Container demand has been more resilient than expected this year, given the ongoing crisis in the Strait of Hormuz and the market losing six months of Middle East volume—roughly 250,000 TEUs in both directions each month.
This was one of the main talking points at a webinar organized by global container shipping line Hapag-Lloyd, with CEO Rolf Habben Jansen among the speakers.
The ZIM Bid
But first, Hapag-Lloyd’s attempted takeover of ZIM Integrated Shipping Services.
The proposed $4.2 billion cash purchase has faced strong opposition in Israel from ZIM’s workers and government officials, who argue that it undermines national security by transferring a national shipping company to a foreign operator.
According to media reports at the end of last month, regulators terminated a review of the deal, declaring the proposed framework no longer valid.
Asked by AJOT to provide an update on the bid, Jansen replied:
“The situation is known to most people. We have closed the merger agreement with them [ZIM] that has been supported by their shareholders.
“We are now going through the regulatory approvals. I think there were reports about two weeks ago that the review in its current form was halted. This was what we expected, and we have asked for a little bit of room to file several amendments, which will happen in due course. We hope to get the approval [of the bid] ideally before the end of this year, but I would not rule out that it takes a little bit longer.”
‘Demand Very, Very Robust’
Turning to a review of the year so far, Jansen highlighted that after a not-so-good first quarter, the last two quarters had brought positive change.
“The market has been very volatile. There’s been a lot of disruption, of course, because of all the events, and not only in the Middle East. But we’ve seen demand being very, very robust. Not only in US trade, but also in places like Africa and Latin America.
“We come from a world where [traditionally] trade barriers were very, very low and a lot of [freight] flows were actually quite optimal. But if you look at the markets these days, with all the trade barriers and tariffs, people need to find more creative ways to keep goods moving, and this actually is triggering quite a lot of additional traffic. And it’s only the beginning of this pattern. Looking to next year, we’re probably going to see more of it.”
Market ‘Falling Off a Cliff’?
Quizzed on the heavy order book for new container ships and whether this will lead to significant overcapacity in the coming years, Jansen replied:
“The order book is bigger than it has ever been, but a couple of things need to be kept in mind here. One is that the current fleet is aging and scrapping is definitely going to go up, even though we can debate about the pace of it.
“Secondly, if you look at the order book today, where traditionally it used to cover two, two-and-a-half years of deliveries, nowadays it’s more like four, four-and-a-half years. If you order a ship today, you will get it by 2030. So, that’s something to bear in mind. And then the last thing is, the [rate of] growth, especially on some of these dominant trade legs, between the middle of 2023 and now, has been about 25% over that time span, which is unbelievable.
“If you combine this with some of the [operating] inefficiencies that we now see because of trade barriers and tariffs, one can certainly not rule out that we’re going to see another couple of years of pretty decent growth.
“So, do I think that the order book is a bit too big? Yes. Do I think the market is going to fall off a cliff [because of it]? Right now, no. I don’t see that. But, of course, if we continue to predict that the market is going to fall off a cliff, like many people have been doing for the past five years, at some point in time, they will be right. But to repeat, I don’t see that around the corner just yet.”
More Traffic Through Suez
As evidence of the buoyant demand currently, Jansen pointed to “a lot more traffic” going through the Suez Canal in the last few months, which has meant quite a bit of capacity being made available again.
“Yet we still see that ships are chock-a-block full and overbooking at levels we have not seen for quite a long time, even post-Golden Week.”
Outlook for 2027
Turning to 2027, Jansen said that while the order book looms large, deliveries, especially at the beginning of the year, are not going to be all that significant. However, they will increase in the second half of the year and especially in 2028 and 2029.
“As to the challenges we see today around Hormuz, I fear they will not be solved from January 1. A good deal of capacity that was stuck, so to speak, by going around the Cape of Good Hope has, in the meantime, been put back into the system, and idling is still very, very low.
“So, if demand grows at the pace we have seen so far this year, then, in my view, the first six to nine months of 2027 actually look quite OK. What happens beyond that is very difficult to call. This industry has always been cyclical, and if you look at when there will be a peak in new ship deliveries—2028 and 2029—certainly more capacity will be coming onto the market at that point, but probably not everywhere.”
