Suez Canal return could dent global container ship demand

A potential return to normal Red Sea and Suez Canal routings looms large over the container shipping market outlook, with the shift expected to have a material impact on ship demand and overall market balance in the coming years.

In its Container Shipping Market Overview and Outlook for December, Baltic and International Maritime Council (BIMCO) points to an increased likelihood that carriers may gradually resume Suez Canal transits in the not-too-distant future, a development that could lower ship demand by around 10 per cent.

From January, CMA CGM’s INDAMEX service will fully return to the Suez Canal, while its MEX service will use the canal on the back-haul leg from Europe to Asia.

If these changes prove successful, other carriers may slowly begin adjusting services back to the Suez Canal.

Looking ahead, BIMCO expects supply and demand growth to remain broadly balanced in 2026.

Supply is forecast to grow by 3 per cent, while demand growth is expected to range between 2.5 and 3.5 per cent. In 2027, however, supply growth is estimated to marginally outpace demand, with supply forecast to rise by 3.5 per cent against demand growth of 2.5 – 3.5 per cent.

Overall, the supply-demand balance in 2027 is expected to be slightly weaker than in 2025, while remaining close to 2025 levels during 2026.

A return to normal Suez Canal routings could, on its own, reduce ship demand by 10 per cent.

Moreover, if sailing speeds do not fall as forecast, effective supply could grow by a further 1.2 percentage points per year.

On the demand side, the International Monetary Fund estimates that the global economy will grow by 3.1 per cent in 2026 and 3.2 per cent in 2027.

Growth has so far proven more resilient to the impact of US tariff increases than previously expected.

At the same time, conditions in the global manufacturing sector have improved, with the global manufacturing PMI remaining above 50 over the past four months.

That said, retail sales volumes in the US, the EU and China have grown by less than 2 per cent year-on-year over the past three months, weaker than earlier in the year. US consumer confidence, meanwhile, remains near record lows, reflecting persistent affordability pressures.

Against that backdrop, the likelihood of a return to normal Suez Canal routings has increased further. From January, CMA CGM’s MEX service will again use the Suez Canal in one direction, while the INDAMEX service will return to the canal in both directions.

On the supply side, global fleet capacity is expected to exceed 36 million TEU by the end of 2027.

Capacity growth is forecast to be concentrated in larger vessels, with capacity from ships above 12,000 TEU projected to expand by around 20 per cent, while capacity in the smallest size segments declines.

BIMCO has included 750,000 TEU of recycling in its 2026–2027 forecast, a significant increase compared with the past nine years.

This is expected to help reduce the estimated 1.8 million TEU recycling overhang that has built up over the last five years.

Port congestion increased in 2025 and ended higher than previously estimated, driven largely by congestion at Chinese ports.

Average sailing speeds declined marginally during the year but remained higher than in 2023. Capacity-weighted average sailing speed has so far in 2025 fallen to 14.7 knots from 14.8 knots in 2024, although it remains elevated compared with 14.4 knots in 2023.

As more ships are delivered, carriers are expected to slow vessels further. BIMCO has included a 0.25-knot per-annum reduction in average sailing speeds in both 2026 and 2027.

Should that not materialise, effective supply could grow 1.2 percentage points faster in each of those years.

Assuming a significant increase in recycling of older ships and a reduction in average sailing speeds, average market conditions in 2026 are expected to resemble those of 2025, while 2027 could see slightly weaker conditions.

Ship demand growth is forecast at 2.5 – 3.5 per cent in both 2026 and 2027, while supply is estimated to grow by 3 per cent in 2026 and 3.5 per cent in 2027, according to BIMCO’s chief shipping analyst Niels Rasmussen.

North American import container volumes are expected to contract by 3 per cent in 2025. Negative growth rates are also expected in the first half of 2026, before the market returns to growth in the second half of the year.

Overall, North American import container volumes are forecast to grow by around 2 per cent in both 2026 and 2027.

However, Rasmussen cautioned that risks remain. Up to 70 per cent of US economic growth in 2025 may be driven by AI investments and the wealth effects of rising AI-related share prices.

“Should the AI bubble burst,” Rasmussen said, “it could significantly hurt the US economy with spillover consequences for the world economy and container ship demand growth.”