Up to 13 cruise ships were reduced to scrap in 2020 – more than in the five previous years combined.
The number of cruise ships removed from the global fleet in 2020 was so high that junkyards struggled to keep up with demand – especially when the ships are registered in the European Union and therefore have to meet stricter regulations.
According to Vagelis Chatziginnis, a senior trader at GMS Leadership (one of those ship scrapping companies), most of the ship scrapping in 2020 took place in Turkey.
“We have already seen some units sold for recycling in India, but some units are nothing compared to the numbers we have seen so far in Turkey,” Chatziginnis told Cruise Industry News. “For example, some of these larger cruise ships are being set up in places like Greece until there is more space in Turkey for digestion.”
Scrap values
Chatziginnis said the average scrap value in India is $ 400 per ton. In Turkey, the value is significantly below the value at 280 to 300 USD per ton. However, at the height of the pandemic, those values could be as low as $ 90 for ships flying the EU flag.
“When the pandemic peaked – say around summer 2020 – and the first cruise ships were scrapped, some of them were even getting double-digit numbers, like barely $ 100 a ton, maybe $ 90,” he said.
The value can depend on various factors, e.g. B. the country in which the facilities are located or whether the cruise ship is registered in an EU country.
“If the ship had to be recycled under a European Union regulation, you would probably look for $ 200 per ton equivalent in Turkey as the capacity of shipyards that comply with European regulations is very limited.” Declared Chatziginnis.
“There is one facility in the US that is approved in the European Union. So the ship could be recycled there, but it’s a completely different market. For example, you’d probably be looking at around $ 80 a ton, ”he added.
However, Chatziginnis said steel prices have increased dramatically worldwide in recent months, with residual value increasing nearly $ 100 per tonne in each of the major ship recycling districts.
Process organization
One role of a company like GMS is to organize the entire recycling process.
“Ultimately, ownership and responsibility of the ship would be transferred to the owner unit who would buy the ship. The cruise line no longer has anything to do with the ship. Then we organize the transport from point A to point B, ”said Chatziginnis.
“Let’s say you take over a cruise ship and, for example, Piraeus.
So we brought our crew on board from Piraeus in Greece and made sure that the unit went to Turkey. We will send the unit (then) to the recycling facility and the recycling facility will have to pay to buy the ship to recycle according to the standards we will agree on, ”he added.
GMS also reviews the original owner’s requirements for regulations to be followed and then introduces them to how to scrape in the best interests of the cruise industry.
“It sounds easy, but it’s not always like that. Especially when you have to comply with other rules (like EU rules), ”said Chatziginnis.
What keeps
A record-breaking 46 cruise lines could enter service in 2021: 30 ships set to make their debut and 16 more ships that were delivered in 2020 but have not yet entered service.
With so many ships, cruise lines need to be careful not to outbid the market, said VesselsValue, a marine data provider.
“A quick and confident return in demand is paramount to the recovery of the industry. Otherwise, we should expect further delays and moves to keep the balance, ”Guy Cooper, cargo analyst at VesselsValue, told Cruise Industry News.
The other sad consequence of the pandemic is that many relatively young cruise ships are being scrapped.
“Look at the Marco Polo – it’s a 55 year old ship … It’s been in service for about 50 years … And now all the other major lines are scrapping all ships that were built in the 1990s and 1980s. From our understanding of the normal cruise industry, this is still quite young, ”said Chatziginnis.
“I doubt we have recycled that many cruise lines in a year in the last decade, or maybe more,” he added.
