Shipowners Scrap Most Container Vessels in 2 Years as Cargo Rates Plunge

Shipowners scrapped the most container vessels in two years this month as they seek to revive cargo rates amid an oversupply of ships and higher fuel costs.

Vessels equivalent to 21,000 20-foot containers were scrapped, the most since November 2009, according to Alphaliner. The dismantled ships were mostly panamax-sized ones and included those that were as old as 19 years, the Paris-based maritime data provider said in a weekly newsletter.

“Poor earnings prospects for such panamax ships will likely drive further demolition sales in 2012,” Alphaliner said. Panamax vessels are those that can travel through the Panama Canal.

Neptune Orient Lines Ltd. and China Cosco Holdings Co. (1919) are among shipping companies that posted losses this year as they contend with lower cargo rates and fuel costs that jumped as much as 43 percent. Daewoo Shipbuilding & Marine Engineering Co., the world’s second-largest shipbuilder, expects its new orders to drop 23 percent next year, it said Dec. 25.

A total of 219 ships with a capacity of 546,000 boxes were idle as of Dec. 19, an increase from 526,000 two weeks ago, according to Alphaliner.

To contact the reporter on this story: Kyunghee Park in Singapore at kpark3@bloomberg.net

To contact the editor responsible for this story: Vipin V. Nair at vnair12@bloomberg.net

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