The container shipping industry has been through a highly traumatic few years with huge losses incurred by many of the market leaders.

The underlying problems for the industry have come about fundamentally due to overcapacity in the market and weak global economic growth. At the time of its results in 2017, Maersk commented that market capacity had been expanding by 7-8% while demand was significantly less than that.

This imbalance in supply and demand had serious consequences for the sector, resulting in the bankruptcy of a top ten carrier, Hanjin Shipping. Smaller market players have been acquired by competitors and others forced to go to governments for emergency loans (for instance, Taiwanese carriers Evergreen and Yang Ming).

Rates and volumes now seem to have revived, and Maersk, Hapag-Lloyd and CMA CGM have all suggested that the full year 2017 results will be much better than those in 2016. In 2017, estimates suggest that shipping demand grew by 5% compared with capacity growth of just 3.9%.

Despite this, parts of the market still struggle, and it is likely that there will be further consolidation in the market in the years to come. There are also fears that over-supply may depress rates once more in 2018. Fitch Ratings believes that capacity will increase by 5.5% compared with demand growth of just 4.5% in the year.

One major concern is that there will be a new-build ‘arms race’ as the major carriers vie for market share – CMA CGM has already placed an order for nine mega-ships in September 2017. Shipbuilders are reportedly offering very attractive deals, and cheap finance is widely available.

It is likely in the future that the Chinese carrier COSCO will increasingly challenge European competitors for market leadership, supported by the Chinese government. Following its acquisition of OOIL, it is now the third largest carrier behind Maersk and MSC.

Despite the hopes for continuing global economic growth, there are demand-side worries too. Some economists believe that China will re-orientate itself around domestic investment rather than exports and its government will suppress the flow of easy credit. At the same time as this, many people believe that the Trump administration will toughen its stance on major exporters such as China, Mexico and even Germany, leading to potential trade wars which could have a serious impact on the shipping industry.