Could a return to the Red Sea turn a market dip into a crash? Global freight rates are forecasted to slide 16% y-o-y in 2026 — marking two consecutive years of declining rates. We recently sat down with Simon Heaney, container industry analyst at London-based maritime consultancy Drewry, to test the waters.

ENTERPRISEAM: Everyone is watching the order book, but rates remain elevated. What is masking the influx of tonnage right now?

SIMON HEANEY: Overcapacity in the market is being hidden by disruptions — excess supply growth has been buoyed by slower steaming, port congestion, and the Red Sea diversions.

ENTERPRISEAM: If we assume a normalization of the Red Sea route in 2026, does the floor fall out?

SIMON HEANEY: We anticipate a substantial drop in freight rates — and carrier earnings — as those disruptive factors unwind. The drop will factor into carriers’ decisions on how they want to release capacity into the market through going back through the Suez Canal. The speed of return to the Suez Canal will impact the market’s ability to be shielded from the level of overcapacity.

ENTERPRISEAM: Is this purely a supply glut, or is the demand side also softening?

SIMON HEANEY: It is a compounding effect. We forecast supply remaining higher than demand — which is expected to tumble next year as inflation hits consumer confidence and the “front-loading” of cargo from 2025 fades out.

ENTERPRISEAM: How much of this new capacity is already locked in?

SIMON HEANEY: This is the third year in a row of record deliveries — driven by orders placed in 2021 and 2022. While new orders slowed slightly in 2023, hitting the water now is unavoidable.

ENTERPRISEAM: Do carriers have any levers left to pull to stabilize rates?

SIMON HEANEY: The only thing that could change the direction of this would be a structural effort to cap market capacity — but that’s unlikely. There is going to be an uptick in scrapping, more idling of ships, and a continued slowing down of ships.

Tags: