Expanded Panama Canal means scrap heap for last generation of container ships

Maritime analysts say smaller and older vessels will be scrapped in high volumes now that thePanama Canalhas been expanded.

This sector is already most affected by the general containership oversupply as classic panamax ships have been massively displaced from service over the past eight months.

According to analysts at the Paris-based consultancy,Alphaliner, vessel cascading and service restructurings have forced these ships out of several of their core trades, with very limited alternative employment opportunities. Idling and lay-ups of classic panamax ships have been building up over the past few months, while scrapping has also accelerated.

As a consequence, panamax ships as young as 14 years were sold to scrap buyers.

What is more, it is expected that in the coming months, the influx of 6,000-10,000 twenty-foot equivalent (TEU) vessels into trans-Panama services will accelerate the redundancies of classic panamaxes.

Demand for maxi-panamaxes, a sub category of classic panamaxes optimized to make full use of the existing Panama locks dimensions, is vanishing as well, as the opening of the larger locks seals the ships’ fate.

“After having been the kings of the container trade in the two decades that followed the launch of the first generation of maxi-panamax containerships in 1972, and so far the optimal choice for services requiring a Panama transit, these vessels are now facing their demise,” said an analyst.

The new Panama Canal locks were inaugurated last Sunday by a China COSCO Shipping’s container vessel Andronikos, a 9,400 teu neo-panamax vessel.

The $6 billion expansion project that began in 2007 will allow for the passage of the Post-Panamax vessels with up to 13,000/14,000 TEUs, doubling the canal’s capacity.