Consultancy Linerlytica has warned that over the next four years, container shipping will need to recycle as much capacity as it has over the past 25 years, while shipbroker Braemar has raised concerns about limited scrapping capacity.

With newbuilds flooding the market, an increasingly top-heavy sector will require the demolition of 4.5 million TEU by 2030, but shipyard capacity constraints are expected to hinder this process.

In its weekly report, Linerlytica stated that rebalancing the market would require container ship scrapping in the next four years to match the cumulative levels seen in the past quarter-century. “The rapidly expanding orderbook will have to be offset by a sharp rise in demolition, with at least 4.5 million TEU needing to be removed by 2030—the equivalent of the past 25 years’ scrapping total.”

Recent low scrapping activity has not helped the situation, with only about 12 ships (a total of 8,465 TEU) recycled this year.

“Container ship recycling is set to collapse in 2025. Sales for scrap have become so rare that every deal is now an event,” Braemar researcher Jonathan Roach wrote in this week’s Braemar market report.

By 2025, the average scrapping age of vessels is expected to rise from 23–24 years to 28 years. Braemar estimates that only 0.09% of fleet capacity will be removed this year, compared with a five-year average of 1.6%. The last similar downturn occurred in 2021–22. In more “normal” years since 2010 (excluding 2021/22 and 2025), average annual demolition stood at around 210,000 TEU.

According to Braemar, container ship scrapping peaked at 670,000 TEU in 2016, while the 2012–2017 average was 410,000 TEU annually, or roughly 150 ships per year.

Data from Dynamar shows that between 2014 and 2024, container trade volumes grew at an average of 2.2%, while capacity expanded at 5.6%.

“To restore balance, if container ship capacity had grown at the same pace as cargo, the fleet at the end of 2024 would stand at 23.4 million TEU, rather than the actual 32.4 million TEU,” said Dynamar analyst Darron Wadey.

This implies that 9 million TEU would need to be removed to maintain “mathematical balance”—a staggering gap.

Adding to the complexity, supply chain disruptions have created demand for additional buffer capacity. Hapag-Lloyd CEO Rolf Habben Jansen noted in a recent webinar that carriers require spare tonnage to handle unexpected events, which have become a near-constant feature this decade.

The World Bank estimated that 5–6% of the global fleet was idled last year due to disruptions. Even at the higher 6% figure, this still means net available capacity is outpacing cargo growth by 0.7%.