Ship recycling plots in Alang, home to the world’s largest stretch of shipbreaking facilities in Gujarat’s Bhavnagar district, beached 196 ships in calendar year 2020 for dismantling, benefiting from the green recycling policies of global ship owners for their end-of-life ships.
In comparison, sub-continent rivals Bangladesh beached 150 ships and Pakistan 95 ships. In 2019, Alang beached 186 ships for recycling.
Over 90 of the 120 working plots at Alang are certified for compliance with green recycling standards prescribed by the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships adopted by the International Maritime Organization in 2009.
“Alang managed to get steady business despite the pandemic,” said Anand Hiremath, Head, Research and Development and Lead Coordinator, Responsible Ship Recycling at Global Marketing Systems, Inc (GMS), the world’s biggest cash buyer of ships for demolition. “More than 90 green recycling facilities in Alang is the main reason for this as ship owners with Hong Kong Convention recycling policies for its end-of- life ships recycled their tonnage in India.”
Bangladesh had only one green recycling yard while Pakistan had none.
The pandemic had a devastating impact on the shipping industry the world over, as vessels became stranded, steel prices crashed by about $150 per Light Displacement tonnage (LDT) and led many recycling deals to collapse. Light displacement tonnage refers to the weight of a ship’s hull, machinery, equipment and spares and forms the basis on which ships are usually sold for scrap.
Alang was also hit by an exodus of migrants from Uttar Pradesh, Bihar, Jharkhand and Odisha who make up for some 80 per cent of the 20,000 workers directly employed in the shipbreaking plots.
Ship recycling markets, though, made a strong recovery in Q3 and Q4.
The year 2020 started with container ships being sold for recycling as owners scrapped vessels due to low freight rates, but it ended with a resurgence in rates for the container shipping sector. “When the world is in recession, recyclers get better benefits. The same thing happened in 2008. When the world was in recession, business boomed at Alang as fleet owners scrapped vessels at a record pace,” said Ashit Parikh, Partner at Bhavnagar-based agency Ashit Shipping Services.
In 2021, the focus will be on recycling dry bulk carriers and tankers due to the declining charter rates in these segments, according to GMS Inc.
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