When will the scrapping begin?

We are all familiar with the beaches of Alang and elsewhere. We've dodged the monsoons and towed the slightly sad hulls of the tankers and bulkers to their last port of call. But then we've always retrieved our gear and moved on to the next job.

Now, maybe, it's time to consider the unthinkable, time to start scrapping our own vessels!

There has never been much of an incentive in the past. Not much steel, difficult to dismantle and machinery usually so tired that it was approaching its' last wheezing breath, and anyway, we could probably sell it to some remote part of the world to trade for a few more years yet. Somewhere exempt from the beady eye of class and flag. And in any case, there were no new builds to replace the tonnage.

But what now? We have never had so many new builds waiting to join the charter market in such a short space of time. We have never had such a bountiful supply of elderly ladies. Scrap prices have past their glorious zenith (at least for now), and you have to have the cash pile of a drug baron to buy vessels since the banks picked up their towels and went to the beach, so buyers for future trading are more elusive than the Unicorn.

We all know that given the current depressed market, and with deliveries arriving on a daily basis, we need to take some tonnage out of the picture, but who will flinch first? No doubt our learned colleagues in the finance departments will determine how much downtime we can have before it's a one trip to the breakers.

I suspect that from the charterers perspective, these older vessels still have a part to play in the rates game. They can be relied upon to drive rates down further and faster than if just the newer boats were available. So perhaps one or two will continue to be fixed, allowing some project to meet its' reduced budget. Next time of course, maybe the new boats will be bid at the same level. Job done!!

Even if we start to scrap it won't help everybody. The deepwater operators will still have to joggle with all the other shiny news toys in their particular playground, waiting for better times to come. The price you have to pay for being at the frontier of offshore development I suppose, but then, when times are good, they are very good indeed.

If you consider the total fleet numbers and age profiles, some categories of vessels may even be in short supply if we scrap vessels over 25-30 years old. A shortage of vessels would cheer the owners up no end, but then the charterers would be unhappy.

You just can't please everybody I guess.