Why very less ships are coming for recycling.
15-Jun-2025
The decline in the number of ships coming for recycling or breaking up in recent years is due to a mix of economic, regulatory, and market factors. Here’s a breakdown of the major reasons:
1. High Freight Rates (Shipping Profits Still Strong)
- Post-COVID boom: Since 2021, global shipping demand surged (especially containers, bulkers), leading to record profits for shipping companies.
- Shipowners delay scrapping: Many older ships that would normally be scrapped are still profitable to operate.
2. Young Global Fleet
- A significant portion of the global fleet was built between 2008 and 2015, meaning many vessels are still under 20 years old — not yet due for recycling.
- Ship lifespan is around 25–30 years; hence, fewer are currently eligible.
3. Environmental and Regulatory Delays
- IMO regulations (e.g. carbon intensity index, EU ETS, etc.) are still evolving.
- Shipowners are waiting to see how older ships can be retrofitted or sold before choosing to scrap.
- Scrapping yards must comply with Hong Kong Convention standards (more below), limiting eligible yards.
4. High Scrap Yard Costs & Compliance Issues
- Many yards (especially in India, Pakistan, Bangladesh) face pressure to improve environmental and labor safety standards.
- Some shipowners prefer to delay scrapping rather than risk reputation issues or face regulatory red tape.
5. Uncertain Steel Market
- Recycled ships are a major source of scrap steel.
- If steel demand or prices are weak, yards reduce offers — making scrapping less attractive to shipowners.
6. Geopolitical Disruptions
- Conflicts (e.g. Red Sea, Russia–Ukraine, etc.) affect global trade routes and demand for tonnage.
- More older ships are used in “gray trades” (like sanctioned oil) instead of being scrapped.
The Hong Kong Convention (HKC) Impact
- Entering into force in 2025, the HKC sets safe and environmentally sound ship recycling standards.
- Shipowners are already assessing which yards will be compliant — delaying scrapping decisions until rules are clear.
AlangToday.com