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BIMCO: demolition activity grows slowly

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Dry Bulk,

Global demolition activity rose in the first nine months of 2016 by 16% (compared the same period in 2015).

Diminishing demolition activity from March through July was bad for the recovery of the market. Next weeks’ update of BIMCO’s “Road to Recovery” will shed more light on recent developments, specifically on the dry bulk sector, whereas this analysis focuses on the total shipping industry’s demolition activity.

From a broader perspective, a total of 362 000 DWT was demolished in the first nine months of 2016, with most of it taking place in the first four months of 2016. This is equal to 218 000 DWT or nearly twice as much as in the following five months of 2016.

However, comparing the period May - September 2016 in the same period in 2015, the growth of demolition activity adds up to 2.9m DWT or 26%.

BIMCO’s Chief Shipping Analyst, Peter Sand, said: “The poor global economic situation, as well as the depressing outlook for most of the seaborne shipping sector caused by excess supply of capacity, needs to be countered by a drastic increase in demolishing activity in order to lower merchant fleet growth.”

In 2015, demolition increased in comparison to the previous year by 58 000 DWT 15%.

In reference to the available data from the beginning of January 2014 through September 2016, the average demolished ship size in DWT increased on a year-on-year basis by 32% in 2015 and 13% in 2016.

Peter Sand added: “The trend for the demolition of bigger ships can be explained by weak global demand, especially for containerships in 2016, which is not growing at the pace needed to match excess containership capacity. Another factor is the expansion of the Panama Canal, which takes the uniqueness away from the panamax ship segment.”

Pakistan has demolished, on average, the largest ships in DWT in the period between 2014 until present day.

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