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Scrapping of older ships is on the rise: Will it be enough to support freight rates? |
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Wednesday, 30 September 2009 |
 As was the case during the early months of 2009, the freight market is dictating shipowners’ mood – together of course with scrap prices – regarding the pace of vessels heading for demolition. With the Baltic Dry Index (BDI) on a subdued mode during the past couple of months, it seems that more and more owners are realizing that in order to
provide their new building vessels a fighting chance, they will have to
scrap their ageing counterparts.
This appllies for almost all major
segments of the shipping industry, with dry bulk carriers and
containerships taking the lions’ share,
although tanker owners are
increasingly interested in scrapping their older ships, given that from
2010 single-hulls will be altogether abolished from international
waters.
As a result, according to newer figures from Clarksons, a total of 590
ships were scrapped from the beginning of the year and until the end of
August. These vessels represent a total capacity of 18.1 million tons,
while their average age is also quite younger than the relevant ships
scrapped last year. in fact, during the whole of 2008 the number of
ships demolished had reached just 385 units with a capacity of 13.6
million tons. Most of them were scrapped during the last quarter of the
year, when the shipping industry came face to face with one of the
worst crisis of its recent history, as a result of a halt in global
trade.
The average vessel age of each ship scrapped last year was 30.5 years
during 2008, while this year this number has dropped at 29 years (for
all ship types). For 2009, the average age is at just 25.3 years for
tankers and 30.5 years for dry bulk carriers. The increase of scrapping
activity comes as no surprise to most industry analysts, as this was
expected regardless of the state of the freight market. With the world
orderbook for most ship types near record levels, it was obvious that
older ships would have to leave the market eventually. The collapse of
the freight market, which commenced about a year ago, simply speeded
things up.
Today, industry analysts and brokers are saying that should the pace of
scrapping is maintained until the end of year, the market could get a
breathing, as this trend will manage to offset the expected increase of
newbuilding deliveries. According to latest reports, scrapping has
continued vigorously during September as well, but it seems that
container ships are taking the helm this time with 510,000 dwt sold for
demolition, most of them by Maersk. In the dry bulk segment, it is
estimated that 285,000 dwt have left the market, while in the wet
market, the figures are just 140,000 dwt. But, as the month ends, more
data will become available. In terms of prices, naturally they have
been lowered, due to increased demand by ship owners, leading them
downwards by approximately 10% against the previous weeks.
Nikos Roussanoglou, Hellenic Shipping News Worldwide
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