The number of cellular container ships scrapped in the last six months of 2021 dwindled to just four, as owners kept vessels operating in record markets.
Consultancy Alphaliner said only 2,489 teu of capacity was sent for demolition from July to December — a “historic low”.
In the first six months of last year, the company said an “already meagre” 15 ships of 14,007 teu were scrapped.
The annual total of around 16,500 teu is well below the 194,500 teu recycled in 2020, and a far cry from the 417,000 teu and 655,000 teu demolished in 2017 and 2016, respectively.
“Despite attractive demolition prices throughout 2021, container vessel owners have clearly preferred to keep trading their ships in a boiling hot charter market, where unprecedented profits could be achieved, especially with free-of-debt older tonnage,” Alphaliner said.
Scrapping will not speed up
“Going forward, it is expected that owners will continue to stay clear of the demolition scene as long as the container charter market remains strong, which could extend beyond the first half of 2022.”
Alphaliner believes that container ship demolition figures will remain low in the medium term, with an estimated 60,000 teu expected to be scrapped in 2022.
However, next year could see a more significant pick-up in scrapping deals, with a raft of newbuildings expected to push older and smaller tonnage to the beaches.
The vessels sold for scrap in the first half were the 982-teu reefer container vessel pair Dole California and Dole Ecuador (both built 1989), the 310-teu Chinese-controlled Da Fa (built 1991) and the 215-teu Hanjin 3006 (built 1996).
“The red-hot charter market and the astronomical charter rates obtainable have prompted non-operating owners to retain in their fleets older ships of 20 to 30 years of age, many of which would have otherwise been recycled had the market turned out differently,” Alphaliner said.
'Staggering' profits
The average duration of fixtures agreed for these older units was much longer than before, with a substantial proportion of multi-year deals.
“These charters will in some cases prolong the life of some older vessels significantly, with some units now employed until 2025,” Alphaliner said.
The consultancy firm calculated 29 fixtures of vessels aged between 25 and 30 years in 2021, of which 10 were for periods of 24 months or longer.
There were also 226 deals for boxships aged from 20 to 25 years. Seven of these secured terms of 48 months or longer.
Alphaliner described the rates involved for some of these charters as “sky-high”.
One 20-year-old, 2,200-teu feeder ship bagged $35,000 per day over three years.
Tonnage providers are generating “staggering profits” from these once-in-a-lifetime contracts, the company said.
