News / MSC joins ship-scrapping spree, but overcapacity still a prospect

MSC Floriana Photo: VesselFinder

MSC is to scrap a containership for the first time in nearly four years, as demolitions in the sector continue to rise amid the lacklustre freight market.

Linerlytica reported yesterday that the 1986-built, 1,911 teu MSC Floriana, serving the Swiss-Italian liner giant’s intra-Mediterranean service, had been sold for $4.56m, or $520/ldt, for recycling in Alang, India.

Shipping databases show MSC acquired the MSC Floriana for $25m in September 1994, before selling it to Niki Shipping for an undisclosed price in December 2019 on a lease-back basis. In November 2021, as MSC was building up its fleet amid historically high freight rates, it bought the ship back.

The last time MSC sold ships for recycling was in 2019: the 1990-built, 1,743 teu MSC Ronit and 1989-built, 2,553 teu MSC Mirella.

Linerlytica data show that, since the start of this year, 13 ships (18,553 teu) have been sold for demolition, following just seven for 5,815 teu recycled last year. However, this is inadequate to restore the supply-demand equilibrium in the market, it said.

“The pace of scrapping needs to pick up further before it makes a material difference on the overall fleet numbers,” added Linerlytica.

Other liner operators that have sold ships for recycling this year include Maersk, Evergreen, Straits Orient and Shreyas, as well as Wan Hai, which has scrapped 10 elderly vessels.

VesselsValue said last month was the most active scrapping since July 2020, with all the box ships recycled so far being built in the 1990s.

Dubai-based Global Marketing Systems, a major cash buyer of ships for recycling, said yesterday its main supply continued to arrive from the feeder container sector, with few panamaxes yet arrived. A lack of US dollars in Bangladesh and Pakistan continue to make India the first-choice for recycling ships.

Simon Heaney, senior manager for container research at Drewry, told The Loadstar as much as 600,000 teu could be recycled this year, adding: “However, despite this being close to record levels, because orderbook deliveries are so heavy this year and demand is stalling, we don’t think the market will be able to avoid overcapacity.”