Ship Demolition Fighting Industry Oversupply


Global demolition activity rose in the first nine months of 2016 in comparison to the same period of 2015, by 16%. Showcasing shipping industry action, to counter the imbalance between supply and demand in the market, reported BIMCO.

However, diminishing demolition activity from March through July was bad for the recovery of the market. But could the recent increase in August and September be seen as a mild sign of hope?

From a broader perspective, a total of 36.2m DWT was demolished in the first nine months of 2016, with most of it taking place in the first four months of 2016. This is equal to 21.8m DWT or nearly twice as much as in the following five months of 2016.

However, comparing the period May – September 2016 in the same period as last year, the growth of demolition activity adds up to 2.9m DWT or 26%. Therefore, the decrease in scrapping from the fourth till the ninth month of 2016 can be accounted for by cyclical demolishing activity.

Peter Sand, Chief Shipping Analyst at BIMCO, said: “The poor global economic situation, as well as the depressing outlook for most of the seaborne shipping sector caused by excess supply of capacity, needs to be countered by a drastic increase in demolishing activity in order to lower merchant fleet growth.”

This upswing in ship breaking follows PTI's recent coverage of Maersk's decision to stop selling on ships before they are scrapped, choosing instead to oversee the demolition process themselves.

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