Bimco upbeat about ship recycling

The industry trade group for shipping, Bimco, expects twice as many ships to be recycled in the coming decade than in the past 10 years.

The forecast comes as recycling of bulkers, tankers and container ships has dropped to the lowest level in 20 years. During the first quarter of 2024, only two million deadweight tonnes (DWT) ship capacity were recycled. According to Bimco, this marks the ninth consecutive quarter with recycling levels below three million DWT.

The last time recycling was this low for a prolonged period was before the 2008 financial crisis. 

20-year low

‘A combination of strong demand following a series of market shocks and low orderbooks have kept older ships operating for longer than usual,’ Bimco’s Filipe Gouveia writes on the organisation’s website. He adds that bulker and tanker newbuilding deliveries have also reached the lowest levels in 20 years.

Gouveia points out the current security situation in the Red Sea has boosted demand for ships. ‘A larger number of ships is needed to transport the same amount of cargo as sailing distances increase when ships reroute via the Cape of Good Hope.

‘During 2022 and 2023, sanctions on Russian oil and coal exports had a similar and lasting impact on the tanker and bulk sectors. Also, changed consumer behaviours during the Covid pandemic caused a spike in container demand.’ 

Container growth

Gouveia believes some indicators point to stronger fleet development. In the container sector, the newbuilding delivery record from 2023 is expected to be broken in 2024. ‘In the tanker sector, recent increases in newbuilding contracting will cause deliveries to rise significantly in 2025 and 2026 while cargo volume growth could remain low.’

Bimco says ship recycling will ‘inevitably rebound’ in the coming years. ‘The ships that would have been recycled if the Cape of Good Hope rerouting had not been necessary, will likely be recycled soon after the situation is resolved,’ Gouveia concludes.

‘Despite this short-term lull in recycling, we still expect that more than twice as many ships will be recycled between 2023 and 2033 than were recycled during the past 10 years.’