Tradewinds – Demolition volumes set to be four times greater than 2011

(Written by Ian Lewis)

12 December 2012 - Demolition activity has rebounded with larger and younger boxships being sent to the breakers.

Containership demolition in 2012 is on course to be nearly four times greater than last year.

Figures from Bimco suggest that scrapping of containerships is expected to touch 300,000 teu by the end of the year, up from a very low level of 77,000 teu in 2011.

It says the demolition of larger boxships has picked up, with 27% of the recycled tonnage having a capacity exceeding 3,000 teu.

That includes the 3,415-teu APL Zircon (built 1989) recently sold to India for $440 per ldt and the 3,074-teu MSC Sardinia (built 1986) for $408 per ldt “as is” Singapore.

Bimco finds that younger ships are being scrapped following the demolition of the 534-teu Ventura I (built 1995), which in January became the first vessel built after 1992 to be recycled.

Since then, 37 vessels of 72,000 teu built between 1993 and 2000 “have fallen victim to the cascading pressure, iron-hard market conditions and sub-optimal trading specifications”.

Two-thirds went to India and two-thirds were under German KG (limited partnership) ownership.

Meanwhile, there remains a steady stream of smaller boxships being sent to the breakers. The Zodiac-owned, 1,742-teu Santa Monica (built 1991) has reportedly fetched $355 per ldt with delivery “as is” Greece.

According to Bimco, the demolition data provides hard evidence of the devastating market conditions, “as the ultimate tool to cut capacity is applied to the final frontier.”

It says that “the elevated recycling activity has shrunk the number of vessels in the fleet during the past two months”.

“The poor state of the demand side has prompted owners and carriers to idling and recycling tonnage on a large scale,” said Bimco.

“It improves the supply side of the market balance greatly that 272,000 teu has been demolished already this year, with more to come.”

Bimco warns, however, that the supply of new tonnage in 2013 will continue to grow faster than world trade.