25 May 2012

Ship scrapping accelerates, but fails to offset tonnage in market

THE number of containerships sent for scrapping is surging with 69 vessels totalling 124,000 TEU broken up so far this year against 85,000 TEU in all of 2011, Alphaliner reports.

But the growth of the global box ship fleet remains high due to the large number of deliveries. Total deliveries of new ships have reached 621,000 TEU so far this year, compared to only 124,000 TEU scrapped.

Ship breakers are expected to be busy for the rest of the year, with low earnings and a weak outlook for older, less efficient ships driving more owners to dispose of such vessels. More than 200,000 TEU is expected to be scrapped this year, making this the second highest year of scrapping behind the record-breaking 379,000 TEU scrapped in 2009.

The average age of scrapped vessels, which averaged 28 years in the last decade, has dropped to 26 years as a number of younger ships are broken up.

Notably, the 1999 built Ocean Producer, formerly the Norasia Sultana, was sent for scrap this month and the 13 year-old ship set a new record for the youngest containership to be scrapped (excluding vessels damaged by accidents).

Containerships with operational deficiencies or facing costly repairs, including some units that are younger than 20 years, are becoming scrap candidates. Their owners could be tempted to profit from the relatively attractive scrap prices to dispose of them.

MSC has taken the lead in scrapping several of its oldest ships, with 15 vessels of between 900 and 3,000 TEU scrapped so far this year for a total capacity of 35,000 TEU. UASC has sent six of its 2,248-TEU 'A2' class ships, built in 1983 for demolition.

However, the capacity scrapped by these two companies pales in comparison to the new capacity that has been delivered. MSC has already received 13 new ships for 147,000 TEU this year while UASC has also received eight units of its A13 class ships of 13,100 TEU (rated at 13,500 TEU by UASC) since January this year.

Evergreen has scrapped its last two GX-class ships of 3,428 TEU (built in 1986-1988). Six of its chartered 2,868 TEU G-class ships that were built in 1984 have also been scrapped this year and two further ones are to follow. Evergreen is due to receive the five first units of its 35-strong 8,800 TEU L-class newbuildings (rated at 8,000 TEU by Evergreen) between July and October this year.

Source: Sea News. 23 may 2012

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