The container ship sector may be pretty rough next year as new supply continues to enter the market, shipowners say.

Because owners engaged in an ordering frenzy during the pandemic-driven boom years of 2021 and 2022, the boxship orderbook has swollen to 26.6% of the global fleet and is set to be delivered by the end of 2025, Euroseas chief executive Aristides Pittas pointed out.

“Therefore, 2024 will probably be quite a difficult year,” he said on Thursday during an earnings call with analysts.

“Market conditions will remain challenging as [charter] rates may decline even further towards the lowest point of the cycle due to the second consecutive year of substantial fleet expansion.”

Controlling overcapacity and vessel speed may ease downward pressure on the market, he said, but inflation and geopolitical strife in Ukraine and the Middle East are causing enough macro uncertainty to prevent the sector from rising.

“Slower speeds are expected to play a key role going forward in absorbing some of the excess tonnage,” Pittas said.

“Economic developments amidst the two wars remain very uncertain.”

Clarksons Research’s assessment of average container ship earnings has fallen to nearly $17,400 per day on Friday, from more than $24,400 per day at the beginning of the year.

The Freightos Baltic Index for spot container freight has fallen by 20% since the end of August to just over 1,000 points on Thursday.

The index has improved since July, but is 80% below its peak in January 2022 to meet its pre-Covid 10-year average, according to Pittas.

“Despite our expectations for the poorer market next year … we believe that we are largely insulated from developments in the charter market during 2024 due to our contracted revenue backlog of more than $400m, which we have developed during 2021 and 2022,” he said.

A double whammy of macroeconomic and geopolitical uncertainty and seasonality may also hurt next year’s market, said Tom Lister, chief commercial officer at New York-listed owner Global Ship Lease (GSL).

“Macro uncertainty continues to exert downward pressure on market sentiment and the liners are providing cautious guidance, though they do so with significantly fortified balances,” he said in a conference call with investors.

Executive chairman George Youroukos said GSL was able to weather a down market in the third quarter by quickly finding new charters for its ships, but the market might not be as prosperous in 2024 as a result of the challenges.

“Market rates are softening and the charter durations available have shortened considerably, especially for smaller ships,” he said.