CONTAINERSHIPS with a total capacity of more than 520,000 TEU have been scrapped so far this year and this rapid increase in demolitions has helped to bring the annual growth rates for global supply and demand closer together, according to Drewry, the MarineLink of New York reported.

This year's peak scrapping month of September (84,000 TEU) was higher than the full-year total for 2011. At the current rate the end-year 2016 scrapping sum will be in the region of 615,000 TEU, which would represent a 38 per cent increase on the previous annual high of 444,000 TEU set in 2013.

Assuming that scrapping does continue at the current pace and after adding in the newbuild deliveries, the total containership fleet will have grown by just 1.8 per cent at the end of 2016. That is only marginally higher than Drewry's forecast for world port throughput growth at 1.3 per cent. In 2015 the differential was much larger as supply grew by 8.4 per cent versus the same 1.3 per cent for demand, with the miss-match contributing to the collapse in freight and charter rates.

The reason why the closer global supply-demand balance in 2016 hasn't seen either market appreciably recover is that it is not a universal trend as there remain significant imbalances in many big volume trade lanes.

Unfortunately for owners Drewry is not anticipating that demand will get much above three per cent over the next two years so they will need to scrap even harder if they want to see supply growth fall into line.

This is because much more new tonnage is scheduled to arrive over the next two years than in 2016. With nearly 3.2 million TEU of new ship capacity scheduled for delivery ?split roughly equally - in 2017 and 2018, to perfectly match supply growth with our demand forecasts will require that around 1 million TEU will have to be scrapped in consecutive years. To achieve this, owners will have to look for ever younger and bigger ships to send to the demolition yards.

Financial difficulties at some non-operating companies may add to the demolitions pile.

In September, Rickmers Maritime Trust declared that it was unable to repay $180 million in outstanding debt, due in March 2017. The company owns 16 ships ranging from 3,500 TEU to 5,000 TEU, with the oldest ship only 12 years old. In an effort to buy time, the Rickmers board is proposing a re-structuring of finances that would eventually give bondholders a share in the company.

Soon after that news broke, the German KG Hansa Treuhand and its affiliated ship management company were forced to initiate insolvency proceedings for 15 containerships ranging between 3,800 TEU and 6,500 TEU. Fewer willing buyers on the second-hand market could force all, or some, of these vessels to be scrapped.

For other owners, there may well be some resistance to writing-off even larger shares of asset values, and with a market recovery in sight after the rush of new deliveries has passed come 2019 it could be that idling takes preference for those that are able to wait it out.