Analysts Warn Container Shipping Outlook Remains Bleak Despite Short-Term Profit Rise

Volatility continues to define the container shipping market, as analysts warn that attempts to talk up the sector are being undermined by economic realities. 

Alphaliner’s latest report highlighted a rise in profits for the top nine carriers in the third quarter compared to the second, with both volumes and freight rates increasing quarter-on-quarter.

“As a result, the nine largest carriers publishing EBIT (earnings before interest and tax) reported an average 13.7% operating margin for the period, up from 9.9% in the previous quarter,” said Alphaliner. “While profits and margins have fallen from the very high results a year ago, they are still strong historically and much better than expected at the start of the year”.

Despite this improvement, the average year-on-year profits for the nine carriers, excluding privately owned MSC, were down by 53%. Wan Hai recorded the smallest decline at 28%, while ONE saw the steepest fall with an 80% drop in income. 

Alphaliner said that results are expected to deteriorate further, particularly as there is no prospect of a “geopolitical disruptor to improve rates”.

Other analysts are even more pessimistic. 

“Our assessment of mainline demand in the next three quarters is downbeat, with a major contraction forecast on the Transpacific EB trade as Chinese imports remain subdued, while we expect that Asia-Europe WB and Transatlantic WB volumes will soften,” MSI said in their monthly Horizon report. 

While Chinese exports to Europe have increased, congestion and delays at North European ports have held up freight rates for cargo out of Asia. MSI warned that softening demand across all three major east-west trades will coincide with yet more capacity being delivered this year and into 2026, with negligible scrapping expected.

The imbalance between supply and demand is being exacerbated by the nature of newbuilding orders, which are concentrated in larger vessel sizes. 

Chartered vessels tend to be smaller, leaving the charter market “effectively detached from near-term freight market dynamics as the lack of available ships squeezes supply and liner demand endures,” MSI said. 

Hong Kong-based consultancy Linerlytica reported that just 14 ships totalling 9,457 teu had been scrapped this year, with none sent for recycling in December, as high charter rates continue to keep older ships in service.

An unexpected source of potential relief could come from the United States, where the Supreme Court is considering a case brought by American importers challenging the president’s use of the International Emergency Economic Powers Act to impose sweeping import duties. 

“We know that on a normal schedule, the court may not release its rulings until spring or even as late as June. My guess is they'll do it sooner than that, and whatever happens, we'll be ready for next steps,” US Trade Representative, Jamieson Greer, told Fox News.

MSI suggested that if the court rules against the administration, there could be temporary relief from tariffs, potentially provoking another wave of precautionary frontloading of US imports before duties are reinstated through more formal channels.

Nevertheless, the overall tone remains downbeat.

“Carriers’ reluctance to withdraw capacity during the slack winter season has hurt freight rates across key routes with the transpacific rates facing the greatest stress,” Linerlytica’s weekly newsletter said, adding that the imbalance “could soon be exacerbated by the potential return of ships to the Suez route”.

With profits still positive but demand weakening and oversupply looming, the container shipping market faces a difficult period ahead, with little sign of a near-term recovery.

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