Container Vessels: Return to Suez Canal Looms Large

"Assuming a significant increase in recycling of older ships and a reduction in average sailing speeds, we forecast that average market conditions in 2026 will be like those in 2025 but 2027 could see slightly weaker market conditions. We forecast ship demand growth of 2.5%-3.5% in both 2026 and 2027 while supply is estimated to grow 3% in 2026 and 3.5% in 2027,” says Niels Rasmussen, Chief Shipping Analyst at BIMCO.

 The return to normal Red Sea and Suez Canal routings in the not-too-distant future, however, seems increasingly likely, which could result in a 10% reduction in ship demand. Starting in January, CMA CGM’s INDAMEX service will fully return to the Suez Canal while the MEX service will use the Suez Canal on the back-haul leg from Europe to Asia. If these changes are successful, other carriers may slowly begin to change services back to the Suez Canal.

North American import container volumes are expected to contract 3% in 2025. We also expect to see negative growth rates in the first half of 2026 before the market returns to growth in the second half of the year. We forecast that North America import container volumes will grow 2% during both 2026 and 2027.

“However, up to 70% of US economic growth in 2025 may be driven by AI investments and the wealth effects of AI share price increases. Should the AI bubble burst, it could significantly hurt the US economy with spillover consequences for the world economy and container ship demand growth,” says Rasmussen.

We have included recycling of 750k TEU capacity in our supply forecast for 2026-2027. We estimate that a recycling overhang of 1.8m TEU exists due to recycling during the past five years reaching only 272k TEU. If recycling ends lower than our forecast, we expect that the shortfall will add to oversupply of capacity in the market.

Despite increased port congestion, capacity-weighted average sailing speed has year-to-date 2025 fallen to 14.7 knots from 14.8 knots in 2024. Speeds, however, remain elevated compared to the 14.4 knots in 2023. As more ships are delivered, we expect that carriers will slow ships down and have included a 0.25 speed reduction in both 2026 and 2027 in our estimate. Should that not happen, supply could grow 1.2 pp faster during both years.

“While our forecast indicates mostly stable market conditions, several uncertainties remain. In particular, the possibility of a return to Suez Canal routings looms large over the market outlook. As other supply and demand risks also exist, the coming two years could thus end more eventful than our headline forecast suggests,” says Rasmussen.