Amidst the fears of Global Economic Turmoil, the ship breaking yard in India at Alang in Bhavnagar District in Gujarat state is all set to demolish 400+ vessels, in financial year 2011-12.
New vessels ordered in year 2006-2007-2008 are all set for deliveries by 2012, adding Global Shipping capacities by 25%, whereas on the flipside, freight-rate reductions and the global economic slowdown will result in a large number of ships to be destined for India’s ship breakers. According to Bloomberg |UTV, they anticipate more than 180 million gross tons of the global shipping fleet, mainly comprised of vessels older than 20 years, will be made available for demolition.
Regulatory issues in Bangladesh and a high cost of breaking ships in China makes Alang a favorite destination for ship breaking. Significant economic factors play into this as well considering India’s current ban on iron-ore mining, and an infrastructure that is particularly suited for the consumption of scrap steel.
The depreciating Indian Rupee is becoming a factor however, as it is now becoming more and more cost-prohibitive to purchase vessels for demolition, in particular, non-Indian ships.
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Indian shipping regulators and related authorities seem to be keeping a close watch on ongoing supply chain dynamics for export trades as ocean carriers arguably tend to profiteer from capacity disruption, especially in a larger crisis situation.
India is sending additional warships to the Gulf of Oman and Arabian Sea to ensure the safe passage of its vessels in anticipation that Iran may allow more of its fuel tankers to exit the Strait of Hormuz, people familiar with the matter said.
Two Indian liquefied petroleum gas carriers have successfully transited the Strait of Hormuz after receiving rare clearance from Iran, highlighting how the world’s most critical energy shipping corridor is increasingly being shaped by diplomacy rather than routine commercial navigation.
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