The container market barometer has shifted into negative territory again with TEU-mile demand growth slipping below the growth in vessel supply and the outlook remaining gloomy for the remainder of this year. Carriers’ reluctance to withdraw capacity during the slack winter season has hurt freight rates across key routes with the transpacific rates facing the greatest stress.
Despite the softening freight market, carriers has continued to bid up charter rates and second-hand ship prices even as the new ship ordering spree gathers pace. Containership scrapping remains at a record low, with the supply-demand outlook looking increasingly imbalanced and could soon be exacerbated by the potential return of ships to the Suez route. However, CMA CGM has stopped its ad-hoc re-direction of its ships on the Asia-Europe route to the Suez after 3 recent voyages with other main carriers still unwilling to begin redeployment.
Johnson Leung
High charter earnings keep containership scrapping at record low
Only 14 containerships for 9,857 teu have been scrapped so far this year, with no new scrap sales expected in December as the high charter rates are keeping older ships from the scrapyard. The full year scrapping rate in 2025 will be the 2nd lowest on record, only surpassing 2022 when just 3 ships for 2,848 teu were sent for demolition during the height of the COVID pandemic.
With over 1,690 ships for 4.40m TEU that are over 20 years old, the number of ships to be scrapped will need to accelerate in the next 5 years, if only to keep supply and demand in balance as the orderbook has swelled to a record high of 11.25m TEU.
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