The Xeneta Ocean Outlook 2026 – published in October – highlighted overcapacity in container shipping as a key theme for the year ahead – and we are now seeing the different ways carriers will tackle this problem across the world’s major trades.
With a forecast for container demand growth of 3% against fleet growth of 3.6%, the overcapacity headache will get worse for carriers in 2026.
Carriers have demonstrated their ability to manage capacity effectively, but they have some big decisions to make in the year ahead.
Do they manage capacity to keep rates elevated? Do they take a more aggressive approach of maintaining higher capacity levels in a strategy to gain market share?
The answer will be a combination, with different tactics deployed on different trades – which makes life more difficult for shippers in understanding these market dynamics in 2026.
Far East to US – market share over higher rates
Carriers are taking an aggressive approach on the US-bound fronthauls, seemingly targeting market share rather than higher rates.
From the Far East to US East Coast, weekly offered capacity is up 35% compared to a year ago, with a four week rolling average standing at 183 000 TEU.
Container shipping demand was down a substantial 9% year-on-year into the US East Coast in September. Carriers’ aggressive approach to capacity against this subdued demand backdrop means it is no surprise average spot rates are down 53% compared to 12 months ago at USD 2 684 per FEU (40ft container).
Carriers are also taking an aggressive approach into the US West Coast, with blanked sailings in November at the lowest level since mid-2024.
Offered capacity in November stands at 324 000 TEU. This is almost exactly the same as 12 months ago (down just -2%), but importantly it is against the backdrop of falling demand, down 9% year-on-year in August and September.
Again, it is no surprise that carriers’ aggressive approach to maintaining capacity levels in the face of falling demand sees average spot rates down 55% year-on-year after plummeting 32% since 1 November.
Differences between the US coasts
Carriers have taken an aggressive approach on major trades into the US East Coast and US West Coast, but there is an obvious difference between the two – the scale of the offered capacity increases.
Offered capacity into the US East Coast is up 35% year-on-year, but into the US West Coast it is down slightly at -2%.
This can be partly explained by November 2024 coming shortly after port strikes when offered capacity was still recovering – meaning a lower baseline for the year-on-year comparison on this trade.
However, it is also the case that the US East Coast is less exposed than the US West Coast when it comes to US-China geopolitics. 51% of total containerized imports into the US West Coast come from China, but it is lower 24% into the US East Coast, which sees a higher proportion of goods coming in on Far East to US East Coast services arriving from the rest of the Far East
If demand is holding a little stronger into the US East Coast, then it should be more supportive of a more aggressive strategy towards capacity.
Far East to Europe – higher rates over market share
Carriers are taking a different strategy from Far East into Europe, seemingly prioritizing keeping freight rates elevated over market share.
On 25 November, the four week rolling average for offered capacity into North Europe stood at 290 100 TEU, down from a peak of 320 600 TEU in September. This has been enough to see average spot rates increase 40% since 14 October to stand at USD 2 350 per FEU.
This is not an easy situation to read for shippers, because the same logic does not seem to apply on the trade from Far East to Mediterranean where average spot rates have increased 37% since mid-October, despite offered capacity hitting 739 000 TEU in November – the highest since July.
Clearly there is healthy demand on this trade that is allowing carriers to enjoy the best of both worlds – for now.
North Europe to US East Coast – central to carrier’s global strategy
If carriers want to manage capacity effectively one on trade, they either need to demolish, idle or deploy those vessels elsewhere. At the moment the idle fleet remains below 1% and only 5 000 TEU of capacity has been demolished so far this year. Instead, ships are being re-deployed onto new trades, and one of the trades often chosen is the Transatlantic from North Europe to US East Coast.
Demand on this trade is at almost exactly the same level as 2020, yet offered capacity is up more than 50% since 1 January 2020. This demonstrates that the level of capacity deployed by carriers on this trade is influenced by factors beyond the underlying demand.
The Transatlantic often goes under the radar compared to other fronthaul trades, but it is central to carrier’s global strategy. When ocean supply chains are under pressure – such as during Covid-19 or Red Sea Crisis – capacity is removed from the Transatlantic and deployed onto more lucrative trades.
Conversely, when there is overcapacity (such as right now) carriers move ships back to the Transatlantic to protect freight rates on other trades. This is yet another example that a shipper needs to be aware of what is going on in the global container market. Even though they may only ship on a few trades, what is happening elsewhere tends to have knock on effects.
Tactics can change
Carriers will change their tactics as the game evolves – and the more cynical observer may suspect the capacity management on European trades is timed to keep rates elevated as shippers are entering tender season.
If so, there could be a different approach in 2026, with carriers adopted more intensive capacity management on US-bound trades when tender season arrives on the other side of the Atlantic.
That is why shippers entering negotiations for new contracts must understand the carrier tactics influencing these market dynamics at that specific point in time.
2026 may see the tables turn more in the favor of shippers given the overcapacity, but carriers will do all they can to maximize volumes and rates – shippers need to be ready or they risk leaving money on the table in their 2026 freight agreements.
