I was under the impression that cargo capacity is currently expanding. Maersk is taking delivery of 11 new ships within the next year and a half: http://theloadstar.co.uk/maersk-refines-fleet-second-generat...

I'm under the impression that both are true. There is overcapacity in the shipping market, which drives down prices. Because prices are low, shippers are investing in ever larger (more efficient) vessels, in order to turn a profit. This in turn leads to more overcapacity, which leads to a drive for even larger and more efficient ships.

It's a type of 'tragedy of commons' situation, where every shipping company is making the right decisions from their individual perspective, but collectively they're driving themselves into the ground.

For me this explains the rise of slow-steaming. It makes a lot of sense in this market because it lowers the cost of shipping a container (less fuel), while simultaneously reducing the market capacity (# of containers / year).

Finally, very few shipping companies make money on the major lines (e.g. China to Europe), because it's pure price competition. They're much more likely to make money in places where they have a 'monopoly' on something: e.g. being the only ship that leaves in the next 3 days, or being the only shipper going to a specific location. For example inter-Africa shipping falls in this category.

An additional detail is also the expansion of the panama canal which allowed more and larger ships to travel through it cutting down the travel time for larger cargo ships eliminating a primary advantage of smaller vessels.

However ironically though, these mega vessels are considered with quite a bit of disdain by many in the industry. This link can provide quite the rabbit hole of information. http://www.supplychain247.com/article/state_of_ocean_contain...

> I was under the impression that cargo capacity is currently expanding

Further exacerbating the problem with the glut of cargo capacity.

Those ships were ordered a long time ago.