According to new research from leading maritime data provider, Lloyds List Intelligence, ship scrapping tonnage rate would increase by 75 per cent by 2030 compared to 2020 levels.
The Loyds List report disclosed how shipping’s transition to a zero-carbon future represents a ‘generational risk’ for the shipping industry as it struggles to stay ahead of carbon efficiency metrics. As a consequence, it stated that the regulations would increasingly eliminate tonnage and some ship owners from the market.
“This shift will dramatically accelerate the number of ships previously deemed ‘fit for purpose’ recycled over the next decade, with a scrapping tonnage rate increase of 75 per cent by 2030 compared to 2020 levels.
“Vessels over 10 years old are already facing imminent obsolescence in employment terms,” it stated. According to Lloyd’s List Intelligence research, which assessed a sample of ocean-going vessels under 10 years old, the majority of standard configured ships would struggle to meet the regulatory required emissions ratios sometime in the second half of this decade.
It forecast that 10,300 ships would be removed, primarily for scrapping this decade, with scrapping rates rising 75 per cent by 2030, adding that obtaining financing would become increasingly challenging for the owners of ships that cannot show they meet with decarbonising trajectory lines.
“The decarbonisation transition will therefore reduce the active life of vessels, placing further risk on shipping investments that are not made with this curve in mind,” it noted.
Managing Editor, Lloyd’s List, Richard Meade, argues that this would have a dramatic impact on the global fleet, and investment in shipping in general. “The global call to decarbonise is only raising investment costs while leaving revenues vulnerable. Just because the fuel is changing doesn’t mean the industry’s ability to yield a return on invested capital will, and given shipping’s history in that regard even the most optimistic forecast would concede that risk is growing for shipowners.
“The route to shipping’s decarbonisation deadline is likely to be littered with casualties, and the banks understand that better than anyone. Given the questionable past lending practices that fuelled cycles of overcapacity, the banking sector has a vested interest in making sure their clients make the right decisions from here on,” he stated.