Shipbreaking, 2015 record

2015, the year of Bangladesh, bulkers go for slaughter, the industry for purgatory

Tons and $
766 ships demolished in 2015, i.e. a 21% drop compared to 2014. The scrap tonnage was 7 million tons, it was 8 million tons in 2014. This has been the weakest year since 2010 for the demolition business. Turbulence in the Top 5: decline in Pakistan and Turkey, drop in India, collapse in China and boom in Bangladesh. With a 47% increase, it is taking the lead after 6 years of Indian reign. 2015 is the year of Bangladesh. The Top 5 absorbed 95% of the demolished ships.

The purchase prices have shrunk. The ton fetched 400 $ early 2015 and dropped below 300 $ at the end of the year in the Indian Subcontinent. In Turkey, the decrease reached 40%; in China, prices have been halved with an upper limit of 140 $ for tankers. When a Chinese ship owner does not order a new ship to replace a demolished one, it cannot benefit of scrappage incentive. Some Chinese owners send their end-of-life vessels to Bangladesh. Thus, the FPSO tanker Nanhai Kai Tuo left the South China Sea to be demolished in Chittagong, for an additional profit of 5 million $ compared to a Chinese shipbreaking yard.

Bulk and oil crisis
2015 has been a gloomy year for bulk carriers, victims of depressed freight rates. This is an haemorrhage: 32% of the scrapped tonnage in 2014, 61% in 2015. Among the 364 sacrificed units were 91 capesize bulkers, over 110,000 t deadweight. The average age at the end of their life is 25 years; it was 28 years in 2014. Only container ships have a shorter life: 22 years. The overall average for all categories is 28 years.

The other economic victim is the oil exploration and exploitation sector. The established low level of crude oil prices is slowing down investments and has led to demolition 41 vessels dedicated to seismic research, drilling or offshore supply.

Flags of the last voyage
At least 125 ships (16%) have been deflagged prior to their last voyage: the rythm is speeding up. St. Kitts and Nevis remains the favourite funeral flag of ship owners and brokers, ahead of Comoros. Palau archipelago, which emerged in 2014, is ranked 3. Newcomer this year, Niue Island, population 1190, 260 km², a South Pacific country in free association with New Zealand, recognized by UN and member of the IMO. Niue has been blacklisted in June 2015 by the European Union as an uncooperative tax haven.

Detention and demolition
This is good for maritime safety: substandard ships are still driven out of business. 55% (423) of demolished ships have been previously detained in ports around the world. The detention rate of general cargo carrier is 74%; it is of 71% for bulkers, 62% for chemical tankers, 45% for container ships. The most punctilious port with regard to ship control is Newcastle, an Australian port located north of Sydney, specialized in coal exportation. It has totalled 49 detentions among the ships sent to the scrapyards. It’s ahead of the Russian port of Novorossiysk (33 detentions), Hong Kong (25 detentions) and a trio of European ports, Rotterdam and Hamburg (22 detentions) and Antwerp (21 detentions). English and French ports are missing in this roll of honor.

Hong Kong in focus
The Convention for a safe and environmentally sound recycling of ships was adopted in Hong Kong in 2009. The number of contracting parties remains stagnant: 3 (Norway, Congo, France). Yet, the ship demolition industry worldwide pretends to be Hong Kong compatible. In China and Turkey, shipbreaking yards say they are ready. For a few years now, Japan has been counting on some selected Indian yards. In 2015 the classification society Nippon Kaiji Kyokai issued certificates of compliance to 2 Alang shipbreaking yards, Kalthia Shipbreaking and Priya Blue Industries; no South Asian beaching plot had been awarded such certificate before. In Bangladesh, Norway and the IMO are on the move. Launched in April 015, the project to improve safety and environmental standards « is making good progress » according to its governing bodies which met in Dakha in December 2015.

Europe is moving offshore
254 ships (33%) were flying a European flag or belonged to a shipowner established in the European Union or in a member state of the European Free Trade Association (Iceland, Switzerland, Norway). 27% have been built in the same countries. 86% have been broken up in Asia, India was their favoured destination, ahead of Pakistan and Turkey.

The European regulation is an ongoing process: it will apply to ships flying a European flag pending the entry into force of the Hong Kong Convention. It is an improvement with regard to risk awarenesss through the implementation of inventory of hazardous materials on board. Shipbreaking yards will be responsible for the management of toxic waste from European-flagged ships. They will be awarded renewable authorization. Everything is getting in order to legalize export practices from the EU towards third countries, including non-OECD ones.

Genoa
The Costa Concordia dismantling operations are progressing. In May 2015, after lightering, the ex cruise ship was transferred from the seawall pier at Voltri container terminal to a Genoa dock. The project is a deconstruction, not a demolition. Each deck is stripped of its interiors, the removed materials are sorted in containers or big bags and evacuated to be recycled or disposed off in Italy. The dismantling of the upper decks is ongoing. The final cutting phase will be carried out in drydock. Will it only be a demonstration with no follow-up? This would be regrettable. Europe needs facilities able to dismantle large-sized vessels.

© Saipem/San Giorgio del Porto