In this week’s “Shipping Number of the Week” from BIMCO, Shipping Analyst, Filipe Gouveia, looks at the recycling of dry bulk ships which has reached the second lowest level in 16 years between January and August, reports Bimco.
Recycled ships
According to Filipe Gouveia, between January and August 2024, the number of recycled ships has dropped 42% y/y, the second lowest level in 16 years. The market has seen high freight rates and strong demand, delaying the recycling of older ships. On the supply side, the fleet has continued to grow slowly, limiting fleet renewal.
Over the past three years demand shocks contributed to stronger than anticipated demand. Sanctions on Russian coal and rerouting away from the Red Sea and the Panama Canal all contributed to increased sailing distances, keeping ships at sea for longer.
Climate regulations
More ships will be replaced in the future to comply with future climate regulations, since energy and fuel efficiency will be key to decarbonising. Although ship design has not radically changed over the past twenty years, younger ships are marginally more efficient and make for better investment candidates for fuel saving technology due to their longer lifespan.
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Source: BIMCO
