A view from the FOC'SLE #11: Ship Demolition Market

BLOG | April 2023

Another warm welcome to our perch up here on the Foc’sle tonight.

We have recently seen some aspects of the ship demolition market, and these inevitably lead us to the question, “What happens now?”

Well, to be brief, what happens now is that most shipbuilders are preparing to launch a rather amazing number of new ships!

Some stats:

It has been reliably reported that 32 container ships each of over 23,000 TEU and 67 ships of 12,000 – 16,000 TEU will be delivered this year, not to mention smaller vessels. A total of 7.962 million TEU capacity is on order from now until 2027. BUT….it is also predicted that 25% of these new builds will be postponed and 10% will be cancelled.

This container ship fleet renewal rate of 29.5% is only exceeded by the LNG vessel fleet.

This, yet again, begs the question of what awaits the older and smaller container ships, in a market having a declining cargo volume and likewise deteriorating freight structure? A trip to Gadani Beach, most likely!

It may thus be reasonable to assume that the container and LNG fleets will become younger, on average, but what about Bulkers?

As a global fleet, the average dry bulk carrier age stood at 15.2 years in 2009 and reduced to 9.5 in 2013. It further reduced to 8.6 years in 2014, but by 2022 it was back up to 11.5 years. These numbers probably tell us that the demolition market actually drives the appetite for new building in this fleet, and not much major change is expected there.

I do not have accurate age stats for the global tanker fleet, but we can see that some 20% of all crude carriers are now involved in breaking sanctions in one way or another. Large crude carrier values continue to harden, and the fleet age increases.

Smaller tankers, Afra, MR1 and 2 size, are also enjoying a profitable market now, so perhaps it is also reasonable to expect the average age in these fleets to increase likewise.

I have not seen any vigorous ordering of tanker new builds……perhaps the yards are all happy with their current order books!

This is all well and good, but none of these stats are of any use if the vessels can’t find capable and reliable crew!  So next month we will look at the problem of crew abandonment.

Your Lookout Man

capt jon elliot coastal marine

About The Lookout Man

Captain Jon Elliott

Capt. Jon began his seafaring career in 1960.  He spent 11 Years in Taiwan running US Lines and then moved to Singapore in 1980 where he eventually joined Matthews Daniel in Singapore in 1989 and becoming Far East Managing Director. Capt. Jon started his own company Elliott Associates Pte Ltd after his retirement to bring an enhanced level of loss prevention to the Asian Marine industry. Capt. Jon is a consultant to Coastal Marine Asia Holdings Limited in our Loss Prevention Division providing technical guidance to our underwriters, whilst arranging crew and management loss prevention training for some of our insureds.

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