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Demolition of panamax boxships up sharply in 2016: Bimco

Demolition of panamax boxships up sharply in 2016: Bimco
The demolition of containerships almost increased by three-fold in the January-May 2016 period compared to the year-ago period, with scrapping particularly active for the panamax segment, according to Bimco.

The sending of panamax boxships to the scrapyard has been especially significant since the start of this year till the year-to-date. A total of 150,863 teu of panamax ships have been demolished so far in 2016, equalling the number of the same type of ships scrapped from June 2014 up to and including December 2015.

One possible explanation behind the higher demolition in the panamax segment since January 2016 is their potential redundancy due to the opening of the new locks of the Panama Canal on 26 June. The wider canal has allowed neo-panamax boxships with a maximum beam of 49m to pass through.

The higher scrapping activities illustrate the efforts carried out by shipowners to counter the fundamental imbalance between supply and demand under poor container shipping market conditions. However, more needs to be done to lift the charter market.

“Throughout 2016 very poor market conditions stemming from excess supply has triggered higher demolition activity,” said Peter Sand, chief analyst of Bimco.

“Given the stubborn growth of global demand, increased scrapping is the way to diminish the gap between supply and demand in the containership market. Bimco is therefore raising its forecast for containership demolition from 250,000 teu to 400,000 teu for the whole of 2016,” Sand said.