More containership capacity is being demolished than ever before, including old-design ships made redundant by the new Panama Canal. Will this end the current capacity surplus?

Now is not a good time to own an old containership.

Drewry’s Container Forecaster (June 2016) found that, for the first time, 450,000teu of containership capacity is expected to be scrapped in just one year, as the containership sector recognises that there are far too many ships chasing too little cargo.

Based on an average size of 3,000teu for ships which are being scrapped, this means that about 150 mainly old and medium-sized containerships will be pulled out of the market or out of temporary idle positions and sent to the scrapyard in 2016.

In 2015, demolitions were less than half this level (see Figure 1). The surge in demolitions started in 4Q 2015, has continued since and looks set to reach 450,000teu by the end of 2016, an even higher annual total than the 444,000 teu scrapped in 2013. (For disclosure, Drewry consultants have advised some owners and investors to scrap their containerships in recent years, but we have no ownership links with shipowners and have an independent view).

Figure 1
Containership capacity demolitions, by quarter 2015-16 (teu)