Container ship demolition triples in 2016

Demolition of container ships has almost tripled in the first five months of 2016 in comparison to the same period in 2015, according to a report by the Baltic and International Maritime Council (Bimco).

A total of 150.863 TEUs of panamax ships have been demolished so far in 2016, which equals the total number of ships scrapped from June 2014 up to and including December 2015.

“This illustrates the efforts carried out by ship owners to counter the fundamental imbalance between supply and demand under poor container shipping market conditions,” said a spokesperson for the shipping association. “However, more needs to be done to lift the charter market.”

The higher demolition in the panamax segment could be attributed to the opening of the new locks of the Panama Canal last month, rendering panama vessels redundant. This will soon allow neo-panamax containerships with a maximum beam of 49m to pass through.

“Throughout 2016 very poor market conditions stemming from excess supply have triggered higher demolition activity,” says Bimco chief analyst Peter Sand. “Given the stubborn growth of global demand, increased scrapping is the way to diminish the gap between supply and demand in the containership market.”

Bimco has raised its forecast for containership demolition from 250 000 TEUs to 400 000 TEUs for the whole of 2016.

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