SIMIC

THE long-awaited surge in demolition sales has failed to materialize despite weak demand from shippers and falling freight rates, reports The Maritime Executive, Fort Lauderdale, Florida.
While there has been some selective weeding out of ships, sales to scrappers remain below expectations and especially in the containership sector hit hardest by the falling rates and beginning to see a surge in the delivery of new capacity.
"Demolition sales have increased at a slower pace than anticipated in the first months of 2023," wrote analysts at Alphaliner in their recent report on the market.
Despite a rise in the number of idle vessels, they cite continued high charter rates and the strength of the secondhand market as factors continuing to delay the anticipated increase in containerships being sold for recycling.
Calculating sales year to date, Alphaliner reports that only 28 containerships have gone for scrap so far in 2023. Owners are not rushing to dispose of ships, with the data showing the average age remains high at 28 years. Among the leading sellers, MSC has been the most active to clear out old tonnage selling three 1980s vintage ships. Other sales are coming from vessels built in the 1990s.
Equally telling is that owners are not rushing to dispose of larger capacity vessels, despite the current overcapacity on many routes and the increase in the number of idle ships.
Alphaliner reports only 48,555 TEU was sold in total so far in 2023 with the ships ranging from a capacity high of 6,572 TEU to a low of just 591 TEU. The bulk of the sales (80 per cent) came at the smallest end of the capacity range between 1,000 and 2,000 TEU.
The anticipation was that 2023 would reverse the trends of the past few years.
The bottom fell out of the demolition market in 2021 and 2022. Alphaliner calculated that just 16,500 TEU was sold in 2021 saying it was the lowest level in at least six years. In the second half of 2021, just four containerships were sent off for recycling and all of them were among the smallest ships with individual capacities of under 1,000 TEU.
Alphaliner expected a market rebound in 2022 saying that approximately 60,000 TEU would be removed from the sector with the expectation the rate would rise higher in 2023.
However, with market demand, secondhand sales, and charter rates remaining at peaks for most of the year, Alphaliner reported the market fell to a new low far from its beginning-of-year forecast. Just six containerships went for scrap in all of 2022 with a total capacity of 10,600 TEU they calculated.
The demolition market is up from 2022 when no containerships were sold for recycling during the first eight months of the year, but it is not meeting projections.
Forecasts were that when Wan Hai in December 2022 announced the retirement and tender for scrap of 10 ships built in the 1990s it would be the beginning of a broad culling of fleets, which has simply not happened.