Now that the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships has entered into force, BIMCO has updated its estimate for the ship recycling potential over the next ten years. In a new Shipping Number of the Week, the organisation estimates this to be 16,000 ships.
The estimate potential of 16,000 ships, or 700 million deadweight tonnes (DWT), is up from previously 15,000. ‘The new estimate equals twice the number of ships, and nearly triple the DWT, recycled over the last ten years and highlights the need for investments in compliant recycling facilities,’ says Niels Rasmussen, Chief Shipping Analyst at BIMCO.
Applying the recycling patterns seen between year 2000 and 2019 for each ship segment and type, BIMCO has calculated the recycling potential for the next ten years. If on average ten per cent of all twenty-year-old capesizes were recycled between 2000 and 2019, the organisation has assumed the same recycling frequency for the coming ten years. The 2000-2019 period saw both very low and high recycling wherefore BIMCO believes it provides a good foundation for calculating the future potential.
Also read: BIMCO paper: ‘Remove obstacles to safer ship recycling’
Shipbuilding high in 2000s could fuel recycling
‘During the 2015-2024 period, ships built in the 1990s made up 35 per cent of the ships and 62 per cent of the DWT recycled. During the 2000s, 31 per cent more ships were built equal to a 115 per cent DWT increase. The ships built in this period are expected to dominate recycling in the coming ten years,’ says Rasmussen.
In fact, only three per cent of the ships and five per cent of the DWT built during the 2000s have currently been recycled whereas the same is true for twenty per cent of the ships and 67 per cent of the DWT built in the 1990s.
Combined, the three largest sectors, bulker, tanker and container ships, naturally make up most of the future recycling potential: 91 per cent of the DWT. However, they only make up 53 per cent of the ships, and general cargo and fishing ships each contribute nearly as many ships as each of the three large sectors.
Bangladesh, India and Pakistan
During 2015-2024, Bangladesh, India and Pakistan continued to be the largest recycling destinations, making up 86 per cent of DWT and 58 per cent of ships recycled. The three countries’ dominance was even more pronounced after 2017 as China stopped recycling international ships and has since recycled less than two per cent of DWT.
Outside of South Asia, Turkey remains a sizeable recycling location, especially for offshore ships.
Even though projects exist to expand recycling capacity elsewhere, BIMCO expects the majority of recycling will still take place in South Asia for some time to come.
Also read: BIMCO: Regional container trade imbalances increase 33%
New record on the horizon?
The current record high recycling volume was achieved in 2012 with nearly 1800 ships and 60 million DWT recycled. The potential recycling volume for the coming ten years is meantime so high that DWT volumes recycled in every year starting from 2027 could exceed this record.
‘Actual recycling may naturally end lower than our calculated potential if the supply/demand balance is particularly strong. On the other hand, it could end higher due to weak markets and the need for replacing older tonnage to reduce greenhouse gas emissions. In either case, we find it overwhelmingly likely that recycling will end significantly higher than in the past while recycling facilities at the same time need to ensure compliance with the stricter requirements of the Hong Kong Convention,’ says Rasmussen.
Note: Ship sectors included in the data and forecast are dry bulk, tanker, container, gas tankers, general cargo, other dry cargo, offshore and inland waterways.
Picture: Work in progress beached vessel in a recycling yard (photo by Nayeem Noor, Wikimedia Commons, CC BY-SA 4.0).
Also read: BIMCO: Demand shocks slash ship recycling
