Ship broker Braemar confirmed today that 57 ships of 110,000 teu had been sent for demolition this year to date, compared to just four ships of 2,750 teu up to 14 August 2022, with an estimated 105 ships totalling 207,000 teu expected to be scrapped by the end of this year.
Braemar’s container researcher Jonathan Roach said this was, “A lot lower than expected,” and put that down to the combined impact of slow steaming, and the expected new carbon charging due to be introduced by the EU in January.
“The relentless pressure from a sustained delivery schedule will increase the need to remove older displaced tonnage. The pace of demolition is very likely to pick up towards the end of 2023 and significantly into 2024 in correlation with the flood of newbuilding deliveries,” said Roach.
The level of newbuildings being delivered was 126 container ships in the first half of 2023 and that is expected to be added to by another 210 vessels in the second half of the year, with a further 381 deliveries slated for 2024.
Braemar reports that Maersk and MSC have been particularly active in scrapping ships to make way for new vessels, “We continue to see healthy activity in the Chartering market with operators around the globe being active despite the slower summertime. Time charter rates continue to show some stability despite an unarguable negative trend. Rates as well as periods are for most segments coming off slow-moving,” noted Braemar.
According to Roach, Braemar is estimating that vessel scrapping will increase next year to around 160 ships with a similar level of scrapping the following year as deliveries of new vessels, particularly with capacities of around 15,000 teu will replace vessels in the 5,100-7,500 teu range.
“There are 145 ships of 880,000 teu that are over 20 years old, in the 5,100-7,500 teu size range compared with just 28 in the size above, 7,500-10,000 teu, and historically the average age for scrapping has been 17.5 years old,” explained Roach.
Generally, the size of container ships correlates to the age of the vessel, with smaller ships being older as the industry has sought to take advantage of cost savings from ever larger ships.
As such the traditional panamaxes, of 4,000-5,099 teu are also in line for a cull with 84 vessels currently over 20 years old and a further 60 ships reaching that age milestone in 2024.
With freight rates in now in freefall, and the global fleet set for a sustained period of newbuilding deliveries the outlook for the demolition market is expected to remain high.
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