Six of the world’s most famous and largest cruise ships are at a Turkish beach town along the Aegean Sea, at the same time. And they are all being ripped apart by two and a half thousand workers in the country’s ship scrapping hub, Aliaga. The cruise line industry has been at the forefront of the economic crisis brought on by the coronavirus pandemic. Its first casualty was the British-registered Diamond Princess which was struck by an outbreak in January. 712 passengers were infected and 14 of them succumbed to the disease. Since then, a number of ports have refused to allow cruise ships to anchor at their ports. To date, the three of the world’s largest cruise operators have sent 18 of their five-star floaters to scrap yards and they are expected to continue cutting their fleets. That’s led to a bonanza for Turkish ship breakers, but yards in other countries can also expect a boom soon.
Demand for other marine vessels is also in the doldrums. In its October update, the World Trade Organisation forecasts international merchandise trade to fall by 9.2 percent this year, compared to 2019. It’s also warning of a protracted recovery that could see trade volume rise by just 7.2 percent instead of the 21.3 percent expansion it had forecast in April. Freight rates charged for shipping containers have forfeited six years of increases, over as many months.
Likewise, the market for vessels used in offshore oil and gas exploration and extraction, as well as in the transport of these fuels, is also facing losses of apocalyptic proportions. Maritime market analysts at Lloyd’s List reports global shipments of diesel and natural gas are down to their lowest level in 11 years. In its monthly update, OPEC cut its forecast for global oil demand by 9.5 million barrels per day. And it expects the fuel glut to worsen as producers are expected to continue pumping at levels far exceeding demand, until the end of this year. Hundreds of oil tankers are already serving as offshore storage units in the Strait of Hormuz and along the coast near North American refineries. Those fleets can only be expected to grow further.
All the signs are pointing towards an imminent boom for ship breakers. Along with India and Bangladesh, Pakistani ship breakers have historically accounted for 90 percent of the world’s ship scrapping industry, so these countries should be among the main beneficiaries of the coming bonanza.
But the domestic industry has been losing ground to its regional competitors, for years. Back in the 1970’s, Gadani was the world’s largest ship breaking facility. Last year, it handled just 35 vessels with a gross tonnage of less than 300,000 tons. By comparison, the Alang ship graveyard in India handled 200 ships with more than 3.6 million gross tonnage and the Chittagong Ship Breaking Yard in Bangladesh ripped apart 236 vessels weighing over 7.8 million tons.
Raising this year’s tally over the previous year should not suffice as an achievement considering the scale and scope of business available over the next few months. Can the domestic industry make the boom count, and what’s the role for government? We will explore answers in subsequent columns. Stay tuned!
Comments
Comments are closed.