In 2024, 409 ships were scrapped through this official market, though calling it “official” makes it sound clean and safe, which, for the most part, it isn’t. A few of the ships scrapped last year were disassembled in countries like Denmark, Norway and the Netherlands, which follow strict rules regarding human and environmental safety. A handful of others were scrapped in Turkey, which has an OK record. But two-thirds were scrapped in Southeast Asia, where the shipbreaking industry is notoriously unsafe.
To get around safely rules, less-than-scrupulous owners often sell their nearly dead ships to “final journey” firms, which have the sole purpose of disposing of them. These companies and their middlemen then make money by selling the ships’ considerable amount of steel to metal companies. But in India, Pakistan and Bangladesh — the latter is the world’s most popular shipbreaking country — vessels are disassembled on beaches rather than sealed facilities, and by workers using little more than their hands.
Of course, this makes the process cheap, but it also makes it dangerous. According to the NGO Shipbreaking Platform, last year, 15 South Asian shipbreaking workers lost their lives on the job and 45 were injured. Just one accident involving an oil tanker claimed the lives of six workers and injured another six.
This brings us to the shadow fleet and its old vessels, as they, too, need to be scrapped. But many of them are under Western sanctions, which presents a challenge to their owners since international financial transactions are typically conducted in U.S. dollars.
Initially, I had suspected that coastal nations would start finding all manner of shadow vessels abandoned in their waters and would be left having to arrange the scrapping. But as owners want to make money from the ships’ metal, this frightening scenario hasn’t come to pass. Instead, a shadow shipbreaking market is emerging.
Open-source intelligence research shows that shadow vessel owners are now selling their sanctioned vessels to final-journey firms or middlemen in a process that mirror the official one. Given that these are mostly sanctioned vessels, the buyers naturally get a discount, which the sellers are more than willing to provide. After all, selling a larger shadow tanker for scrap value and making something to the tune of $10 to $15 million is more profitable than abandoning it.