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Reduced World Trade Is Destroying Container Ships

Reduced World Trade Is Destroying Container Ships

One very tangible manifestation of weak consumer demand is what’s happening with container ships.

 
World trade is down, so the number of ships needed to transfer stuff from country to country is necessarily less. And idle ships cost a lot of money.
 
What to do? Destroy them.

Paul Kedrosky picked up on the trend on his blog, InfectiousGreed: 

What is a struggling containership company to do? Easy: Destroy capacity. You can take oversupply straight out of the market without the carrying costs of idle ships.
 
So far in 2009 we have seen record numbers of containerships being sent off to scrap yards in India, Bangladesh, Pakistan and China. Such yards are seeing boffo business in tearing apart ships as large as 4,000 teus, as the following figure shows. To put in context, so far in 2009 we have destroyed as much containership capacity as transited through Oakland annually back in the 1960s when it was among the largest ports in the world.
 

This Alphaliner graph shows the record pace of containership demolition this year:

container ship graph from alphaliner

 


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