A recycling backlog of at least 500 containerships, equivalent to 1.8 million TEUs, has accumulated in the global fleet as vessels continue trading well beyond their normal retirement age.
According to data accumulated and analysed by the Baltic and International Maritime Council (Bimco), only 10 box ships have been recycled so far this year.
This trend of minimal demolition activity has persisted since at least 2021, gCaptain reports.
The proportion of ships aged 20 years or older has risen from 16% in early 2020 to 24% today – the highest share recorded since the early 1970s.
Bimco’s chief shipping analyst, Niels Rasmussen, said the organisation’s estimates, based on average recycling patterns between 2000 and 2019, pointed to a minimum overhang of 500 ships and 1.8 million TEUs.
He explained that before the global financial crisis, strong market conditions had led to limited scrapping, while weaker markets after 2009 had resulted in more vessels being recycled.
Taken together, that period had offered a reasonable benchmark for “average” recycling conditions, he said.
Between 2000 and 2019, 20% of containerships were recycled before reaching 20 years of age, while 53% were retired before turning 25.
However, Bimco’s latest analysis indicates that the actual recycling overhang could be significantly higher. Using patterns observed during the weaker market conditions of the 2010s, the organisation estimates a potential backlog of up to 850 ships, totalling 3.1m TEUs.
The analysis suggests that a combination of factors, including a large order book, possible rerouting around the Suez Canal, and tightening efficiency regulations, could push up recycling levels in the years ahead.
Yet, even at increased scrapping rates, clearing the accumulated backlog would take considerable time.
The highest annual recycling on record occurred in 2016, when 185 ships with a combined capacity of 0.6m TEUs were demolished.
Alphaliner said in a recent note that the demolition market was likely to remain subdued until the ongoing fall in freight rates began to erode carriers’ profitability.
Rasmussen added that forecasting future recycling activity remained challenging, gCaptain reports.
He noted that Bimco’s estimates suggested an overhang of 6–10% of currently trading ships, representing 33–55% of vessels aged over 20 years.
The estimated overhang, he said, was larger than the order book for all ship segments below 8 000 TEUs, implying that future fleet growth could be driven mainly by larger vessels.
This trend, he added, might accelerate the involvement of bigger ships on routes currently served by smaller tonnage.
