ONE hundred more panamax ships need to be added to the 50 scrapped since the expanded Panama Canal opened in June if a start is to be made on the rebalancing supply and demand in container shipping, says Paris research house Alphaliner.
100 more panamaxes need to be scrapped to right supply-demand imbalance
ONE hundred more panamax ships need to be added to the 50 scrapped since the expanded Panama Canal opened in June if a start is to be made on the rebalancing supply and demand in container shipping, says Paris research house Alphaliner.
"Only such a drastic reduction can elevate [charter] rates from their current all-time low of US$4,200 to $4,500 per day," said Alphaliner.
So far, 120 panamax ships of 4,000- to 5,300 TEU have been removed from the Asia-US all-water trade to the east and Gulf Coast ports.
Alphaliner said a further 30 to 40 panamaxes will be removed from the trade over the next couple of months, idling 150 to 160 units by the end of the first quarter of 2017.
Non-operating owners are suffering the most as carriers redeliver chartered vessels at an ever faster pace, to the point where it forms the bulk of the idle tonnage in the panamax range.
Many cash-strapped owners can't afford the survey-related costs, and the vessels are instead being laid up, sold for scrap, or sold to bargain buyers at distressed prices, Alphaliner said.
Owners might also be tempted to wait for an increase in scrap prices, which currently hover at only $300 per ton, compared with more than $500 in 2008 and 2011.
Alphaliner said the structure of the classic panamax fleet currently led to a paradoxical situation: while non-operating owners have many idle panamaxes, carriers kept them as candidates for scrap.
"As an illustration, 68 of the 78 maxi-panamaxes aged 14 years and over are either owned or long-term chartered by carriers, whereas only 10 such vessels are traded by non-operating owners on the liquid market. Of the 23 handy panamaxes (258 metres to 272 metres) aged 14 years and over, only 10 are controlled by carriers," the analyst said.
A possible solution for carriers reluctant to scrap older maxi-panamaxes, Alphaliner said, would be to swap them for younger and more economic panamaxes, purchased at competitive prices from the non-operating owners in "buy & scrap" schemes.
"For the moment though, this suggestion is bound to hit a wall as carriers benefit from the ultra cheap charter rates that the ship overhang causes. Shipping lines are, therefore, in no hurry to enter into any such schemes," said Alphaliner.
Seven-year-old Rickmers boxship sent for scrap
A seven-year-old containership has set a new unfortunate record. The 2009-built India Rickmers built in China is being sent for scrap. Owned by Rickmers Shipmanagement, brokers report the 4,250 teu ship managed to get a very firm price of $325 per ldt for its scrapping.
With panamax vessels now worth little more than scrap 2016 has seen record volumes of containerships scrapped. The India Rickmers sets a new record however – the previous youngest ships scrapped were all built in 2006.
In the first 10 months of the year a record 500,000 teu has been scrapped, 4.2 times more teu than the scrapping activity for the same months in 2015, according to Bimco.
With the last three months accounting for more than 41% of the total demolition in 2016, the activity is picking up and is primarily generated by the panamax container ships. The demolition of panamax containerships in teu accounts for 47% of the total demolition in 2016.
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