Following the drop off in capacity across global tradelanes, an aggressive vessel scrapping is now expected in container shipping.
The most likely targets for the need to reduce global supply are the smaller size ships, which have not received major investment recently, and this is likely to leave many fleets unbalanced.
Vessels between 15,000 and 24,000 teu, have been coming on line in their droves over the past few years, with the world largest ship changing frequently. Larger vessel types are the newest in most fleets and are therefore the least likely to be culled.
The scrapping of ships has been virtually non-existent since the Covid outbreak, with demand continuing to encourage carriers to deploy every serviceable vessel, especially on Asia origin routes.
However, now that demand has significantly reduced on most of the major tradelanes, carriers have been rushing to off-hire charter vessels and are being forced to idle some of their own ships.
Demolishing, or scrapping, many vessels seems to be the only way to cut supply and mitigate further overcapacity. However, with average ages of under 14 years on most fleets, this could prove to be a costly exercise for carriers.
If you have any questions regarding the above, then Westbound are here to help. So, please do not hesitate to contact us.
