You probably didn’t notice it while running errands last weekend, but the vast global network that moves foreign-made boxer shorts and Bluetooth headsets to your neighborhood store is experiencing a major malfunction. Last week, South Korean shipping company Hanjin, the world’s seventh-largest container line, filed for bankruptcy after failing to reach an agreement with its creditors to alleviate its $5.37 billion in debt. This has left 85 of the 97 container ships the company operates literally stranded at sea, as ports refused to admit them for fear that stevedores and tugboat crews won’t be paid. Even if the situation is resolved soon, the unprecedented mess is an ominous indicator about the state of global trade.

“Ships get arrested on occasion, and container companies have gone bust in the past, but the difference here is a matter of scale,” says James Baker, editor of Containerisation International, a publication of the British shipping journal Lloyd’s List. “We’ve never seen such a larger line go down so comprehensively in such a large way.”

These “ghost ships,” which typically carry crews of about 15 to 25, are now starting to run low on food and water while the company’s managers scramble to find a solution. Arrest orders have been filed for Hanjin ships in Sydney and Singapore as creditors try to recover unpaid bills. Hanjin announced this week that it would spend about 90 million dollars, with more than a third of that coming from its chairman’s personal assets, to help resolve the disruption, but that sum still falls short of what it will take just to unload the cargo currently on its vessels; the South Korean government may have to step in with more financing. The company’s lawyers are tying to arrange legal cover in dozens of countries for the ships to dock. A U.S. judge agreed on Tuesday to bring the company under the umbrella of U.S. bankruptcy protection, allowing ships to dock in the States without the company’s assets being seized. But the cargo on those ships, including toys, tires, clothes, and computers, probably won’t make it to stores, since railroads and truckers don’t want to touch Hanjin containers without guarantees they’ll be paid. Most of the vessels are sitting offshore of major ports, awaiting instructions.

While Hanjin’s bankruptcy has stranded boats and roiled boardrooms, consumers probably won’t notice the effects of the mess. “I don’t think the shelves are going to be empty at Christmastime. It will get sorted,” says Baker. Hanjin’s competitors will be more than happy to swoop in and take the business Hanjin vacated. Share prices for South Korea’s other major shipper, Hyundai Merchant Marine, soared last week, and other lines have assigned vessels to pick up Asian cargo in the wake of Hanjin’s collapse.

As for the ships themselves, some are merely operated under charter by Hanjin and will revert back to their original owners. Those that are actually owned by the company will be sold off. Which means that the shipping industry’s biggest underlying problem—overcapacity—isn’t going away.

Essentially, the global supply of ships has been growing much faster than the amount of goods that need to be shipped. According to a Moody’s analysis published in June, global container-ship capacity grew by 8.6 percent in 2015, a year when global trade grew by only 2.6 percent. Despite low demand, companies continue to order ever-larger vessels. Shipping capacity is measured in “twenty-foot equivalent units” with the largest ships able to transport more than 18,000 TEUs. In the 12 months through May 2016, the number of these ultra-large vessels increased to 37 from 22. The next class down, 14,000 to 18,000 TEUs, increased from 51 to 70. Larger ships are far more efficient and drive down the rates that their operators can afford to charge manufacturers, which has led to a race to the bottom: Supply now vastly outstrips demand, and shipping rates are sitting at all-time lows.

“It’s very much a commoditized industry. A box is a box is a box,” says Moody’s analyst Maria Maslovsky. “It really doesn’t matter from a customer perspective who moves it as long as it’s reliable. So for the container liners, the primary thing is to provide reliable service. There’s this ongoing race to keep the fleet young and large, which doesn’t help the capacity issue.”

How did we get here? “Hubris and ego and insanity in the shipping industry,” says Baker. “It happens over and over again, cycle after cycle. Thus it was and ever will be.” The arms race was ignited by wildly optimistic global trade forecasts made in the waning days of the global recession, notably by Denmark’s Maersk, the world’s largest shipping company. What they didn’t count on was China’s recent economic slowdown. “We had a generation of people working in shipping that have lived under the China effect,” says Baker, referring to the years when the country’s construction boom and skyrocketing manufacturing sector kept the global commodities market humming. “To a large degree, everyone thought it would remain like that.”

There’s also the impact of the recent improvements to the Panama Canal. The locks of the canal, originally built in 1914, used to limit the size of ships passing through it to so-called Panamax size—about 3,000 to 5,000 TEUs. But the recent expansion of the canal has spurred companies to build newer, bigger, neo-Panamax ships.

Not surprisingly, the global shipping slowdown is cause for alarm in Panama, which spent $5.25 billion on the canal retrofit, a plan approved more than a decade ago under very different global economic circumstances. Egypt has also spent more than $8 billion, raised by selling investment certificates to cash-strapped citizens, to improve the Suez Canal, a nationalist project promoted by President Abdel Fattah al-Sisi.* Traffic through the canal has dropped since its expansion. Then there’s the ongoing speculation over a troubled Chinese project to build a second Central American canal in Nicaragua, which is looking less likely to actually happen by the day. “I don’t think Nicaragua will ever happen,” says Baker. “I’ve joked that if it opens in my lifetime I’ll swim the length of it.”

As for the shipping industry’s woes, the obvious solution would be to just scrap a large amount of capacity, giving more business to the dystopian ship-breaking yards on the coast of Bangladesh. Scrapping is increasing, but companies are still reluctant to do this, since iron ore prices are also low due to China’s slump. It’s cheaper to let the ships float rather than melt them down, so at the moment many companies are simply having them do nothing. A record 352 500+-TEU ships are currently sitting idle around the world. An estimated 25 percent of the world’s container capacity sit empty.

The Hanjin situation also raises the question of whether more companies will follow. Baker says a cascade effect from the bankruptcy is likely but that it certainly isn’t the only company in trouble. “The next big issue is Japan,” says Baker. “They have too many shipping companies for their own good and far more than needed.”

Shipping, as an industry, isn’t going anywhere, of course. Nearly 80 percent of the world’s goods and commodities still travel by ship. “The way the global economy is organized now, most of the goods are not produced in the place where they’re consumed, so they need to be moved, and ocean shipping is the most cost-efficient way to do it,” says Maslovsky. “But I think the overcapacity is something that will persist for some time. I don’t think there’s a quick and easy fix for it.”

For the time being, hundreds of ships will continue to sit idle on the world’s oceans, waiting for something to carry across them.

*Correction, Sept. 8, 2016: This article originally misstated that Egypt has spent more than $8 million to improve the Suez Canal. It has spent more than $8 billion on the project. (Return.)