What happens to old ships?

At Marine Traffic we track the passage of ships as they move around the world, but have you ever wondered what happens to the ships at the end of their working lives?

Most of the world’s ships are scrapped in Asia

Commercial vessels will typically have a working life of about 20 years, sometimes longer in the case of LNG carriers, often less for containerships and tankers as new and more efficient designs emerge and shipowners decide to invest in new ships rather than upgrade their existing fleet. Today the average age of the world’s commercial shipping fleet is less than 10 years.

But even at the end of their working lives, ships still have a value. The vast quantities of steel and component parts can be recycled and reused in numerous applications. In fact over 95% of a modern ship by weight can be recycled. However, recycling a ship is not easy. Not only does great care need to be taken with the numerous hazardous substances onboard, but the work of dismantling ships is a very dangerous business that costs the lives of too many workers every year.

Most of the world’s ships are recycled in Bangladesh, China, India, Pakistan and Turkey. Tidal beaching, the most basic and controversial of recycling techniques, where the ship is dismantled manually on the beach itself is practised across South Asia with about 75% of ships by tonnage or 641 vessels dealt with in this way in 2014.

There are however greener and safer recycling methods of dismantling ships in more sophisticated quay-side yards. These yards have heavy lifting equipment, and floating or dry docks but this is of course a more expensive method. The price differential between beaching and greener recycling methods can be significant. Traditionally, prices obtained for scrap by a shipowner at South Asian facilities are 40-60% higher than in Turkey and China where a more mechanised contained approach is taken, meaning a careful decision by the shipowner.

Scrap values for vessels have declined by more than half since their peak in 2008. Chart above shows $ per tonne for ship scrap at facilities on Asian-sub continent, 2004-2015 (source: the Baltic Exchange)

In 2009 a more comprehensive regulatory regime was introduced with the signing of the International Maritime Organization’s Hong Kong International Convention on the Safe and Environmentally Sound Recycling of Ships (HKC). The Convention is not yet in force as only four states representing 1.5% of global gross tonnage have so far ratified it. For the HKC to come into operation, 15 states representing 40% of global gross tonnage will need to ratify the Convention.

Under the Convention a “cradle to grave” approach is taken to ship recycling covering the design, construction, operation and preparation of ships for recycling. It also provides rules for the operation of ship recycling facilities, stipulating the requirement of a ship recycling facility plan and stresses the improvement of environmental credentials and employee working conditions at the facilities. Crucial to the HKC is the requirement of a certified Inventory of Hazardous Materials (IHM) for individual vessels. The document, which accompanies a ship throughout its trading life, indicates the quantity and location of the hazardous materials in its structure that will be encountered upon during recycling.

It has now been six years since the HKC was introduced, and yet the Convention has still to be ratified. This has caused huge frustration, particularly at the European Parliament, which introduced a set of interim measures which come into effect at the end of this year. The European Union Ship Recycling Regulation 1257/2013 (EUSRR) has the same technical standards as the HKC, but bans beaching as a method of ship recycling, requires all ships calling at EU ports to carry a more stringent list of hazardous, and requires all shipowners of EU flagged vessels to only use ship recycling facilities that are on the approved EU list.

Critics of the scheme argue that a blanket ban on beaching ships will lead to the closure of Asian facilities which provide employment to thousands in impoverished regions. They also point out that there are not enough ship recycling facilities to meet the requirements as well as noting that European shipowners will potentially be placed at a huge competitive disadvantage.

For the backers of the scheme, the fact that too many poor and unskilled workers are killed dismantling ships is reason enough to seek a ban on beaching.