Containership demolitions reached record highs as it breached the 500,000 TEU mark, tilting the balance towards positive growth for the struggling shipping industry, according to international trade association BIMCO.
BIMCO added that demolition has kept pace with industry levels and exceeded expectations.
“The demolition activity in the last three months’ surprised BIMCO positively and it exceeded our initial expectation based on the appalling 2015 demolition activity,” BIMCO chief shipping analyst Peter Sand explained, further saying that the development is “a push in the right direction.”
The current demolition levels are 4.2 times more than the TEU recycled in the same period in 2015, with the last three months accounting for 41% of the year to date total demolitions in 2016.
BIMCO further reported that demolitions are gaining momentum, primarily among Panamax container ships, which accounted for 47% of the demolitions so far this year. Recycled TEU from intermediate and feeder containerships accounted for 30% and 23% respectively.
“It is important that the demolition of excess capacity comes sooner rather than later, as there is still a huge delivery schedule hanging over the container shipping industry for the rest of this year and well into 2017-2018,” Sand said.
The demolitions are keeping the current oversupply in the shipping industry in control, and “will prevent a darker outlook for the years to come, if maintained,” Sand concluded.
