Bangladesh: Containership Demolition – Boom Time on the Beaches?
Hellenic Shipping News post on 1 May 2013:
The last quarter of 2012 saw 58 containerships of a combined 114,118 TEU sold for demolition. This surpassed Q3 2009 – in the aftermath of the global financial crisis – to represent the greatest ever amount of capacity scrapped in a single quarter. With a further 43,744 TEU scrapped in January 2013, containership demolition continues at elevated levels, but for how long?
Scrapping in 2012
179 containerships totalling 332,922 TEU were demolished in 2012, making it the second highest year ever for scrapping after 2009, when 203 vessels of a total 379,426 TEU were demolished. Scrapping in 2009 was driven by the global financial crisis, as the 9% contraction in global container trade volumes took its toll, while ongoing charter market weakn-ess largely drove scrapping last year.
As shown on the Graph of the Month, the average size of boxships scrapped last year stood at 1,860 TEU, boosted by the scrapping of 31 3,000+ TEU containerships. This was a significant increase on the 2011 average size of 1,309 TEU, but still marginally less than 2009, when 37 x 3,000+ TEU ships were scrapped.
Younger Scrapping
Last year 52 container-ships of less than 20 years old were scrapped, while the average demolition age was just over 23. In comparison, only one vessel of less than 20 years was scrapped in 2011, while the average age of the 57 boxships demolished was 29 years, as older tonnage was cleared out. The trend for scrapping younger ships looks likely to continue in the short-term, as ten of the twenty ships scrapped in January were less than 20 years old.
Rising Panamax Scrapping
Close to 350,000 TEU is currently projected to be sold for demolition in full year 2013, 46% of which comprised of vessels of 3,000+ TEU. This represents an increasing proportion of ‘Panamax’ vessels in the pool of scrapped tonnage, a shift encouraged by a number of factors.
As the fleet ages (and owners consider scrapping younger ships) more Panamax vessels will become demolition candidates. Exacerbating this, Panamax timecharter are in the doldrums – the benchmark 6-12 month rate for a gearless 3,500 TEU vessel sits at $6,600/day, barely a third of the 1H 2011 average. In addition, the increasing uncompetitiveness of narrow-beam Panamaxes, owing to their relatively high fuel consumption compared to similar capacity wide-beam designs, is likely to encourage demolition. Even if many are still usefully employed, in the longer term, the opening of the expanded Panama Canal will further limit demand for ‘Old Panamax’ style tonnage.
Taking into account container trade growth projections, scrapping levels are currently expected to fall to 0.20m TEU in 2014. However, as the age profile of the fleet evolves, while volumes of demolition will remain cyclical, larger ships look set to in general constitute an increasing proportion of demolished tonnage.
CTG. Ship Breaking 01 (Photo credit: naquib)
CTG. Ship Breaking 07 (Photo credit: naquib)
Jafrabad Chittagong shipbreaking (2) (Photo credit: Wikipedia)
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