Container ship scrapping has a hit record of over 500,000 TEU with panamaxes accounting for nearly half that volume according to Bimco.
As container shipping has struggled with severe overcapacity demolition has surged over the last three months accounting for 41% of the total for the year so far.
“The demolition activity in the last three months’ surprised Bimco positively and it exceeded our initial expectation based on the appalling 2015 demolition activity,” said Bimco chief analyst Peter Sand.
“The advance is a push in the right direction, as demolition activity is one of the essential measures needed to be taken to rebalance the container shipping industry.”
In particular the scrapping of panamax containerships surged as the class has been essentially made obsolete by the expansion of the Panama Canal that opened at the end of June. Traditional panamaxes, 3,000 – 5,000 TEU with a beam of not more than 32.5 m, have accounted for 47% of the more than 500,000 TEU containership capacity scrapped this year. Panamaxes as young as 10 years old have been ending up on the beaches in Alang, with over 100 more such vessels idle around the world.
There has also been a sharp rise in the scrapping of what Bimco classifies as intermediate tonnage – 3,000 – 7,999 TEU – but wider than a traditional panamax – accounting for 30% of demolition activity.
“It is important that the demolition of excess capacity comes sooner rather than later, as there is still a huge delivery schedule hanging over the container shipping industry for the rest of this year and well into 2017-2018,” Sand said.
“However, the high demolition activity is currently softening the net supply growth rate of the container shipping capacity and will prevent a darker outlook for the years to come, if maintained.”
So far this year 4.2 times boxship capacity has been scrapped as compared to the same period in 2015.
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