Institute of Chartered Shipbrokers
London & South East Branch

Is scrapping likely to regain momentum?

by Richard Scott FICS, member of London & South East Branch Committee, 7 March 2022
Within the world fleet of merchant ships, scrapping of older vessels has been subdued in recent years, although tanker demolition sales picked up in the past twelve months. But there are signs of a changing trend, resulting in much larger volumes heading for the breakers’ yards in the period ahead.
During the three years from 2019 to 2021, annual scrapping totals were the lowest since the exceptional freight market boom which ended fourteen years ago. Since then, the world fleet’s capacity has grown by over four-fifths, further emphasising how scrapping has receded.
Sales of merchant ships for demolition totalled 67 million gross tonnes in the past three years, averaging just over 22m gt annually, based on Clarksons Research data. This volume compares with an average 37m dwt annually in the preceding five years. Bulk carriers contributed the largest proportion in the 2019-2021 period, accompanied by a substantial volume of tankers.
Low overall scrapping last year mainly reflected freight market conditions. Extensive tanker recycling was caused by the depressed tanker freight market. Bulk carrier freight earnings improved, ensuring owners’ greater reluctance to sell for recycling. In the container ship market, box freight and charter rates soared, resulting in almost nil scrapping.
What will happen in the next few years? Annual demolition volumes tend to remain unpredictable, but some signs of greater tonnages are prominent. One influence is the volumes of older ships which will reach the end of their ‘natural’ lives. Another, potentially adding substantial impetus to the recycling trend, is the intensifying pressure from tightening maritime regulations, probably rendering many older vessels uneconomic.              
An article entitled ‘Shipowners’ muted enthusiasm for scrapping’, is available at:
(Hellenic Shipping News Worldwide, 3 March 2022, by Richard Scott)
A more detailed article about this topic in PDF format is obtainable from me at:
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