- The number of cellular container vessels sold for recycling in 2024 fell sharply to 56 units, representing a capacity of 80,950 TEU, half the volume scrapped in 2023.
- Strong freight and charter markets discouraged demolition sales despite high demolition prices.
- Unexpected factors like Cape of Good Hope rerouting and booming charter rates absorbed new building capacity, keeping older ships in service.
The container shipping market thrived in 2024, with demolition sales plummeting by half compared to the previous year. Initial expectations of a significant surge in recycling sales due to aging fleets and stringent environmental regulations were defied. Instead, favorable market conditions kept shipowners incentivized to retain their vessels. This article explores the factors driving this trend and its implications for the market, as reported on Alphaliner on LinkedIn.
Sharp Decline in Demolition Sales
In 2024, only 56 cellular container vessels, totaling 80,950 TEU, were sold for recycling—a significant drop from 162,000 TEU in 2023.
This decline can be attributed to the booming freight and charter markets, which offered shipowners lucrative opportunities to retain older tonnage rather than scrapping it.
Market Conditions Favor Older Tonnage
High charter rates and increased demand for shipping capacity made it more profitable for shipowners to operate their vessels instead of selling them for demolition.
Certain ship sizes saw charter rates nearly double from 2023 levels, reaching their best since the exceptional demand boom years of 2021 and 2022.
Unexpected Market Dynamics
Several factors combined to support the continued use of older tonnage.
A key factor was the rerouting of many container vessels via the Cape of Good Hope instead of the Suez Canal, significantly increasing TEU-mile demand.
This rerouting and robust demand absorbed the 3 MTEU of new building capacity delivered in 2024.
Demolition Market Predictions Defied
Predictions for a surge in demolition sales were based on an aging global fleet and stricter environmental regulations.
However, with freight and charter markets thriving, these forecasts did not materialize. Despite firm demolition prices, the incentive to scrap vessels remained low.
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Source: Alphaliner on LinkedIn
