The ship-breaking market size was valued at US$3.98 billion in 2023.
The market is projected to grow from US$4.08 billion to US$ 7.64 billion by 2032, exhibiting a compounded annual growth rate of 82% during the forecast period.
Ship-breaking refers to the dismantling of a ship after its estimated end of life. Based on the utilization and condition, vessels are sent for scrapping to yards. These yards charge ship owners based on the Light Displacement Tonnage (LDT) of a ship for end-to-end dismantling or scrapping.
The majority of ship recycling yards are present across South Asia, especially in China, India, Bangladesh and Pakistan.
The ship-breaking market is estimated to grow at a notable pace owing to several factors, such as
aging fleet, emission regulation, safety measures, and so on. On average, ships are sent to recycling at the age of 25-40 years depending on the type of ship, annual utilization, vessel condition, and other factors.
Moreover, the COVID-19 pandemic positively impacted the ship recycling sector as fleet Owners scrapped a few of their ships before their actual or planned age owing to reduced demand for them and the financial crisis during this period. Hence, the outbreak of the virus proliferated the market growth during the FY 2019-2020.
Furthermore, the enforcement of marine emission regulations are catalyzing the ship recycling market progress.
For instance, the International Maritime Organization (IMO) and the International Labour Organization (ILO) presented the Hong Kong Convention, which aimed to improve the safety at ship scrapping yards.
Many countries have signed the Hong Kong Convention and it will be implemented from June 2025. Such developments will propel the ship recycling market development during the forecast period.
Market Trends
Increased adoption of robots in the manufacturing industry has paved the way for automation processes. Robotics in shipbuilding has already found its applications in material handling, measurement, welding, metal cutting, testing, and other operations. As a guide, in July 2023, Fincantieri and Comau announced their decision to develop MR4WELD, an autonomous welding robot for the shipbuilding industry. The new robot will enhance work efficiency and can perform hazardous jobs as well.
The Ship recycling industry also possesses several hazardous tasks, such as material handling and cutting of vessels having toxic and carcinogenic substances, such as PCB’s, mercury, sulphuric acid, and others. These tasks have led to serious
injuries and health issues among on-field workers. This paved the way for process automation in the ship-breaking industry. In November, 2022, Circular Maritime Technologies (CMT), a Dutch startup, received funding from the European Regional Development Fund to develop automated processes for the ship recycling industry.
Aging Ship Fleet Will Catalyze Ship Breaking Market Growth :
The Russia-Ukraine war has also proliferated the ship-breaking market growth owing to increased maritime freight rates. Due to the Covid-19 outbreak period and the war, ship freight rates went up
several times, which led to increased scrapping of aged fleets.
More than 15,000 vessels will be recycled in the next decade. In terms of deadweight, these ships will account or more than 600 million tons showcasing a growth of almost two times compared to the previous decade.
Bulk carriers, Tankers, and Container ships will be the major types of ships to be sent for recycling. A majority of shipping companies have started optimizing their fleets and considering new deliveries in the coming years.
The Global maritime fleet capacity was at around 26 million TEU’s in 2023; this capacity was at just 6 million TEU’s 20 years ago. In the early 80’s we handled as Agents the first Container ship in Mumbai port which was only 750 Teu capacity and today the Industry is building Container ships of over 24/25,000 TEU’s. The rising presence of new fleets will pose a major challenge for shipping companies to optimize their fleets by scrapping old vessels. These factors will propel the market growth.
Development of New Ship Recycling Yards will Propel Market Growth Globally
The global demand for ship recycling is fulfilled by the shipyards in South Asia, especially from Bangladesh, India, and Pakistan. This has led to a higher dependence on a few key players for conducting the ship scrapping process. To overcome this situation and meet the global demand, majority of the private and public entities across the globe have planned to develop new ship breaking facilities at different locations.
New ship scrapping facilities are being planned to be set up across Brazil, Canada, the Netherlands, Saudi Arabia, Turkey, and other countries in collaboration with different private and public entities. Such initiatives will establish a supply chain balance in the market by reducing dependency on South Asia.
Moreover, shipyards present across South Asia are also expanding their annual recycling capacity to meet the proliferating demand for shipbreaking. Several other factors, such as the introduction of the Hong Kong Convention, EU-approved shipyards, and so on will also propel the market development during the forecast period.
Shipbreaking deals with several critical tasks, starting from material handling to metal cutting. These activities require significant safety measures for on-floor workers. Lack of protective equipment while carrying out these tasks or handling hazardous materials has led to the death of or serious injuries to workers. As per reports, more than 440 workers have died since 2009. To increase profitability, shipyards tend to violate a few procedures, which create major safety issues later on during the process.
Marex Media