The expansion of the Panama Canal has caused a massive oversupply of the classic Panamax-sized vessels, according to Alphaliner.
The newly expanded locks on the canal has caused a sharp decline in demand for vessels ranging between 4,000 and 5,100 TEU. 130 Panamax vessels have already been scrapped since 2009, including 44 in the last four months alone, but more needs to be done to balance the market.
The fleet of Panamax vessels currently stands at 563 ships, down from 643 two years ago, with PTI reporting ships as young as seven-years old being scrapped by Rickmers in December, 2016.
Of this fleet of several-hundred vessels, only 88 are currently involved in trans-Panama services, compared with 221 ships in June, 2016. Alphaliner predicts a further 100 vessels of this size will need to be scrapped before the market recovers.
Charter rates have dropped as low as $4,000 per day in an effort to stimulate demand, but the idle fleet has remained high despite this. Increasing demolition activity could be the only way to improve matters.
