Alang’s Shipbreaking Yards in Distress: Dismantling Dreams in Rough Waters
Alang, India, boasts the world’s largest ship-breaking yards. But these once-bustling graveyards for giant vessels are now facing their worst slowdown in nearly a decade.
The numbers speak for themselves. In 2023, just 136 ships arrived at Alang for their final tear-down, a significant drop compared to the 141 dismantled in 2022. This decline follows a previous slump, with 2021 seeing 205 ships dismantled.
Industry veterans initially thought 2022 was the rock bottom. However, 2023 proved even bleaker. The situation shows no signs of improvement in 2024 either. Haresh Parmar, secretary of the Alang Ship Recycling Association, reports a meager 25 ship arrivals between January and mid-March. This translates to a mere 15 days of work for laborers in the past two and a half months, a far cry from previous years’ activity.
A Perfect Storm: High Costs, Regional Tensions, and Global Competition
Several factors are creating a perfect storm for Alang’s ship-breaking industry:
- Soaring Freight Rates: Even after the COVID-19 pandemic subsided, freight rates continued to climb. This financial boon for ship operators incentivized them to keep their vessels operational for longer, delaying or altogether avoiding the inevitable dismantling process. With good money to be made, sending ships for recycling became less attractive.
- Red Sea Jitters: The situation in the Red Sea threw another wrench into the works. A critical shipping artery, the Red Sea connects Asia and Europe, significantly reducing travel time through the Suez Canal. However, tensions escalated in October 2023 when Houthi rebels in Yemen launched missile attacks on container ships in retaliation for Israeli actions in Gaza. Fearing for their vessels’ safety, many shipping companies suspended operations in the Red Sea. Others opted for the far longer route around Africa’s Cape of Good Hope, further extending journeys and delaying the point where ships become uneconomical to operate.
The Global Market Heats Up: Competition from Bangladesh and Pakistan
Alang isn’t just facing internal challenges. Neighboring countries like Bangladesh and Pakistan are offering more attractive rates for ship recycling. While Alang yards pay around $500-510 per ton of recycled steel, Bangladesh offers a steeper $540-550, and Pakistan comes in at $525-530. This price difference makes Alang a less attractive option for ship owners seeking to maximize their return on their retired vessels.
A Call for Change: A Push for Recycled Steel and Government Support
Industry leaders like Haresh Parmar are urging the Indian government to take action and help Alang regain its footing. One suggestion is to mandate the use of recycled steel in government projects. This would create a guaranteed domestic market for the steel produced by Alang’s ship-breaking yards, boosting demand and potentially raising prices to compete with rivals.
The Road Ahead: Uncertainty and a Hope for Revival
The future of Alang’s ship-breaking industry remains uncertain. Without significant changes, the slowdown may very well become the new normal. Addressing the issues of high freight rates, regional instability, and international competition is crucial for Alang to reclaim its position as the world’s leading ship recycling hub. Additionally, government support through policies promoting the use of recycled steel can provide a much-needed boost to the industry.
Whether Alang can weather this storm and emerge stronger will depend on its ability to adapt and innovate in a rapidly evolving global market. The future of these massive ship graveyards, and the livelihoods they support, hangs in the balance.
