Ship Breaking Market Strategies and Forecasts 2017 to 2025

Author: Sagar Jagadhane

Ship breaking is the process of dismantling decommissioned ships and similar vessels to extract scrap metal and demolish the huge ship structure. It is also known as ship demolition, ship cracking, or even ship recycling, at times. Global trade and shipping has consistently increased over the past years due to globalization and industrialization, which has led to substantial rise in ship building. However, the average life of a ship is quoted to be around 25 to 30 years. Post this age, the ship needs to be decommissioned for safety and economic concerns, may be sometimes due to accidents and mishaps of the ship. The process of decommissioning is usually followed by an auction of the ship, after which it is moved to the breaking yards to break it down. The breakdown is labor intensive, and the time required for breaking the ship down varies according to the size and type of vessel.

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An ageing ship fleet, especially small (less than 500 GT) and medium (500 to 25,000 GT) sized ships, is the key market driver of the ship breaking market. There are other alternatives to ship disposal, i.e. to deliberately sink it (and convert it into a coral reef) or to convert it into a museum; however, every alternative has severe drawbacks. The deliberate sinking method calls for exhaustive cleaning process and removal of all toxic materials that make up the ship, such as heavy metals, batteries, fuel, oils, etc., which may harm the environment. Furthermore, the process wastes several resources such as metal, which can be recycled. For turning a ship into a museum, the ship needs to be big enough, and most ships are small and not suitable for the process.

Moreover, they occupy unnecessary space in dockyards and ports. Thus, the only viable and economical process is to break the ship for its resources, especially metals. Most of the times, several other functional systems can be reused for other ships and vessels. Ship breaking also reduces the strain on the metal mining industry and introduces new metal in circulation for other usage. Additionally, the competition for the ship breaking industry is substantially low and concentrated. On the contrary, the ship breaking market has some serious issues as well, the industry is known to harbor some of the most dangerous working conditions, and thus, the labor is difficult to source and often conflicts & violates human rights for life risk and threats. Moreover, fluctuation in prices of scrap is a key threat to the ship breaking market. However, overall, the ship breaking market has consistently been performing well, even during the recession of 2008-09. Thus, the market is anticipated to remain strong during the forecast period.

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In terms of geography, the global ship breaking market can be segmented into Asia Pacific, Europe, North America, Latin America, and Middle East & Africa. The dynamics of the ship breaking market differ from developing and underdeveloped countries to developed countries. In developed regions, such as Europe and North America, the breaking of a ship is cost intensive and stringent rules, regulations, and standard operating procedures need to be followed, making the entire process economically unviable. On the other hand, in developing countries such as, China, India, and Bangladesh, the scenario is quite the opposite, the ship breaking market is expanding due to lack of regulations. Hence, Asia Pacific is a prominent market for ship breaking globally, with India, China, Bangladesh, and Pakistan topping the market. Turkey is also a major market outside Asia Pacific.