Seatrade Maritime: Storms on container shipping’s horizon

A turbulent 2025 is closing, but a New Year change of direction for the liner shipping sector remains challenging as the industry faces sliding demand, chronic overcapacity and tougher regulation unless the US and its allies disrupt the IMO for a second year.

An early candidate for disruption in the New Year would be the possible return of services to the Suez Canal and the release of around 2 million teu to an already over-supplied global container market.

A return to the shorter Suez route has been mooted by a few industry observers, and the speculation was given legs by the transit of CMA CGM’s INDAMEX service and further strengthened by Hapag-Lloyd’s admission that the carrier had a plan for returning services to Suez “on the shelf”.

More recently Maersk’s announcement, last week, that its 6,500 teu vessel Maersk Sebarok had also completed the west bound journey via the Bab el-Mandeb Strait and into the Red Sea makes the return to Suez feel more imminent. Even though Maersk sought to play down the possibility.

“Whilst this is a significant step forward, we are not at a point where we can set a date on any potential wider network change back to the trans-Suez corridor. Also, there are currently no additional planned sailings,” said a Maersk statement.

One temporary hiccup that could result from the return to Suez is a bunching of vessels at European and Asian ports as their rotations are disrupted with vessel arrivals from the ships travelling around the Cape, out of sync with those transiting Suez.

The flood of tonnage coupled with a regular influx of newbuildings could have a destabilising effect on the freight rates, not just on the major trades, but with a knock-on effect on regional trades.

Drewry’s supply chain consultant Stijn Rubens believes the impact of this returning tonnage could prove to be catastrophic for the regional freight rates, which have climbed to $667 per feu and with China sending intermediate goods for finishing to Vietnam and other Asian countries, notably Indonesia, demand will continue to rise, but the influx of new vessels could kill the rate rises dead.

Dynamar analyst Darron Wadey believes that the case for the return to Suez is getting stronger but warns that there will be no mad rush to return to the far shorter route.

“There will be no mad rush to start utilising this route as carriers will want a firmer security foundation than the tentative one, we have now. Furthermore, even if the carriers feel comfortable enough to start transiting the Red Sea/Suez Canal again en masse, the logistics of the exercise will mean this will require weeks if not months to unravel,” said Wadey.

Should such a pattern pan out then there will be a gradual and inexorable pressure on freight and charter rates as the service adjustments are made. Wadey added: “Once that is all done, then the question is: what to do with all this freed up capacity?”

That is a pertinent question given that the world’s most lucrative trade, from Asia to the US, has seen volatile demand as the Trump administration tariffs have taken hold, with demand ramping up fast when import duties are suspended, filling inventories, and then declining rapidly when they have been reintroduced.

A similar pattern could ensue later in the year when China tariffs, and similar import taxes, are reapplied after year’s moratorium. The major difference in 2026 could prove to be the US mid-term elections that will be imminent as tariff negotiations are being pursued. If the US electorate have not seen the promised decline in the cost of living Washington’s leverage may be compromised.

A somewhat similar situation may occur with the IMO’s Net Zero Framework (NZF), which the US and its allies successfully paused after frantic behind the scenes machinations at the regulators Extraordinary Meeting in October. 

Another attempt to pass the legislation, vehemently opposed by some sections of shipping and just as forcefully supported by others, is expected to take place in October 2026. 

If the NZF is passed then the maritime sector across the globe will enter a period of transition leading up to 2050, which will GHG emissions from shipping reduced to zero.

Failure to pass the legislation will inevitably see the fragmentation of climate regulations countries that have invested heavily in the climate transition drive the policies forward on a regional level.

Such an outcome may be seen as a victory for some oil producing nations in their battle to slow the transition to global clean energy, but the impact on shipping could be far reaching, even for those parts of the industry that oppose the IMO’s global regulation.

George Procopiou, the chairman of Dynacom Tankers, spoke for many tanker and bulk carrier operators, when he said in October of 2025 that there were no net zero fuels and that made any regulation driving maritime to curb its emissions would need the fuels first, anything else was “Jules Verne ideas,” he said.

Semiramis Paliou, CEO at Diana Shipping, speaking on the same panel as Procopiou, took a different view pointing out: “What is very important is that we maintain a global level playing field and a global regulation on decarbonisation, anything regional will be a disaster for shipping.”

She said regional regulation will require more staff to monitor and maintain regulatory payments and compliance across a wide range of rules. 

Moreover, maritime industry concerns over where and how emissions charges were used would be less transparent under national government regulation than if the IMO was to administer a fund that helped to decarbonise the industry.

Essentially, the major determinant for which side of the decarbonisation debate in shipping that you are on is how close to the consumer the vessel operator is. For example, the charterer of a bulk carrier, shipping iron ore will be less likely to support green regulations.

For a bulk owner green fuels will be difficult to bunker, vessels, very often, do not have a regular trade route that they follow and they do not feel the pressure from what is most often a single charterer of space on their vessel.

Customers of container ship operators, by contrast, have formed groups demanding to know what their scope three emissions are, pressure from consumers to use green transport is directly translating into a drive for greener fuels, green corridors and a host of vessel modifications to reduce fuel consumption, thereby reducing greenhouse gas emissions.

The industry already understands how the imposition of import duties can change the pattern of logistics services globally, with manufacturing shifting to the cheapest areas of production.

If the overcapacity levels become critical, driving down freight rates and sending the carriers back into loss-making businesses the effect could be a swift and major shift to ramp up vessel demolitions, which have virtually stopped in 2025.

If the NZF is again rejected and the above scenarios on tariffs and excess capacity are also realised the shift to demolitions may gather pace, but if there is a fragmentation of emissions regulations there will be too many variables to be certain how the industry will evolve.

Each element could play a part, but the interaction of these major structural changes will be difficult to predict.