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Fleet-heavy carriers grapple with container overload

Fleet-heavy carriers grapple with container overload

Posted on December 4, 2023   |  

The shipping industry faces the challenge of overcapacity, with 55 million TEUs serving 6,000 ships—far surpassing the total capacity of 28 million TEUs. 

This results in an accumulation of surplus containers in depots, leading to additional charges.

This year the container pool is likely to drop by 2.6%, with further reductions expected in 2024. 

This marks the first drop since the global financial crisis of 2008-2009.

Carriers grapple with honoring extended equipment lease agreements, typically lasting between five and 13 years, with possible renewals extending from 1-8 years.

Despite the decrease in container demand, lessors' business plans appear resilient, similar to the long-term ship charter agreements made during the post-pandemic demand surge.

Carriers find it challenging to sell aging equipment, particularly the 50% of containers they own, as the 2nd-hand market is saturated. 

The average resale price for a 40ft high-cube container has sharply fallen from $4,132 in October 2021 to just $1,005 in October.

This situation underscores the industry's vulnerability to global events, emphasizing the importance of strategic planning and adaptability to respond to fluctuating demand and market conditions.