Future of Ship Breaking Business

Thanks to the US and European sanctions on Russian & Iranian dark fleets, Indian ship-breaking industry is finally looking up after 5yrs of a dramatical fall in business 🙌.

Many may not know, but India has always been a major player in the ship-breaking industry. And Gujarat’s Alang has long been one of the best-known destinations globally for aged ships to be brought and broken down for scrap. In fact, in 2012 alone, the 150+ yards in Alang broke down some 461 ships massive ships.

But, then 𝗳𝗼𝘂𝗿 𝘁𝗵𝗶𝗻𝗴𝘀 broke it all down!

First came Donald Trump’s 2019 Iran sanctions, driving up demand for dark fleets of aged ships to secretly transport Iranian oil to China. This deeply eroded the supply for ship-breaking yards across major hubs, be it Gujarat’s Alang or Pakistan’s Gaddani.
Then came Covid-driven supply chain disruptions, which increased shipping charges globally. This meant better returns for all kinds of cargo ship owners if they kept operating those older ships for more time.
Then came the Russia-Ukraine war and resultant sanctions on oil tankers shipping Russian oil to India and China, etc. That drove many more owners of older ships to keep the ships running on waters than be broken down.
Then came the Red Sea crisis of last year (because of the Israel-Gaza/Lebanon/Yemen/Iran war), which further raised the tariffs, making it more profitable for older ships to keep chugging.

And with each such event, the ship-breaking yards were left gasping.

But now, latest round of US and EU sanctions on 650+ dark fleet ships, majority of the dark fleet owners are no longer able to move as much oil as they once desired.

And the longer this holds, the greater the loss of keeping the ships maintained and operation-ready while not having a demand for them, making it more attractive to sell those off to ship breakers and cash out of the floating junk.

Results?

1. Big ships are beginning to come back to India (Alang), and also to other major ship-breaking hubs, like Pakistan (Gaddani), Indonesia and Bangladesh.
Two such mega ships to have come to Alang within the last two months include Nolan and Blufins.
But, Alang’s 150+ yards need more than a trickle of tankers to survive. Sure, a few sanctioned ships are a lifeline. But, one or two ships won’t save the day; they need dozens, hundreds, to get back on their feet.

This is a massively labor-intensive industry, with several lakhs employed in its heyday. Yet somehow, nobody talks about it, and there is hardly any awareness.

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