Shipbreaking Accelerating

The Wall Street Journal article: Economic Slump Sends Big Ships to Scrap Heap details the downward spiral of the world economy, over capacity in the Merchant Marine fleets, and depressed shipping costs.

As a marine surveyor working for ABS many years ago, I remember inspecting vessels which in some cases were well beyond their projected service life of 30 years. Ships on the Great Lakes have a longevity that we all wish we could have. Today a number of these vessels are not even 15 years old.

The effect of depressed rates to $575 per container from Asia to Europe has resulted in a sudden glut of ships being sent to the ship breakers. The glut has depressed the ship breaking rates to $250 a ton from $300 last year.  Once the rates drop too low, even the ship breakers can’t break even.

At the current rate, the ships will end up being beached until they can be broken, or perhaps a worse fate; they will be scuttled at sea.