Container ships less than a decade old are potentially on the block for scrap value as a widening of the Panama Canal earlier this year plays havoc with a market already under strain from a crash in freight rates.
An expanded Panama Canal opened in June to ships three times bigger than those previously called Panamax - a designation assigned to the biggest vessels that could pass through the locks cutting through the Central America isthmus. The makeover for the more than century-old shortcut between the Atlantic and Pacific oceans has already been giving the Suez Canal a run for the U.S. East Coast – Asia's shipping route of choice.
In response, many shipping firms are now weighing whether smaller ships are obsolete, as options to find new opportunities narrow and costs outweigh fees earned from operations, said shipping information provider VesselsValue.
Finding new uses for the classic Panamax ships has been difficult, including the ships actually being too big to ply container feeder routes, said VesselsValue associate director, Claudia Norrgren.
The development has sent the value of container ships down on-year, she said, with news rocking the industry of a 7-year-old container ship under negotiation for sale that was valued just above scrap value at $5.87 million, after its value fell 62 percent this year alone, according to VesselsValue.