Shipping slump: Why a vessel worth $60m was sold as scrap

[nitpicker]

http://www.bbc.com/news/business-38653546

Shipping slump: Why a vessel worth $60m was sold as scrap

By Jamie Robertson
Business reporter, BBC News

1 March 2017

From the section Business

In January 2010, the container ship Hammonia Grenada was delivered from a Chinese yard to its new owners, reportedly priced at about $60m (about £37m at that time). Just seven years later - at the start of this year - it was sold for scrap. The price: an estimated $5.5m (£4.4m today). It's not the only vessel to suffer this fate. Last year container ships were sold at rock-bottom prices for scrap in record numbers. The simple reason is that there are too many ships for too little cargo.
(snip)

The container shipping industry, and Hanjin in particular, has been spectacularly wrong about the financial crisis - twice. There was not one but two waves of container ship ordering in 2010, and then again in 2013-14. Interest rates were low and money was cheap. The result - a massive oversupply of vessels.
(snip)

And there was another reason to buy - and to buy big: the Panama Canal. Last year it got a serious upgrade. The old locks could take container ships up to only 5,000 TEU (Twenty-Foot Equivalent Unit, roughly one container). These are known as Panamaxes. But the new locks, with gates weighing 700 tonnes or more, are designed to take so called Neo-Panamaxes. These are giants, equivalent to the width and length of three football pitches laid end to end, and can carry about 13,000 TEU.

So shippers looking to carry cargoes from Asia to the American east coast ports, can now take Neo-Panamaxes through the new canal - and sell off their smaller Panamaxes. That's why Panamaxes like the Hammonia Grenada are going cheap - in fact, they're going nowhere. If you want to charter one, according to research group Clarksons, it will cost you less than half of what it did a year ago.
(snip)

[mahatmakanejeeves]

1. Panamaxes are obsolete? Sheesh, I need to get out of the house more often.

Admittedly, I do not follow the shipping trade.