International shipping organization BIMCO [ds_preview]is positively surprised by the scrapping level for container vessels in 2016. 500,000 TEU of recycled capacity would be a push in the right direction, it says.
BIMCO’s Chief shipping analyst Peter Sand comments: »The demolition activity in the last three months’ surprised BIMCO positively and it exceeded our initial expectation based on the appalling 2015 demolition activity«.
For him it is important that the demolition of excess capacity comes sooner rather than later, as there is still a huge delivery schedule hanging over the container shipping industry for the rest of this year and well into 2017-2018. However, the high demolition activity would currently be softening the net supply growth rate of the container shipping capacity and will prevent a darker outlook for the years to come, if maintained.
According to BIMCO, so far 500,000 TEU have been scrapped, this is 4.2 times more TEU than the scrapping activity for the same months in 2015. With the last 3 months accounting for more than 41 % of the total demolition in 2016, the activity is picking up and is primarily generated by the Panamax container ships. The demolition of Panamax containerships in TEU accounts for 47 % of the total demolition in 2016, while TEU scrapped from Intermediate and feeder containerships account for 30% and 23% respectively. The demolition of Intermediate container ships has had a great return from only being scrapped one month in 2015.
»The demolition of Intermediate containership is a strong signal, for the measures taken in the container shipping industry, as they generally are bigger and younger than the Panamax and Feeder containerships«, BIMCO states. The high level of scrapping comes in the aftermath of the organization reporting the lowest level of newbuilding contracts in 20 years, were container contracts, based on CGT, were down 84% for the first 8 months of 2016 compared to the same months in 2015.
Peter Sand adds: »The events in 2016 have shown, that the tools to turn the container shipping industry around are being used and are working. The recommendations to consolidate fleets and demolish ships are being taken serious within the industry«.
