In 2023, the container tonnage demolition sales experienced a significant rebound, witnessing 87 vessels totaling 167,000 TEU reaching recycling facilities. This marks a substantial increase from the 10,904 TEU scrapped in 2022 and the 16,500 TEU disposed of in 2021, which were record-low years, according to sources.
However, the 2023 demolition figures fell short of expectations, insufficient to counter the surging overcapacity in the container shipping industry. The sector faced a staggering 2.3 million TEU of newbuild capacity entering the waters in 2023, double the amount seen in previous years.
Factors contributing to the limited impact of demolitions include the unexpectedly resilient container market, with vessel owners enjoying steady demand and charter rates throughout the year. Additionally, challenges such as the constrained choice of EU-approved recycling facilities for European-flagged tonnage and a lack of financing for recyclers in Bangladesh and Pakistan have constrained demolition transactions.
Most of the scrapped cellular ships in 2023, totaling sixty units, had capacities below 2,000 TEU. MSC emerged as the most active seller, removing seventeen vessels from its fleet, followed by Wan Hai Lines and the Transworld Group of India.
Looking ahead, industry experts anticipate a sharp rise in demolition sales in 2024, aiming to offset the impact of a massive 3.2 million TEU of newbuild capacity expected to hit the market. Alphaliner projects potential sales reaching 375,000 TEU, approaching levels last seen in 2017.
The industry may witness more scrapping due to the considerable reservoir of scrappable ships, particularly those aged twenty and above. Positive developments in the scrapping industry, including Bangladesh and Pakistan ratifying the Hong Kong Convention and potential EU amendments, could provide a boost to responsible scrapping options.
Notable ships scrapped in 2023 included MSC’s 8,034 TEU vessel, MSC RITA, and three 4,814 TEU ex-Maersk ‘M’ class vessels. The evolving landscape of the scrapping industry, along with the aging of certain vessel types, continues to shape the dynamics of the container shipping sector.
Sources: Alphaliner
