuming a large amount of capacity. In the third quarter of 2024, the industry's net profit rebounded to $26.8 billion. 3. The Iran war caused a new shock: On February 28, 2026, the U.S.-Israel war against Iran broke out, with Iran closing the Strait of Hormuz, stranding approximately 150 container ships in the Arabian Gulf. Rerouting and the backlog of cargo in the Middle East led to congestion at Asian ports. The Shanghai Containerized Freight Index (SCFI) rose to a two-year high, and the Drewry World Container Index (WCI) hit an 18-month high. According to Xeneta data, by the end of June 2026, spot freight rates from Asia to the U.S. West Coast had increased by 214% compared to before the conflict escalation, to the U.S. East Coast by 176%, to Northern Europe by 115%, and to the Mediterranean by 82%. 4. Newbuilding orders continue to expand: Despite significant capacity growth, liner companies are still ordering ships on a large scale. As of June 2026, newbuilding orders reached 13 million TEU, equivalent to 38.3% of the existing fleet capacity. Alphaliner data shows that in the fourth quarter of 2025 alone, new orders totaled 5.9 million TEU.

Supply Chain Impact- Routes and Ports: The Red Sea crisis has forced all Asia-Europe/Mediterranean and Asia-US East Coast routes to divert around the Cape of Good Hope, drastically reducing Suez Canal revenue. The Iran war has further disrupted Middle East routes, with the closure of the Strait of Hormuz affecting approximately 10% of global container traffic and causing some Middle Eastern cargo to be transshipped through Asian ports, leading to severe congestion. - Freight Rates and Costs: Spot freight rates have surged significantly during each crisis but remain highly volatile. While the current rate increase driven by the Iran war is not yet comparable to the peak of the pandemic, it has notably improved liner companies' financial outlooks for 2026. Maersk raised its full-year EBIT guidance in July 2026 from -$1.5 billion to -$1.0 billion to $2.0–$4.0 billion. - Capacity Supply and Demand: All three black swan events have temporarily alleviated overcapacity pressures by absorbing excess capacity (via diversions, congestion, and longer-haul routes). However, with new vessels being delivered continuously, supply-side pressure will persist even as scrapping activity increases. Sea-Intelligence estimates that once the Red Sea reopens to traffic, approximately 1.75 million TEU of capacity (5–6% of the existing fleet) will be released, threatening the already highly sensitive supply-demand balance.The scenario of black swan events saving the container shipping industry from overcapacity has been played out three times, but its repeatability is questionable. The huge order volume created by the industry itself has increasingly reduced its buffer space against sudden demand or supply shocks. The real test will come during the next period of stability.