Ship Scrapyard Overcapacity

Can Scrapping Container Ships Save Carriers From Overcapacity?


Ship Scrapyard pic by: Ctg4Rahat

This yr has seen file low freight charges due, partially, to overcapacity.

To place it merely, there was far more area on container ships than demand from shippers to fill it.

Overcapacity isn’t a brand new downside that all of a sudden appeared this yr. Overcapacity has been placing downward strain on charges for years now. In reality, 5 years in the past I used to be writing about carriers struggling billions of {dollars} in losses as they confronted overcapacity.

Regardless of this main overcapacity situation, carriers’ megaship craze has accomplished nothing however develop, persevering with to extend capability.

Sure, which means extra downward strain on freight charges and, due to this fact, much less revenue for carriers.

It’s not the perfect time in historical past to be a service within the worldwide delivery trade.

for whom it’s good occasions? Scrapyards.

Based on Drewry Maritime Analysis this yr will see a file excessive in container ship scrapping (by TEUs):

Drewry’s Container Forecaster (June 2016) discovered that, for the primary time, 450,000teu of containership capability is anticipated to be scrapped in only one yr, because the containership sector recognises that there are far too many ships chasing too little cargo (see http://www.drewry.co.uk/publications/view_publication.php?id=312).

Carriers know there’s means an excessive amount of capability on the market for the demand from shippers. When you can’t improve demand, shrink provide. Proper?

Can scrapping container ships save carriers from the overcapacity that’s plaguing them within the worldwide delivery trade?

Scrapping ships actually is a begin, however even eliminating 450,000 TEUs in a single yr isn’t practically sufficient to squash the overcapacity downside. Drewry went on in its Container Perception Weekly, quoted above, to say:

Eradicating 450,000teu of capability this yr, nonetheless, accounts for simply 2% of the present 20-million-teu-strong world fleet of containerships. This can solely make a dent into the over-capacity constructed through the 2010-15 interval, which noticed 4.5 million teu in capability added to the trade globally at a time of slowing demand.

450,000 TEUs subtracted this yr versus 4.5 million TEUs added over the past a number of years? 450,000 from 20,000,000? That’s not a lot of a dent!

The surge in ship scrapping actually is a begin, however it’s not practically sufficient to unravel overcapacity.

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The publish Can Scrapping Container Ships Save Carriers From Overcapacity? appeared first on Common Cargo.

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