The main volume shipping markets are under pressure, so it's no surprise that owners have turned to vessel recycling for a spot of therapy. After relatively little in the way of demolition sales during the boom of the mid-2000s, the last few years have seen a significant return to the scrapping of surplus tonnage. Scrap Happy? Following the years 2004-08 when the annual total of vessel demolition averaged just 8.2m dwt, the downturn of 2009 saw a significant return to ships hitting the beaches, with a total of 31.9m dwt scrapped. In 2010 the rate slowed to 25.5m dwt, before increasing to 40.8m dwt in 2011. In the first 11 months of 2012 the total has already topped that, reaching 52.3m dwt, on course to be the largest annual total on record. However, that’s not to say that the impact has necessarily been uniform across the sectors; the level to which this has offset record levels of deliveries (163.5m dwt in 2011 and 144.4m dwt in the first 11 months of 2012) has varied.
Tanker Therapy
In the late 1990s and early 2000s, the tanker sector led the way in scrapping as the old single hull ships were sold for demolition to make way for new double hull vessels. Tanker demolition averaged 16.6m dwt per annum between 1998 and 2003, accounting for 60% of all tonnage demolished. In the year to date, however, total tanker tonnage sold for demolition is a smaller 11.4m dwt, accounting for 22% of the total. This equates to 37% of year to date deliveries.
Bulker Bulge
In comparison, it has been bulker demolition which has recently caught the eye. As owners have sought to mitigate rapid supply growth, bulker scrapping has accelerated and in the year to date bulker demolition has reached 31.3m dwt, 60% of the total. However, in terms of incoming deliveries to the bulker sector that only equates to 34%. Helpful treatment, but not much different from the tankers.
Containing the Growth
Bulkers and tankers account for the majority of scrapping this year, but the containership sector has also played its part, as scrapping has accelerated to close to the record levels of 2009. 4.2m dwt of boxships have been scrapped, and again this is equivalent to around a third of deliveries (30% to be precise). However, there's one area where the demolition is more than offsetting deliveries. In the Panamax size and smaller, this year's demolition equates to 1.85 times deliveries in TEU terms and the fleet is shrinking. It may not be high profile but it's doing the trick.
Seeing the Shrink?
So, although there's wide variation between the absolute volume of demolition sales, interestingly the impact in terms of offsetting deliveries is about the same in each of the main sectors, at about one third of deliveries this year. However, if it's a shrink you're looking for you can still get therapy down at the beach with the small boxships. Have a nice day.