2016 Sees Record Year for Container Ship Scrapping

2016 is reported to have seen a record amount of container ship capacity sent for demolition.

2016 saw a record high volume of container vessel scrapping, with information from Clarksons showing that close to 600,000 TEU of boxship tonnage was sent for demolition during the January to November period.

Further, the average age of vessels sent for demolition is noted to have been 18 years in 2016, compared to 24 years in 2015.

Of all container ship segments, classic Panamax is reported to have seen more scrapping than any other segment, a development attributed to limited employment stemming from changing trading patterns.

"The scrapping of such young ships is a consequence of the disastrous state of the charter market for classic Panamax tonnage," stated Alphaliner, which estimates that a total of 55 Panamax vessels had been scrapped in 2016 as of December.

Dry Bulk Scrapping

Volumes of scrapped dry bulk tonnage is reported to have fallen below expectations for 2016, with Clarksons noting that the equivalent of 28.8 million DWT had been sent for demolition in 2016, compared to 30.5 million DWT for the year of 2015.

"The one disappointment for dry bulk owners may be that the momentum generated in the early part of the year did not persist," scrap buyer GMS was quoted as saying.

"The resurgence of charter rates has seen many units plough their trade for extended periods and some scrap eligible candidates were even passed through dry dock."

Data from Lloyd’s List Intelligence (LLI) shows 2016 saw the average age of scrapped vessels from the dry bulk fleet drop to 24 years, compared to 26 years in 2015, and 30 years in 2014.

Tanker Demolitions

As tanker earnings have largely managed to stay above breakeven levels, levels of tanker scrapping has remained limited over the past two years compared to other segments.

LLI reports that six crude carriers, or 816,592 DWT, and 15 product carriers, or 592,816 DWT, had been scrapped in 2016 as of December, compared to seven crude tankers, or 769,185 DWT and 35 product tankers, or 959,914 DWT, in 2015.

Last month, Dr. Nikos Mikelis, non-executive director of GMS, said 2017 is likely to be "a year of significant decisions that could shape the future of the global ship recycling industry."