Containership demolitions are forecast to rise 1,200 per cent next year, potentially easing global overcapacity and improving freight market conditions, reports Seoul's Chosun Biz.

Industry estimates suggest 260,000 TEU of containership capacity will be scrapped in 2026, compared with just 8,484 TEU through September this year. Over the next four years, demolitions could total 3.65 million TEU, or about 12 per cent of global fleet capacity.

Scrapping activity collapsed after the Covid scare, when freight rates surged. Alphaliner data shows demolitions fell from 664,717 TEU in 2016 to 12,992 TEU in 2022. From 2020 to 2025, cumulative scrapping is expected to reach 491,753 TEU.

The Shanghai Containerized Freight Index stood at 1,550.7 on October 31, down 29 per cent year on year and far below its October 2021 peak of 4,567.28. Rates have recently rebounded slightly due to increased blank sailings.

Domestic carriers have seen profits decline. HMM posted operating profit of 847.1 billion won in the first half, down 19 per cent year-on-year. Heung-A Shipping reported 10.5 billion won, down 26 per cent.

Alphaliner said 3.06 million TEU of new containership capacity is scheduled for delivery by 2027. If demolition proceeds as expected, they could offset much of this new tonnage and help stabilize rates.

A shipping official said ageing, inefficient vessels remain in service due to temporary rate spikes, but if rates remain flat, scrapping will accelerate.