Containership demolitions accelerated in 2009 in response to a downturn in demand, and the current market conditions may also potentially lead to an increase in demolitions. Currently almost 3% of fleet capacity is over the age of 25 and 6% over the age of 20 and moving towards a suitable scrapping age. Should this capacity be scrapped, however, it may potentially represent the departure of a number of owners from the market.
Who Owns What?
To examine where future scrap tonnage may potentially come from, the Graph of the Month splits the fleet over the age of 20 into 4 categories related to the size of the vessel owner’s fleet.
Of the 36 “large” owners who own boxship fleets with a total capacity greater than 100k TEU, there are 21 owners (58%) who own vessels over the age of 20 years. These vessels number 201 of a combined 0.45m TEU, 4% of this owner group’s total fleet capacity, and 52% of all capacity over 20 years of age.
Comparing this to 20+ year old ton-nage belonging to “small” owners (fleets with a total capacity of between 10-50k TEU), 10% of their total fleet capacity is over the age of 20; 126 vessels of 0.19m TEU (22% of the 20+ year old fleet). This capacity is spread between 27 owners, out of a total of 80 “small” owners.
Meanwhile, 19% of the combined fleet capacity of the 481 “smallest” owners (fleets of 10k TEU or less) is over the age of 20; 300 ships of 0.19m TEU (21% of all 20+ year old boxships). As such, it is clear that the fleet share of aged capacity is imbalanced between owners, and thus demolitions would impact the fleet size of smaller owners significantly more than that of larger owners.
Just One Ship:
The graph also splits the ‘aged’ capacity of each owner group one step further, showing what proportion of the owner’s fleet is over the age of 20. No “large” owner has a fleet of which 50% or more of the capacity is over 20 years of age. However, if you compare this to the “smallest” owners’ fleet, 62% of their 20+ year old capacity belongs to owners with no vessels under 20 (and 27% for “small” owners), illustrated by the white bars. Furthermore, of the 203 “smallest” owners with ships over the age of 20, 124 of these owners (57 charter owners and 67 operator owners) have only a single ship, thus just one demolition means withdrawal from boxship ownership altogether.
As a result, although 6% of the capacity of the global fleet is over the age of 20, a significant amount belongs to small owners who would have to forego boxship ownership to be part of a concerted scrapping effort. The impact of this on the ownership structure of the boxship fleet may potentially be severe. 19% of all boxship owners lie within the white bars on the graph, while 18% of all owners lie within the white bars and only own one vessel. Whether this potential consolidation of ownership is a positive or negative is open to discussion, but it does appear that consolidation could be an immediate impact should weak market conditions and “cascading” force scrapping to accelerate.
Source: Shipping Intelligence Network. By Mr Hashim Abbas. 24 November 2011http://www.clarksons.net/markets/feature_display.asp?section=&news_id=32072&title=Demolition%3A+A+Threat+to+the+Owner+Pool%3F