How much does ship breaking cost the companies that own the ships? Or do they profit

[Davidparks]

When old commercial ships, (tankers, container ships and so forth) are sent to places like India and Pakistan to be broken up for scrap, do the companies that owned them profit from this, or do they have to pay to have it done?

If they are selling them for profit, approximately how much money do they earn per ship?

 

[sailorman]

When old commercial ships, (tankers, container ships and so forth) are sent to places like India and Pakistan to be broken up for scrap, do the companies that owned them profit from this, or do they have to pay to have it done?

If they are selling them for profit, approximately how much money do they earn per ship?

Hello + Please & Thank you wouldnt go amiss NuBee

 

[sarabande]

sounds like a homework question from someone's son....

Oh, by the way, DP, welcome on board. Everyone is happy to help but it is more fun to 'engage' with posters by way of a bit of profile.

 

[penfold]

Shipowners may deliberately send a ship to scrap to limit the availability of tonnage to competitors, and this may not net them very much money relative to the scrap value, but that's not really what you're asking. There's not usually a conscious decision to sell for scrap, just that a ship gets to a certain age and the projected costs of maintenance and keeping the class society happy exceed the costs of financing a new one, so the only buyers that come sniffing are scrap men. Also periodically there are changes in SOLAS, emissions regs etc. which may make it uneconomic to modify an older vessel to comply; the new SOLAS revisions have pushed a large number of older, otherwise perfectly serviceable cruise liners into the arms of the breakers, as the requirements for getting pax into LSA within time limits and fire protection rules mean they would have to be all but gutted and rebuilt from the waterline up.

 

[Bajansailor]

The Ship Breakers usually pay a going rate per tonne to the Ship Owner - I saw in the news that HMS Invincible has recently been sold to Ship Breakers in Turkey.
And the Breakers can usually profit very handsomely from these deals, while paying the crews actually doing the Breaking very minimal wages.

Here (I think) is a Google map with a birds eye view of that most (in)famous ship graveyard Alang Beach in India - http://wikimapia.org/#lat=21.4129213&lon=72.2058392&z=16&l=0&m=b
And here is an interesting travel B-log - http://www.moxon.net/india/alang.html

 

[DaiB]

Ship prices

A VLCC in todays market would fetch between 10 to 15million USD at the breakers in China/India/Bangladesh

 

[Peter Martin]

Aluminum boats

DO break the ship is also the quality work and only those boats are go for breaking process which are no more use. the ship owner and the breaking company both get the variant profit from that.

 

[Peter Martin]

Aluminum boats

To break the ship is also the quality work and only those boats are go for breaking process which are no more use. the ship owner and the breaking company both get the variant profit from that.

 

[Ianhampshire]

Every ship has a 'Lightweight'. This is the weight of the empty ship. The shipbreaker pays the shipowner an amount per lightweight tonne. This amount varies depending on the state of the scraping market at the time of the sale. Normally the vessel owner is responsible for the cost and time needed to deliver the vessel to the breakers yard where it is handed over for scrapping.

Whether or not a vessel owner makes a profit or a loss when he sells his vessel for scrap depends on (a) the prevailing lightweight price per tonne (b) the cost to the vessel owner in fuel, time and operating costs in steaming the vessel to the breakers yard and (c) any outstanding finance that needs to be paid off from the proceeds of the sale.

 

[GenrSquad]

There is also money to be made from stripping out the engines and pumps, etc for spare parts or even for sale complete. Tonnes of copper from the cabling. All the stores left aboard are sold on - from pencils to food stuffs. The fuel ROB has a value. Cabin fittings from mattresses to linen to furrniture.

It all comes out and goes for sale. A drive along Alang Beach looking at the 'shops' is like a marine history lesson.

Lots of the local homes incorporate items removed from ships.

 

[Kukri]

Ships have a "residual value" which is included in the original financing calculations as "x" US$ per LDT (light displacement ton). There's no "profit" in it as it has been factored in from the outset.

Modern ships don't have very good "residuals" (shipbreakers' term of art for the good stuff, beyond the steel plate and iron and steel castings) unlike the old ones with their miles of copper piping, bronze fittings, etc. The bronze prop is factored in but modern ships don't carry a spare prop or anchor.

The cheapest that I ever saw a ship go for was US$83/LDT to Taiwan in the middle Eighties; the highest was US$470/LDT. Today we are using US$250 /LDT as the base rate for calculations.

Here is a link to an article on shipbreaking written by someone I've known all my life; its written from the shipowner's point of view, perhaps, but the Basel Action Network maintain it on their website and they are as green as you like.

http://www.ban.org/Library/shipbreaking_oh_dear.html

"Green" shipbreaking is a reality now and whilst the greener breakers are very well set up their prices don't differ that much yet.

What happens to the scrap? It does not get melted - at least, most of it does not - it gets re-rolled as rebar for concrete, which uses less energy. So the price depends really on the price of pig iron (the alternative source) adjusted for cost of melting and rolling and on the state of the property market at the breaker's location.

Shipbreaking does not look pretty but neither does slaughtering and butchering cattle - both are needed.