Chappell's Shipping Show: Economics > Marketing Decks

Research evidence excerpt

Chappell's Shipping Show: Economics > Marketing Decks

Transportation | Shipping

May 26, 2026

Jonathan Chappell, CFA Chappell's Shipping Show: Economics >

212-497-0827

jonathan.chappell@evercoreisi.com Marketing Decks

I’ve been reading Shipping presentations for 25+ years, and the one

constant message (in addition to the market is either great or about to

become great) regardless of year, end-market, part of the cycle, etc. is

that the fleet is aging and, therefore, there is a large pool of potential

scrapping candidates to offset the newbuilds on order. Now, to be fair,

sometimes these proclamations are accurate, such as in the early-

2000s, when the phasing out of single-hull tankers was occurring. Also,

all fleet ages are not created equal as it relates to breakeven thresholds.

However, the problem with the “scrapping will save us” thesis is that

vessels are not removed from the trading fleet when they’re still making

money (and especially when they’re making A LOT of money). Yet,

that’s where the narrative sits today. Amid all-time high spot rates and

a pace of large crude tanker ordering that is set to eclipse prior records

(here), many are counting on the advanced age of the fleet, as well as

ships operating in sanctioned trades as part of the “dark” or “shadow”

fleets to exit the market to make room for a tsunami of new capacity

scheduled to arrive in 2026-28. History shows, though, that these

ingredients don’t mix, as scrapping only increases when rates are at

poor, often below-breakeven, levels, which is FAR from where spot and

time-charter markets sit today. Figure 1 below shows a 25-year history

of total tanker scrapping (in million deadweight tons - mdwt) vs. VLCC

spot rates (as a proxy for overall market health). After a 5-year run of