The container surplus comes in two waves. Only one can be undone

Drewry’s assessment for 5 November put the World Container Index at US$4,389 per 40ft container, down 1% on the week but still 124% higher than a year earlier. Four days later, Sea-Intelligence published a fleet projection that runs from 34m TEU today to 40m TEU by the second quarter of 2028 and 50m TEU by the third quarter of 2030, as Splash 247 reported.

A market up 124% year on year and a fleet about to grow by nearly half appear to describe different decades. They describe the same one, in sequence. The capacity now arriving comes in two waves with different mechanics. The first is routing: the Red Sea return hands vessel time back within weeks, and can be taken away again. The second is steel: tonnage from an orderbook above 15m TEU arrives on a schedule no carrier can recall. The 2027 outlook belongs mostly to the first wave. The years from 2028 belong entirely to the second. Reading a 30% spot rate forecast and a 50m TEU fleet as one oversupply story blurs the distinction that decides how long a decline lasts.

What happened

The Suez return passed a milestone. On 8 November Evergreen’s 16,556 TEU EVER EON transited the canal from the Netherlands to Singapore on the Ocean Alliance’s NEU7 loop, the carrier’s first passage in almost three years, Container News reported citing the Suez Canal Authority. Drewry’s 5 November assessment says 60% of Asia-Europe capacity now uses the Suez route, with 53 vessels transiting the canal in both directions that week, according to Drewry. The move extends the half-finished Suez return described two weeks ago.

The routing saving is already being counted. Xeneta’s Ocean Outlook 2027, presented at its Munich summit on 5 November, put weekly capacity committed to the Red Sea at 467,297 TEU in October 2026. That is 50% of the pre-crisis level of August 2023 and roughly double the capacity offered at the end of August 2026. Xeneta counts 599,000 TEU of vessel capacity already released by the return, the company said.

The orderbook grew through the rate peak. Alphaliner puts the global orderbook above 15m TEU and thinks it could approach 16m TEU before the end of 2026. LNG dual-fuel ships account for 56% of the capacity on order, conventionally powered vessels just under 32% and methanol dual-fuel 12%, and about 40 further megamax contracts could add roughly 1m TEU, SAFETY4SEA reported.

The delivery schedule is now mapped. Sea-Intelligence expects quarterly deliveries to average 1m TEU between 2027 and 2030, peaking at 1.8m TEU in the third quarter of 2028, with annual fleet growth averaging 8.5%. It puts the effective capacity boost from the Asia-Europe Suez return at about 8%, and says that combined with deliveries, cumulative supply growth could exceed 50% by the end of the decade.

Carriers are still reporting a tight market. Maersk raised full-year underlying EBITDA guidance to between US$14bn and US$14.5bn from US$10.5bn to US$12.5bn, after third-quarter EBITDA of US$4.7bn against US$2.7bn a year earlier, FreightWaves reported. The shares fell as much as 11.6% because the result and the upgrade missed consensus.

The data

Measure	Provider	Period	Level	Change
WCI composite, eight east-west lanes, per 40ft	Drewry	5 Nov 2026	US$4,389	-1% week on week, +124% year on year
Shanghai to Rotterdam, per 40ft	Drewry	5 Nov 2026	US$3,615	-2% week on week
Shanghai to New York, per 40ft	Drewry	5 Nov 2026	US$9,303	-3% week on week
Shanghai to Los Angeles, per 40ft	Drewry	5 Nov 2026	US$7,539	Unchanged
Asia to US East Coast, per FEU	Freightos, via FreightWaves	4 Nov 2026	About US$9,900	-6% week on week
Asia to Mediterranean, per FEU	Freightos, via FreightWaves	4 Nov 2026	US$4,375	+3% week on week

The Freightos figures reached ContainerSignal through FreightWaves’ 4 November report, which also noted that transpacific rates remain about US$5,500 per FEU above their pre-peak level.

On the supply side, the relevant 2027 numbers are: demand growth of 2.5% to 4%, fleet growth of 6.8% with a range of 5.4% to 8.3%, deliveries of 2.9m TEU and demolition of 0.5m TEU, all from Xeneta. On those delivery and demolition figures, net fleet growth in 2027 is 2.4m TEU. Sea-Intelligence adds that even repeating the record demolition year of 2016 every year through 2030 would absorb less than 17% of incoming capacity, and that 10.8m TEU will be aboard ships older than 20 years by 2030.

What the evidence suggests

The two waves have different physics. The routing saving is a stock, not a flow: it appears when a loop converts and the round voyage shortens, in full, without waiting for a shipyard slot. The delivery wave is a flow, paid out in quarterly instalments that Sea-Intelligence expects to average 1m TEU. The routing switch can be reversed by a security decision in a week. The delivery schedule cannot be reversed at all.

That makes the 2027 forecast a conditional number. Xeneta expects the global average spot rate to fall 30% in 2027 against a third-quarter 2026 baseline, and long-term rates to fall 5%. Its chief analyst, Peter Sand, described the Red Sea as offering “both sides of the coin”, with a full return capable of sending rates down sharply and a renewed deterioration capable of forcing diversions back and pushing rates up. The 30% therefore rests on a security assumption as much as an economic one.

The later wave has fewer escape routes. Once the ships deliver, the offsets are demolition, idling, slow steaming and blank sailings. Blank sailings manage a schedule; they do not remove an asset. Demolition is the only permanent subtraction, and the arithmetic is unforgiving: 0.5m TEU scrapped against 2.9m TEU delivered in 2027, and less than 17% of the 2027 to 2030 wave absorbed even at record scrapping rates. Age alone does not send a ship to the beach, because scrapping is taken when charter income falls below scrap value plus the cost of keeping a ship compliant.

Carrier behaviour is consistent with the second wave, not the first. Ordering continued into the rate peak, with LNG dual-fuel dominating the orderbook and about 40 megamax contracts pending. Sea-Intelligence reads that as positioning for market dominance beyond 2030, possibly ahead of an alliance restructuring, with MSC as the example of scale replacing partners. A carrier contracting a megamax for 2029 delivery is not defending the 2027 spot market. It is buying a place in the network that emerges after the surplus. Maersk’s share price reaction makes the same point from the equity side: the reported market is strong, the expected one is not.

What the current rate level contains. The composite is 124% above last year while the Suez share of Asia-Europe capacity is 60% and Shanghai waiting time is down to 35 hours. Part of the premium is diversion rent, part congestion and part demand, and the data cannot separate them. The rent decays as loops convert, which is why Drewry projects another decline while carriers post Asia-Europe increases of US$1,000 to US$1,500 per FEU that forwarders doubt will hold.

The counter-case

The strongest objection is that the routing wave does not subtract cleanly. Drewry warns that an accelerated return could produce overlapping arrivals from Suez and Cape routings, vessel bunching and cargo congestion at European ports. FreightWaves reports congestion still absorbing capacity on Asia to North Europe. If that happens, the vessel time released by shorter transits is partly reabsorbed at the berth, and 2027 rates fall by less than the arithmetic implies.

The second objection is the record. Sand noted that rates were expected to soften in each of the past three years before the Red Sea crisis, US tariffs and the Hormuz crisis pushed them the other way. A live Hormuz risk means the switch could flip toward scarcity again.

What would resolve both: European port waiting times through the first quarter, demolition volumes against the 0.5m TEU assumption, and whether the Suez share stalls near 60% or keeps climbing.

What to watch

• The Thursday WCI prints. The composite against US$4,389 and Shanghai to Rotterdam against US$3,615. Two further weekly declines confirm the rent is decaying. A rebound while the Suez share keeps rising would suggest congestion is doing the absorbing.
• The Suez share and the transit count. 60% of Asia-Europe capacity and 53 transits in the week Drewry measured. The informative signal is transits falling while the share holds, which would mean loops are converting from one-way to two-way routings.
• Demolition in 2027. Anything below 0.3m TEU against Xeneta’s 0.5m TEU assumption tightens the ratchet for 2028 and 2029.
• European berth performance. Waiting times at Rotterdam and Antwerp-Bruges through the winter are the bunching test that decides whether the counter-case wins.
• Contract season. Xeneta’s 5% decline for 2027 long-term rates against the levels actually signed on Asia-Europe in the first quarter.

The routing wave sets the direction of 2027 and the width of its error bar. The delivery wave sets the direction of the years after, with a narrower one. Treating them as a single oversupply number is how a market gets surprised twice.