In a downtrodden market with an excess of ships, owners can afford to be choosey but according to international shipbroking firm Braemar Seascope, an increase in scrapping has meant a return to the trend for early demolitions, with tankers as young as 12 heading for the scrapyard.
Sebastian Davenport-Thomas, Managing Director, Braemar Seascope, recently said: “Demolition is increasing; globally, there were 44 million tonnes sold for scrap last year (80% up on the previous year), which is our highest ever, and I believe we are on course to do a similar amount this year.”
Confirming that these figures show a kind of ‘magnitude’ unseen in scrapping since shipping’s worse period three decades ago, James Kidwell, Chief Executive, Braemar Seascope, said: “I think if you look at demolition trends, relative to the last big newbuilding boom in the early 1980s, the tanker fleet halved back then, so you might argue that the level of demolition now is relatively small compared with 30 years ago. But we are living in a credit crunch and one of the major drivers is that tankers approaching their special survey are being sent for scrap.”
When asked if he believes tankers being sent for scrap are getting younger, Denis Petropoulos (pictured), Braemar Seascope’s Executive Director and Regional Group Director (Singapore), said this is undoubtedly the case: “When you’ve got an oversupplied market you can afford to be quite choosy. The way the market was back in 2007/2008, if it floated, it got fixed and that’s how it was.”
But has Mr Petropoulos seen anything that’s truly shocked him in terms of young vessels going for demolition? “Because I’ve been through this before, I’m not shocked, I’ve seen it before. I remember when I started in broking, hearing a story about a VLCC which was built in Japan, went into layup for two years and then went to the scrapyard. I was a youngster, just learning the ropes when I heard of that. I thought to myself ‘Wow, all that metal, it’s come from Japan, its cost them millions!’ But now, I’ve seen it before and so, it’s not shocking.”
Although Mr Petropoulos sees young demolitions as familiar territory, younger brokers at Braemar have been surprised by this trend. Sebastian Davenport-Thomas again: “If you look at the demolition market, last year I think the youngest tanker that was sold on the VLCC side was 12 years old and while this didn’t shock everyone, it certainly surprised some people in the market who hadn’t been around that long, to see a 12-year-old VLCC get scrapped. Ships may be much younger than 20 or 25 years old before going to scrap nowadays,”
Mr Petropoulos concluded by noting that 12 is quite a rare age for a vessel to be scrapped in the current market, particularly compared to shipping’s struggles 30 years ago: “Though 12 is unusual now, that was the average age of tankers being scrapped in the 1980s, during the worse point in shipping – the average! That number has stuck with me.”
Source: ship management international. 12 June 2013