Evolving Dynamics in Ship Recycling: Capacity, Sustainability, and Global Trends

29 Nov 2023
Author: Dr. Anand Hiremath

This article explores the current capacities, recent growths, and future trends in ship recycling, focusing particularly on the Indian subcontinent and its comparison with global capacities. We delve into the industry's evolution, its economic impact, and its contribution to sustainable maritime practices.

The Integral Role of Ship Recycling


The ship recycling industry, known as the fourth pillar of the maritime sector, plays a critical role in global trade and environmental sustainability. The demand for steel, the primary raw material from ship recycling, is a major driver. The global steel market, valued at approximately $870 billion in 2020, is expected to reach about $1.01 trillion by 2025, as per the "Global Steel Market Report" by ResearchAndMarkets.com. This demand directly impacts ship recycling, as low freight rates and high steel prices can increase recycling activities. The global shipping market, which saw a 3% increase in fleet size in 2020 (according to the UNCTAD Review of Maritime Transport 2021), directly affects ship recycling. Economic growth and increased trade often keep older ships operational, while downturns lead to an oversupply of shipping capacity, pushing older vessels towards recycling. Changes in environmental regulations, like the International Maritime Organization's (IMO) 2020 sulfur cap, can also influence ship retirement decisions. The trend towards a circular economy, projected to reach $4.5 trillion by 2030 ("Circular Economy Market Global Forecast to 2030" by MarketsandMarkets), is reshaping the industry. This shift encourages innovation in recycling methods and might lead to new investment in eco-friendly recycling facilities.


Anticipated Increase in Ship Recycling


According to the Baltic and International Maritime Council (BIMCO), a significant uptick in ship recycling is anticipated. BIMCO reports that 15,000 ships, accounting for 12.5% of the global fleet, are projected to be recycled in the next decade, doubling the number of ships recycled in the previous ten years. This underscores the growing demand for sustainable ship recycling capacity. The aging world fleet, with more than half of the ships over 15 years old, further intensifies this need. The United Nations Conference on Trade and Development (UNCTAD) notes that the average age of the world shipping fleet at the start of 2023 was 22.2 years. The life span of a typical ship is about 25 years. On average, about 600-800 ships reach their end of life worldwide every year. As this number is expected to double, it raises a question: do we have sufficient recycling yards (capacity) to accommodate these end-of-life ships expected in the near future?
The Indian subcontinent, encompassing India, Bangladesh, and Pakistan, is a significant force in the global ship recycling industry. This region’s dominance is a reflection of its substantial capacity and strategic geographic location.

  • India’s Leading Position: India stands at the forefront with 131 operational yards (153 registered), representing a capacity of 7 million gross tonnage (GT), which translates to approximately 4.5 million light displacement tonnage (LDT) annually. This impressive capacity is concentrated primarily in Alang, Gujarat, a location synonymous with ship recycling. Alang's yards, known for their size and volume, position India as one of the largest ship recycling nations. Alang can easily accommodate over 400 ships per year. The Government of India has been actively improving the standards of these yards, pushing for better environmental and safety practices in line with the Hong Kong Convention for the Safe and Environmentally Sound Recycling of Ships (HKC), with 90% of Alang yards compliant with HKC Standards.

  • Bangladesh’s Growing Influence: Bangladesh, with 60 yards capable of handling 6.8 million GT, is another key player. The yards in Bangladesh, primarily located in the Chittagong area, have evolved significantly, contributing to the steel industry as a large portion of the country's steel supply comes from recycled ships. Bangladesh’s ship recycling industry not only contributes significantly to its economy but also employs a large workforce. Four yards in Bangladesh are compliant with HKC standards, and several others are in the pipeline.

  • Pakistan’s Role: Pakistan, with 40 yards, manages a capacity of 3.7 million GT. Most of these yards are in Gadani, historically one of the world’s largest ship recycling locations. Pakistan's industry is a vital source of raw materials and employment. Gadani's yards have been undergoing improvements in safety and environmental procedures, reflecting a broader trend in the region towards enhancing industry standards.

While the Indian subcontinent is a central hub, other regions, including Turkey and the European Union (EU), make significant contributions to the industry. Turkey's role is notable with 28 shipyards dedicated to recycling, handling a capacity of 2.5 million GT. These yards, located in Aliaga, adhere to high environmental and safety standards, aligning with EU regulations. The EU's approach, framed within a commitment to environmental sustainability, lists 48 yards (including the 9 in Turkey) with a collective capacity of 2.94 million metric tons. These yards operate under strict regulatory frameworks that prioritize environmental protection and worker safety, as emphasized by the European Commission's Ship Recycling Regulation.


Recent Growth and Future Projections


The past five years have witnessed marginal growth in global yard capacities, with new yards in Bahrain, Saudi Arabia, the United Arab Emirates, and Indonesia, collectively adding approximately 100,000 MT to the global capacity. Looking towards the future, India is poised for substantial growth. By 2030, India aims to enhance its capacity by 4 million metric tons per year (MMTA), expanding its yards from 153 to 198. This increase will boost the total capacity to 9.5 MMTA, equipping India to meet the escalating global demand.


Navigating the Future of Ship Recycling: Final Insights


India-subcontinent yards are making strides in modernizing their practices, adhering to international standards, and investing in better technology and infrastructure. The continuous improvement in operational standards and environmental compliance is a testament to the industry's dedication to evolving in line with global best practices.

Returning to the question of capacity, the Indian subcontinent indeed has enough to recycle the surge of ships expected in the coming years. While India has sufficient HKC-compliant yards, Bangladesh needs more, and Pakistani yards are yet to start working towards HKC compliance. As for the capacity to recycle EU-flagged ships, there is a shortfall. Bridging this gap requires accepting a standard, such as the HKC, and making suitable amendments to meet the requirements of the EU Ship Recycling Regulation (EUSRR). It's important to remember that the purpose of framing EUSRR guidelines was not to compete with HKC, but to fast-track HKC ratification. With HKC ratified and set to enter into force by June 25, 2023, a unified global standard is necessary to meet the capacity required for recycling the large number of ships expected in the next few years.


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About Author

Dr. Anand M. Hiremath, Chief Sustainability Officer of GMS Leadership, is a Civil Engineer and holds a Master's Degree in Environmental Engineering from the Indian Institute of Technology Guwahati (IIT Guwahati) India. He has a diploma in industrial safety and is a qualified lead auditor for ISO 9k, 14k and 184.

Dr. Hiremath published the first practical handbook on ship recycling, entitled: 'The Green Handbook: A Practical Checklist to Monitor the Safe and Environmentally Sound Recycling of Ships' which highlights the procedures the GMS SSORP follows to help both Ship and Yard Owners recycle a vessel in an environmentally-friendly manner. Dr. Hiremath is the Course Director for the first-of-its-kind 14-week online course on Ship Recycling offered by Lloyd's Maritime Academy, London."

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Ship Recycling Team