72 million DWT! Used ship transactions are booming, hitting record highs again

2022-08-17 09:00

Following a record-breaking transaction volume last year, global used ship transactions reached a new high in the first half of this year, with the ship trading market remaining robust.

Clarksons' recently released report indicates that the used ship market has remained exceptionally active this year, with transaction volumes reaching approximately 33 million deadweight tons in the first quarter and approximately 40 million deadweight tons in the second quarter, the third highest single-quarter level on record. Overall, used ship transactions in the first half of the year totaled approximately 72 million deadweight tons, the second highest half-year record ever. Data shows that used ship transactions in 2021 totaled 140 million deadweight tons, with a total value exceeding US\$48 billion.

However, the used ship market appears to have slowed down since the second half of the year. Due to the summer holidays and increased market uncertainties, July's used ship transactions amounted to approximately 8 million deadweight tons, reaching a new monthly low since 2020. Despite this, the first five weeks of the third quarter have already seen 10 million deadweight tons in used ship transactions. Compared to the historical average of 19 million deadweight tons per quarter from 2011 to 2019, current used ship market activity remains at a reasonable level.

Meanwhile, used ship prices remain high. Although prices for bulk carriers and container ships have recently fallen, compared to the beginning of the year, container ship prices have risen by 13%, bulk carrier prices by 11%, and tanker prices by 32%. In 2021, the increases were 66%, 168%, and 12%, respectively.

Against this backdrop, used ship sales have also been steadily rising. Following a record US\$48 billion last year, used ship transactions have exceeded US\$33 billion so far this year, a year-on-year increase of 30%.

Despite the significant increase in transaction value, Clarksons noted that activity levels across shipping sectors were similar, with container ship activity slowing after reaching a record 1.6 million TEU sales last year.

In terms of ship type, used container ship transactions surged to a record 1.6 million TEU in 2021 (equivalent to 6.7% of the fleet capacity at the beginning of 2021). However, due to limited capacity supply and increased uncertainty about future demand, used ship trading activity slowed down in 2022. As of early August, container ship transactions totaled 159 vessels, or approximately 500,000 TEU, a year-on-year decrease of approximately 50%.

In the bulk carrier sector, used ship trading activity was very strong in the first half of the year, reaching 30 million deadweight tons, although slightly below the record level of 2021. However, with weakening market sentiment, used bulk carrier transactions have declined since the second half of the year. Year-to-date transactions have totaled 33 million deadweight tons, a 17% year-on-year decrease. On the other hand, used tanker transactions have been stable, with year-to-date transactions exceeding 390 vessels and 38 million deadweight tons, similar to the 2021 record, equivalent to 9.4% of the fleet, significantly higher than the average of 5.4% over the past 10 years.

In terms of flag states, Greece remains the largest buyer and seller in the used ship market this year, accounting for over 30% (by deadweight tonnage) of all used ship transactions and once again topping the used ship transaction rankings. Chinese ship owners are the second largest buyers and have surpassed Japanese ship owners to become the second largest sellers.

“Overall, while the used ship market has performed strongly so far this year, with changing market dynamics, sentiment, and increased uncertainty, it remains to be seen how the used ship market will develop next after last year's record levels,” concluded a Clarksons analyst.

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