Ship scrapping fails to offset capacity growth

Global – Even though the number of containerships sent for scrapping has witnessed a surge this year, with 69 vessels of 124 000 TEU broken up by May compared to 85 000 TEU in all of 2011, the on-going growth of the global box ship fleet remains extensive due to the considerable number of new vessel deliveries, independent liner industry consultant Alphaliner has pointed out.

The company expects well over 200 000 TEU to be scrapped during 2012 as a whole – a figure that would render this year the second highest in terms of ship dismantling behind the 379 000 TEU of 2009. But even this figure pales alongside total deliveries of new ships which have already reached 621 000 TEU this year.

The average age of scrapped vessels – put at 28 years in the last decade – has dropped to 26 years because many younger ships are being broken up. A prime example is the ‘€˜Ocean Producer’€™ (formerly the ‘€˜Norasia Sultana’€™), which recently went down in history as the ‘€˜newest’€™ ship received at a scrap yard at just 13 years of age if vessels scrapped prematurely due to damage caused by accidents are excluded.

Moreover, a strong trend line shows that containerships struggling with operational difficulties or vessels facing major repairs are being readily accepted as scrapping candidates, including some ships only on the water since the mid-1990s. According to Alphaliner, an obvious motivation to dispose of these younger units is tempting scrap prices.

Big players like MSC and UASC have put up several of their older ships, averaging approximately 3000 TEU, to be taken apart. But the volumes scrapped by both companies are described as ‘€˜pale’€™ in comparison to the new capacity they have introduced: MSC has already been provided with 13 new ships totalling 147 000 TEU this year alone, while UASC received eight A13 vessels of around 13 000 TEU as of this January.