Container shipping struggles with overcapacity as EU recycling rules limit vessel demolition, impacting the industry’s future, reports Seatrade Maritime News.
Container shipping faces prolonged overcapacity, but the demolition of older vessels is constrained by recycling yard regulations, reported UK's Seatrade Maritime News. The Hong Kong Convention came into force last year, promising safer and cleaner operations, but EU rules further restrict capacity.
The EU does not recognize yards that dismantle ships on beaches, citing risks to workers and the environment. Brussels is considering strengthening the Hong Kong Convention this year, including tougher penalties and a possible recycling license to bridge the cost gap between EU-approved yards and cheaper South Asian facilities.
Drewry reported just 6,000 TEU scrapped in 2025, while Alphaliner calculated 8,172 TEU, marking the lowest level in 20 years. Drewry expects scrapping to rise above 400,000 TEU this year and exceed 700,000 TEU in subsequent years. Alphaliner noted that the return to the shorter Suez route could accelerate recycling as cascading tonnage pressures freight rates.
MDS Transmodal observed that sub-5,000 TEU vessels are ageing rapidly, with more than 60 percent over 25 years old and few replacements on order. Analyst Antonella Teodoro stated that the global fleet below 2,500 TEU could shrink by up to 80 percent by 2030. By then, 3,450 ships will be over 25 years old, including 2,050 operated by the top 10 carriers.
Alphaliner reported that 2016 saw the highest recycling in two decades at 655,000 TEU, well before the Hong Kong Convention was enforced. The EU has identified loopholes in the convention, including re-flagging vessels to non-EU registries to access cheaper yards.
The EU maintains its own list of approved yards, updated in December, and objects to beaching practices common in South Asia. NGO Shipbreaking Platform director Ingvild Jenssen backed the EU stance, noting that beaching fails to contain pollutants and is banned in the EU, China, and the UAE. She mentioned that India’s Maritime Vision 2030 also calls for replacing beaching with drydocks.
