Indonesian workers use blowtorch to dismantle ship for scrap metal in north Jakarta CREDIT: REUTERS
A record number of container ships have been scrapped this year as owners battle a perfect storm of vast overcapacity and rock-bottom freight rates.
So far this year 147 vessels have been sent to the shipbreakers for their steel to be recycled, new data from Braemar ACM shows.
The scrapping spree has taken ships with the capacity to carry a total of 507,000 shipping containers – known as twenty-foot equivalent units or TEUs, the unit of measurement used in the industry – out of the global fleet.
The largest and most modern container ships coming into service are capable of carrying more than 16,000 TEUs.
In 2015 just 185,000 TEUs were removed from the fleet and this year’s level has already beaten the previous record in 2013 when 427,000 TEU of capacity was lost.
Shipowners had held off from scrapping ships as steel prices have been low for a long time, but the new, more efficient and larger ships coming on to the market appear to have driven many to take the plunge.
The shipping crisis has already sunk shipping giant Hanjin. A flood of new vessels entering the global fleet has exacerbated overcapacity at a time when global trade is slowing. The South Korean shipping line – the world’s seventh largest – went into administration in August, while last week Japanese group NYK took £1.5bn of writedowns on the value of its ships.
Jonathan Roach, analyst at Braemar, said: “We’re expecting 700,000 TEU of capacity to be added this year and with between 5pc and 6pc of the global fleet idle the industry is in a very difficult place. It’s likely the industry will see consolidation next year as larger players take advantage of their size over the smaller lines.”
Source: the telegraph. 8 October 2016