BIMCO: Container Ship Demolition Reaches All-Time High, Exceeds 500,000 TEU

by Ship & Bunker News Team
Tuesday November 8, 2016

In what it calls a "positive surprise" for a struggling container industry, BIMCO Monday said container ship demolition has reached an all-time high, exceeding 500,000 TEU so far this year - approximately 4.2 times more activity than was seen during the same period of 2015.

"The demolition activity in the last three months’ surprised BIMCO positively and it exceeded our initial expectation based on the appalling 2015 demolition activity. 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," said Peter Sand, BIMCO’s Chief shipping analyst.

"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. 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."

The last 3 months is said to account for more than 41 percent of this year's total demolition, with activity largely generated by the Panamax segment, which has made up an estimated 47 percent of the total demolitions so far in 2016.

Scrapping of tonnage from intermediate and feeder container ships are noted to account for 30 percent and 23 percent of demolitions, respectively.

"The events in 2016 have shown, that the tools to turn the container shipping industry around are being used and are working," said Sand, adding: "the recommendations to consolidate fleets and demolish ships are being taken serious within the industry."

The news of a high level of scrapping comes after BIMCO also reported the lowest level of newbuilding contracts in 20 years, with container contracts down 84 percent year on year during the first eight months of 2016.

At the beginning of 2016, BIMCO said it was anticipating 2016 to be "the busiest year on record for shipbreaking" of dry bulk vessels as well.