A ship worth $60m was sold as scrap

In January 2010, the container ship Hammonia Grenada
 was delivered from a Chinese yard to its new owners, reportedly priced at about $60m (about £37m at that time).

Just seven years later - at the start of this year - it was sold 
for scrap. The price: an estimated $5.5m (£4.4m today).

It's not the only vessel to suffer this fate. Last year 
container ships were sold at rock-bottom prices for scrap 
in record numbers.

The simple reason is that there are too many ships for 
too little cargo.

The most dramatic casualty was South Korean group
 Hanjin, which collapsed last August weighed down by 
debts.

The container shipping industry, and Hanjin in particular,
 has been spectacularly wrong about the financial crisis - twice.

There was not one but two waves of container ship
 ordering in 2010, and then again in 2013-14. Interest 
rates were low and money was cheap. The result - a 
massive oversupply of vessels.

"The attitude in the industry was when you were not 
making profits the best thing to do was to cut costs, 
and the best way to cut costs is to increase scale, buying bigger and more fuel- efficient ships," explains Rahul
 Kapoor, director  at shipping consultancy Drewry Financial Research Services.

"Before 2008 and 2009 the world had been growing consistently, and after 10 years of growth no-one in the shipping industry expected demand to shrink so fast.

"To start with they thought it was just a blip. But in reality
 it was structural, and they totally missed the structural problems."

And there was another reason to buy - and to buy big: the
Panama Canal.

Last year it got a serious upgrade . The old locks could 
take container ships up to only 5,000 TEU (Twenty-Foot Equivalent Unit, roughly one container). These are known
 as Panamaxes.

But the new locks, with gates weighing 700 tonnes or 
more, are designed to take so called Neo-Panamaxes. These are giants, equivalent to the width and length of three 
football pitches laid end to end, and can carry about 13,000 TEU.

So shippers looking to carry cargoes from Asia to the American east coast ports, can now take Neo-Panamaxes through the new canal - and sell off their smaller Panamaxes.

That's why Panamaxes like the Hammonia Grenada are
 going cheap - in fact, they're going nowhere. If you want to charter one, according to research group Clarksons , it will cost you less than half of what it did a year ago.

Andrew Scorer of S&P Platts says: "You have a steady 
trickle of ships going to the scrap yard under the blowtorch, but you have these bigger TEU ships with bigger capacity, 
and they're going to be ruling the waves for now."

Meanwhile, ports are modernising to take the bigger 
cargoes.

Baltimore, Charleston, Miami, New York and Savannah 
are all updating facilities to accommodate the Neo-Panamaxes.

For instance, the Port Authority of New York and New 
Jersey plans to spend $2.7bn on enlarging its terminals
 and shipping lanes, and a further $1.3bn to raise a bridge 
by 20 metres to get the monsters through.

But the fundamental problem of oversupply has not gone away.

According to Clarksons, the global fleet of all types of
commercial shipping is 50% larger than it was before the financial crisis.

In contrast, the World Trade Organization says growth
 in global trade has been much smaller, creeping up from $14.3 trillion in 2007 to $16.7tn in 2015, an increase of just 15%.

It's not necessarily all doom and gloom. In fact, Drewry's
 latest Shipping Outlook suggests the market could actually 
be at a turning point.

It believes the problem of too many ships for too little cargo
 is now set to improve, and forecasts global freight rates will
increase by 12% this year after four years of decline.

But the reality is that the slowing in global trade may have more profound causes - not to do with shipping or 
economic growth, but to do with how and what we
 consume.

Last year, Mr Kapoor wrote a report for Drewry's using 
the example of his son's excitement at buying the 
Pokemon Go app and comparing his own habits 15 years earlier.

While his son was happy to buy something electronic, back 
in Mr Kapoor's youth he would have bought something physical that may well have been shipped in a container 
from Asia.

"In an increasingly knowledge based and services driven global economic expansion, the trade expansion is stagnating," he wrote.

"The global manufacturing engines, world trade, credit 
driven GDP growth model is being increasingly challenged 
and world trade seems to be stuck in a time warp, barely growing."