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Boxship demolition slows to crawl

The expected tsunami of container vessels sold for demolition is evaporating. Liner operators are intent on chasing market share despite the correction in freight rates, continuing to charter boxships.

This has pushed up charter rates and dissuaded owners from scrapping more ships.

Clarksons' Shipping Intelligence Weekly indicates that for all of March, just two container ships, MSC's 1989-built 2,450 TEU MSC Veronique and Vasi Shipping's 1996-built 1,694 TEU Vasi Star, were sold for scrap.

In comparison, five container ships were sold for demolition in February, while in January, Taiwanese liner operator Wan Hai Lines sold 10 elderly ships in an en bloc recycling transaction.

Clarksons remarked, "The supply of tonnage to the ship recycling market has slowed considerably, with only a handful of units currently being circulated. However, there is speculation that some of these units will instead be sold on for further trading amid some improving shipping market conditions."

The world's largest shipbroker noted that last week, Taiwanese liner operator Evergreen Marine Corporation circulated two 1999-built, 5,652 TEU ships, Ever Unific and Ever Uberty.

"However, some reports suggest there are buyers interested in the vessels for further trading; it is yet to be seen if the ships will eventually make their way to a recycling yard," said Clarksons.

Cash buyer Global Marketing Systems suggested that declining scrap prices in the Indian subcontinent, as well as the Muslim holy month of Ramadan, are also behind the slowdown in ships being offered for demolition.

The cash buyer said, "While there have been a plethora of sales at the start of the year, particularly in the container sectors, the supply has surprisingly slowed so much of late, it nearly seems like it has timed itself in sync with declining sub-continent prices."

Linerlytica's recent report, dated 28 March, states that charter rates continue to rise briskly, as demand from liner operators remains high. Rates for 6,500 TEU ships, for example, are now going at US$30,500/day, up from US$28,000/day at the start of March.

Martina Li
Asia Correspondent

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