Demolitions of aging container ships dropped last year to the lowest level in at least six years as high charter rates encouraged owners to keep ships operating, according to shipping intelligence provider Alphaliner.
An estimated 16,500 TEUs of container carrying capacity was scrapped in 2021, down from 194,500 TEUs in 2020 and 655,000 TEUs in 2016, Alphaliner estimates. In the second half of 2021, just four ships were sold for demolition globally, all of which had an individual capacity of less than 1,000 TEUs.
“The red-hot charter market and the astronomical charter rates obtainable have prompted [non-operating shipowners] to retain in their fleets older ships of 20-30 years of age, many of which would have otherwise been recycled had the market turned out differently,” Alphaliner said in its weekly report.
For example, a 20-year-old 2,200 TEU ship was chartered last year at a rate of $35,000/day for a duration of 36 months. In the pre-pandemic era, such a ship would have struggled to get fixed for $9,000/d, the company said.
“These are clearly once-in-a-lifetime opportunities that NOOs could not afford to miss, despite the current attractive demolition prices,” Alphaliner said.
Demolition prices in the Indian Subcontinent were recently at the $560-615 per light displacement tonnage, or weight of the ship excluding all but the water in its boilers, while demolition prices in Turkey were around $340/ltd, Alphaliner said. In both cases the demolition prices were twice as high as June 2020.
Charterers are willing to pay high charter rates because they are still profitable at current spot market freight rates. Platts Container Rate 13 — North Asia to West Coast North America — was assessed at $9,500/FEU Jan. 19, a 210% jump from $1,650/FEU on the same date in 2020.
Going forward, Alphaliner expects container ship demolitions to rebound, but remain low, in 2022 at around 60,000 TEUs, before rising further in 2023 as a raft of newbuildings pushes older ships out of the market.
Kindly like us on Facebook
Discussion about this post