Ship Breaking Market Size, Share & Industry Analysis, By Light Displacement Tonnage (LDT) (Below 20,000 Tons, 20,000 to 40,000 Tons, and Above 40,000 Tons), By Method (Alongside, Beaching, Dry Dock, and Other), By Type of Ship (Tankers, Bulk Carriers, Farriers & Passenger Ships, Container Ship, General Cargo Ship, and Others), and Regional Forecast, 2024-2032

The ship breaking market size was valued at USD 3.98 billion in 2023 and is projected to grow from USD 4.08 billion in 2024 to USD 7.64 billion by 2032, exhibiting a CAGR of 8.2% during the forecast period. Europe dominated the ship breaking market with a market share of 41.21% in 2023.

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 an average, ships are sent to recycling at the age of 25 to 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 of them and 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 also catalyzing the ship recycling market progress. For instance, the International Maritime Organization (IMO) and the International Labor 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 forecast period.

Ship Breaking Market Trends

Automation and Increasing Utilization of Robots in Marine Industry to Boost Market Growth

Increased adoption of robots in the manufacturing industry has paved the way for automation processes. Robotics in ship building has already found its applications in material handling, measurement, welding, metal cutting, testing, and other operations. For instance, 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 PCBs, mercury, sulfuric acid, and others. These tasks have led to serious injuries and health issues among on-field workers. This scenario has paved the way for process automation in the ship breaking industry. For instance, 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.

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Ship Breaking Market Growth Factors

Aging Ship Fleet Will Catalyze Ship Breaking Market Growth

Ships are sent to scrap yards for the dismantling process at the age of 25 to 40 years depending on its usage and type. Besides the age of a vessel, the COVID-19 pandemic further boosted the market’s growth owing to lower utilization of the existing fleet. Moreover, the Russia-Ukraine war has also proliferated the ship breaking market growth owing to increased maritime freight rate. Due to the COVID-19 outbreak and the war, ship freight rates have gone up by three times. This has led to increased scrapping of aged fleets.

As per reports, more than 15,000 vessels will be recycled in the next decade. In terms of deadweight, these ships will account for more than 600 million tons, showcasing a growth of almost 2 times compared to the previous decade. Bulk carriers, tankers, and container ships will be the major type of ships to be sent for recycling. Moreover, a majority of shipping companies have started optimizing their fleets, and are considering new deliveries in the coming years. The global maritime fleet capacity was at around 26 million TEU in 2023; this capacity was at just 6 million TEU 20 years ago. Hence, 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 ship yards 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.

For instance, 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, ship yards present across South Asia are also expanding their annual recycling capacity to meet the proliferating demand for ship breaking. Several other factors, such as the introduction of the Hong Kong Convention, EU-approved ship yards, and so on will also propel the market development during the forecast period.

RESTRAINING FACTORS

Stringent Regulations and Work Environment Safety May Hamper Market Growth

Ship breaking 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.

To counter these incidents, the IMO has come up with the Hong Kong Convection which enforces major safety measures and mandates the use of specific inventory while handling hazardous materials. Besides safety issues, the ever-changing environmental regulations will also pose a major challenge to the ship scrapping market.

For instance, in May 2023, under environment protection rules, ship breaking has been downgraded to highly hazardous "red" from the less hazardous "orange-b". As per the Bangladesh Shipbreakers and Recyclers Association these new regulations put on hold the scrapping of nearly 42 ships worth USD 554 million for three months due to delay in obtaining environmental clearance. The bank loan interest on such huge amounts puts additional burden on the profitability of these ship yards. Hence, such regulatory delay may hamper the market growth.

Ship Breaking Market Segmentation Analysis

By Light Displacement Tonnage (LDT)

Below 20,000 Tons LDT Dominated Market Owing to Higher Scrapping of Lightweight Vessels

Based on Light Displacement Tonnage (LDT) type, the market is segmented into below 20,000 tons, 20,000 to 40,000 tons, and above 40,000 tons.

The below 20,000 tons segment dominated the market owing to increased scrapping of small-sized vessels. The overall lifespan of the small size vessels is boosting the market growth in the future.

The above 40,000 tons segment is estimated to be the fastest growing segment during the forecast period owing to increased deliveries of large-sized tankers and bulk carriers. For instance, in April 2023, the Aliaga ship-breaking yard initiated the dismantling of six large ships of the Carnival Cruise Line. Nearly 2,500 workers started the process of ship dismantlement.

By Type of Ship Analysis

Tankers Dominated Market Owing to Increased Scrapping and Aging of Tankers

By type of ship, the market is divided into tankers, bulk carriers, farriers & passenger ships, container ship, general cargo ship, and others.

The tankers segment dominated the ship breaking market share owing to aging and increased scrapping of tankers by vessel owners and operators. The new environmental norms, and need for net zero carbon emissions by replacing the aging fleet are weighting on the market dominance in the world.

The container ship segment is estimated to be the fastest growing segment due to major ships will get recycled in coming years. Reduced freight market has led to the sale of multiple container ships for scrapping. For instance, in January 2023, Wan Hai Lines sold 10 container ships for scrapping. A similar trend in the market from other operators will boost the growth of this segment during the forecast period.

By Method Analysis

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Beaching Method Dominated Market Due to Major Adoption by Shipyards across South Asia

By method, the market is divided into alongside, beaching, dry dock, and others.

The beaching method segment dominated the market owing to its cost-effectiveness and high adoption among shipyards across South Asia. The low labor cost in the region is weighting on the dominance in region.

The alongside method segment is estimated to be the fastest growing segment during the forecast period due to its safety measures and efficient methodology. In this method, the vessel is moved to a sheltered harbor for the dismantling process with the help of cranes from top to bottom.

REGIONAL INSIGHTS

In terms of region, the market is divided into North America, Europe, Asia Pacific, the Middle East & Africa, and Latin America.

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Europe dominated the ship recycling market owing to high ownership of ships among European operators and is the dominant region in the market. The regional market is also estimated to be the fastest growing one owing to the introduction of new maritime emission regulations and aging of existing fleets.

The North America market is estimated to grow at an appreciable pace owing to the procurement of new fleets and scrapping of older ships by operators. Development of new facilities across the region is also fueling the market’s growth. For instance, in December 2023, Amix Real Estate Holdings proposed a ship breaking infrastructure in Howe Sound, Canada. These developments will reduce the dependence of Western countries on Asian nations for ship breaking activities.

Asia Pacific is forecasted to grow considerably due to the presence of major ship owners across China, South Korea, and Japan. The presence of major ship scrapping yards across the region will further boost the regional market’s growth. Moreover, many shipyards are expanding their annual ship scrapping capacity to meet the rising demand and facilitate economic development. For instance, in July 2023, the Government of India planned to double the ship scrapping capacity of the country’s leading shipyard in Alang. Alang is also the largest ship breaking yard across the globe.

Latin America and the Middle East & Africa are estimated to grow at a notable rate owing to several initiatives taken by governments and private entities across these regions, development of new facilities, and enforcement of emission norms. For instance, in March 2023, at the commercial port of Al Jubail, Wreckdock Vessel Recycling planned to raise USD 300 million to develop a new ship scrapping facility with an annual capacity of nearly 50 vessels. Such developments will proliferate the ship recycling market growth in these regions.

KEY INDUSTRY PLAYERS

Capacity Expansion and Automation are Key Strategies of Major Players to Gain Market Share

The competitive landscape of the ship breaking market is relatively consolidated in nature owing to the presence of major players, such as Alang Ship Yard, Chittagong Ship Yard, PHP Ship Breaking and Recycling Industries, Ratanpur Ship Recycling Industries, and many others. These players are focusing on capacity expansion to increase their market share across the globe. Moreover, governments are also providing additional benefits, such as subsidies to support these ship yards. For instance, the Gujarat government allocated more than USD 3 million to support the Alang ship yard.

LIST OF TOP SHIP BREAKING COMPANIES:

• Alang Ship Yard (India)


• iZMiR Ship Recycling (Turkey)


• Spot Shipping AS (Turkey)


• Habib Group (Bangladesh)


• Ratanpur Ship Recycling Industries (Bangladesh)


• Chittagong Ship Yard (Bangladesh)


• Arefin Enterprise (Bangladesh)


• Changjiang (China)


• Zhoushan (China)


• PHP Ship Breaking and Recycling Industries (Bangladesh)

KEY INDUSTRY DEVELOPMENTS:

• December 2023: The U.A.E. government implemented a new regulation for setting up a dry dock or similar infrastructure for ship recycling facilities. This regulation also aims to ban beaching and reflagging of end-of-life vessels.


• November 2023: The European Parliament and Council implemented a new agreement for non-OECD recycling yards. The agreement will allow non-OECD yards to dismantle EU-flagged ships and will remove the hurdles imposed by previous regulations.


• July 2023: The European Union increased the number of ship yards approved for dismantling vessels as per the regulation established by the EU to 48. The new list consists of 38 ship yards across Europe, 9 from Turkey, and 1 from the U.S.


• July 2023: Petrobras, Gerdau S.A. and the Ecovix shipyard collaborated to develop a ship recycling facility on a floating offshore platform P-32. By the year 2029, Petrobras may retire more than 25 units, which will require an investment of USD 9.8 billion toward their decommissioning process.


• July 2023: The Netherlands court fined USD 28,000 to Jumbo, a Dutch heavylift firm. The fine was imposed owing to the sale of two ships for scrapping, which violated the European Waste Shipment Regulation.

REPORT COVERAGE

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The research report provides a detailed analysis of the market. It focuses on all major aspects, such as key players, contracts, regulations, and so on. Moreover, it offers insights into the market trends and highlights the key industry developments. In addition to the above-mentioned factors, the report focuses on several other factors that have contributed to the market’s growth in recent years.

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