Impact of ship building and ship scrapping?

[cruisemom42]

A discussion on another forum has made me think about the costs and impacts of building new cruise ships and of scrapping older ones. I feel as if the pandemic accelerated scrapping of older ships, but it could also be that more ships are being sent to the breakers because the fleets of the big cruise lines continue to expand. 

 

I know not everyone shares my opinion (I like smaller ships), but in future there may be a demand for some ships that are not huge floating pleasure palaces. Some ports can only be accessed by smaller ships and also there are places that have begun to place limits on the number of passengers they will accept on a given port day.

 

Rather than send some of these older, smaller ships to be scrapped, are there scenarios where it would make more sense to keep them and extensively update/renovate them?  I've read that this would be prohibitively expensive. But is that still true in today's world -- e.g., costs of materials and labor are increasing in this area as in all others. However, I also realize new technologies make newer ships "cleaner" and more fuel-efficient. Is there any way to retrofit an older ship with some of these technologies and still be more economically feasible than building an entirely new ship?

 

Also, what are the impacts of scrapping and new builds vs. maintaining older ships from the perspective of emissions and other dangers?  How much of a ship's materials are reused/recycled when they are scrapped? What do they do with the rest of it? Are any dangerous pollutants managed appropriately?  And when new ships are built, are the processes relatively "clean"?

 

Finally, I've read information here in the past about hulls requiring additional inspection after a certain age -- is this really prohibitive to maintaining and sailing ships older than, I think, 25 years?  It seems like in previous eras, ships were used much longer before being scrapped. My first ever cruise ship was launched in 1944 as a troop ship and wasn't sent to the breakers until 2004 -- a 60 year career!

 

And is there such a thing as a "glut" of ships being sent to the wreckers? What is done with leftover materials?  As we build more and more ships are we creating problems down the road with what to do with them?

 

I would love to hear answers from some of our knowledgeable posters. 

 

 

Edited July 15, 2023 by cruisemom42

[JRG]

23 minutes ago, cruisemom42 said:

I would love to hear answers from some of our knowledgeable posters. 

 

Make sure you ask for posters to cite references,   so we don't proceed from false assumptions.

 

You're asking alot here and there are some sensitive issues, but I've spoken my piece on most of those that you raise and I probably have a few similar concerns.

 

There are some good analysts on the West Coast Departures forum too and they can converse in very neutral language to address some of the hot topics.

 

 

[cruisemom42]

I am mainly just looking for some discussion and points of view. No thesis required to participate although I would welcome any objective links that help explain the pros and cons.

 

[ontheweb]

I have no expertise in the matters you have raised, but would also love to hear some informed discussion of those topics.

[mammajamma2013]

I prefer smaller ships, too, but I keep reading that they aren't as economically feisable, unfortunately.

 

Good conversation topic, cruisemom42. I'm also looking forward to the discussion.

[chengkp75]

2 hours ago, cruisemom42 said:

I feel as if the pandemic accelerated scrapping of older ships, but it could also be that more ships are being sent to the breakers because the fleets of the big cruise lines continue to expand. 

I'll only cite my 46 years in the industry as my references.  I don't care what the guy who never cites any references, or even answers direct questions wants.

 

While the older ships were marginally profitable before the pandemic, the debt service on them when idle, carried over to whenever they would return to service made them uneconomic.

2 hours ago, cruisemom42 said:

Rather than send some of these older, smaller ships to be scrapped, are there scenarios where it would make more sense to keep them and extensively update/renovate them?  I've read that this would be prohibitively expensive. But is that still true in today's world -- e.g., costs of materials and labor are increasing in this area as in all others. However, I also realize new technologies make newer ships "cleaner" and more fuel-efficient. Is there any way to retrofit an older ship with some of these technologies and still be more economically feasible than building an entirely new ship?

Sure, there are things that can be done to make a ship more economical, and "greener", but these would be things like new bottom paints or air lubrication of the hull, but these are only working the "margins" of efficiency, for great investments, unlike say power cells to fuel the engines, which can provide a much more efficient and "green" operation, but which would also require gutting the engineering spaces and literally starting over.

 

2 hours ago, cruisemom42 said:

Also, what are the impacts of scrapping and new builds vs. maintaining older ships from the perspective of emissions and other dangers?  How much of a ship's materials are reused/recycled when they are scrapped? What do they do with the rest of it? Are any dangerous pollutants managed appropriately?  And when new ships are built, are the processes relatively "clean"?

All of the metallic parts of the ship are recycled (steel hull, copper wire, pipes, valves, aluminum).  Most of the rest is not (land fill, incinerator).  Ships have not been allowed to have any real hazardous material in them for decades, though there is always some that slips in from unscrupulous suppliers.  Fuel tanks are cleaned prior to the scrapping process, as the cutting could cause the tank vapors to explode.  How "green" the scrapping is, depends on where it is being done, and the places that do scrap most vessels do it cheaply for a reason.  I believe that the EU has passed a law saying that if a ship is built in the EU, then the owner must ensure it is either scrapped in the EU, or ensure its scrapping meets EU requirements.  Shipbuilding is a dirty business, but as I said, international regulations don't allow hazardous materials to be used in shipbuilding these days, regardless of where the ship is built, enforced by the class societies.

 

3 hours ago, cruisemom42 said:

Finally, I've read information here in the past about hulls requiring additional inspection after a certain age -- is this really prohibitive to maintaining and sailing ships older than, I think, 25 years?  It seems like in previous eras, ships were used much longer before being scrapped. My first ever cruise ship was launched in 1944 as a troop ship and wasn't sent to the breakers until 2004 -- a 60 year career!

Yes, just like the SS United States is in very good condition, hull-wise, after 70 years afloat.  And, it is after 15 years that the cost of maintaining the hull structure and piping starts to take off, exponentially.  The difference is in the steel.  Old steel like the SSUS, the Titanic, or your first cruise ship had relatively weak steel (compared to today's steels), so everything had to be made thicker and heavier to withstand the loads.  This thicker steel allowed for greater corrosion to happen before the steel was considered to need replacement.  Today's steel is stronger, so a thinner steel can be used to carry the same load as the thicker, older steel.  This thinner steel makes corrosion a more important consideration, and this is why the class societies have found that at 15 years of age, they start taking more and more NDT (non-destructive tests) of the hull plating, frames, and welds to see whether they can still sustain the anticipated loads.

 

3 hours ago, cruisemom42 said:

And is there such a thing as a "glut" of ships being sent to the wreckers? What is done with leftover materials?  As we build more and more ships are we creating problems down the road with what to do with them?

Not really.  As I said, a lot of the ship is recycled, but a lot is also disposed of.  But, just remember, that cruise ships account for about 5% of the world's tonnage, and there are always ships being sent to the scrapyards.

[cruisemom42]

Thanks for bringing up additional points to consider. Fifteen years seems very short given the work that goes into these huge vessels. Is it the same 15 years for passenger and commercial ships? Or do the latter carry additional requirements that extend their useful life?

 

Thinking only of smaller cruise ships such as those Viking Ocean is currently building or slightly smaller/larger, would you say (e.g., in your opinion, citations not needed 😉) it will always be cheaper to build a new ship than recycle/upcycle an older one?

[mnocket]

Do you question that the cruise companies conduct a thorough analysis of their various options when deciding about ship retirement, refurbishment, acquisition, etc?

[SelectSys]

42 minutes ago, chengkp75 said:

This thicker steel allowed for greater corrosion to happen before the steel was considered to need replacement.

I am curious as to the extent that ships use "cathodic protection" to keep corrosion minimized.  This is a common in some other industries such as pipelines and I would expect ships to have similar systems for protecting at least some systems.

 

4 hours ago, cruisemom42 said:

but in future there may be a demand for some ships that are not huge floating pleasure palaces. Some ports can only be accessed by smaller ships and also there are places that have begun to place limits on the number of passengers they will accept on a given port day.

There is absolutely a demand for what you ask for.  This niche seems to be filled by the luxury cruise lines who can by virtue of their higher prices make money from lower passenger counts and ship sizes. That said, the guests that pay these rates probably have high expectations - staterooms, dining, outdoor space -for the onboard experience that can't be accommodated using existing ships.   Of course some smaller ships do get recycled with the "R Class" ships being a notable example.

 

Upon reflection some may consider "R Class" ships large...

Edited July 15, 2023 by SelectSys

[chengkp75]

17 minutes ago, cruisemom42 said:

Thanks for bringing up additional points to consider. Fifteen years seems very short given the work that goes into these huge vessels. Is it the same 15 years for passenger and commercial ships? Or do the latter carry additional requirements that extend their useful life?

 

Thinking only of smaller cruise ships such as those Viking Ocean is currently building or slightly smaller/larger, would you say (e.g., in your opinion, citations not needed 😉) it will always be cheaper to build a new ship than recycle/upcycle an older one?

It's not that the ship is considered for scrapping at 15 years, but that the economic equation changes, and so business decisions need to be made as to how to market the ship, what to do about renovations, etc.  No, while there are considerably more safety regulations for passenger ships, and there are some structural regulation differences, there really isn't anything that separates a cruise ship from a commercial ship as far as hull structure goes.  They all use the same steel, and, in fact the steel of a commercial ship tends to be far stronger than a cruise ship.  Consider that the largest ship ever built, the Seawise Giant, while only 23% larger (GT or volume) than the Oasis of the Seas, it could carry as cargo more than 5 of the Oasis class ships (564,000 deadweight tons, the Oasis weighs about 100,000 tons).

[chengkp75]

4 minutes ago, SelectSys said:

I am curious as to the extent that ships use "cathodic protection" to keep corrosion minimized.  This is a common in some other industries such as pipelines and I would expect ships to have similar systems for protecting at least some systems.

Virtually every ship afloat uses some form of cathodic protection for the hull.  They will use a combination of "galvanic anodes", typically aluminum anodes welded to the ship in places like thruster tunnels, ballast tanks, and sea chests, and "impressed current", where an electrical current is fed to an aluminum anode, and the system attempts to maintain a given voltage between the anode and the hull (about 140mv).  The impressed current anodes last 5-10 years, the galvanic anodes about 5 years, so replacement is part of the drydock procedures.

 

In the relatively few salt water pipes that ships have (designers try to minimize the salt water piping to minimize corrosion), many ships use an "impressed current" system not only to control corrosion using an aluminum anode, but also marine growth by using a copper anode (the copper ions from the anode are toxic to the marine life).

[cruisemom42]

27 minutes ago, mnocket said:

Do you question that the cruise companies conduct a thorough analysis of their various options when deciding about ship retirement, refurbishment, acquisition, etc?

 

No; I am just curious. If the factors being considered are dynamic, the results of the analysis might change in future as opposed to past practices.

 

For example, IF (and I'm not saying this is true) there were detrimental environmental effects of scrapping and newbuilds versus recycling older ships, and IF as a result governments began offering subsidies for the latter, would it make this a more serious discussion?

 

 

[SelectSys]

3 minutes ago, chengkp75 said:

but also marine growth by using a copper anode (the copper ions from the anode are toxic to the marine life

Interesting.  This makes a lot of sense in keeping the ships hull clean and, I assume, drag minimized.

[chengkp75]

36 minutes ago, cruisemom42 said:

Thinking only of smaller cruise ships such as those Viking Ocean is currently building or slightly smaller/larger, would you say (e.g., in your opinion, citations not needed 😉) it will always be cheaper to build a new ship than recycle/upcycle an older one?

It all depends on the business model the cruise line uses.  The now defunct Pullmantur line was moderately successful buying older ships from the mainstream lines and operating them for years.  What their profit margin was, compared to the original owner, I don't know.  Marco Polo operated for 55 years, apparently turning a profit.  It also depends on what you need to do to "recycle/upcycle" the ship.  Remember, maritime regulations are generally not retroactive, so older ships do not always have to meet new requirements.

[chengkp75]

2 minutes ago, SelectSys said:

Interesting.  This makes a lot of sense in keeping the ships hull clean and, I assume, drag minimized.

This only affects piping inside the ship.  Remember, when the ships first restarted, there were Princess ships that had spent a lot of time anchored off Mexico, and then when they went to cooler waters, the dying mussels and barnacles in the sea water pipes (that had grown there while the ship was inactive), clogged the piping and caused overheating of the engines, and ruined itineraries.

 

 The outside is taken care of by use of copper based paint, which also releases toxins to the marine life attempting to attach to the hull.  Some ships have gone to teflon based bottom paint, that provides a surface too hard and slick for the marine life to attach to.

[chengkp75]

14 minutes ago, cruisemom42 said:

For example, IF (and I'm not saying this is true) there were detrimental environmental effects of scrapping and newbuilds versus recycling older ships, and IF as a result governments began offering subsidies for the latter, would it make this a more serious discussion?

But, here you fall afoul of the international nature of the maritime industry.  Let's say, as per your example, that the US wanted to be all warm and fuzzy and very "green", and decided to give subsidies for keeping older ships in service, over scrapping and building.  So, they give a subsidy to a company that pays no US taxes, to prevent a scrapping that will take place in another country (taking away the livelihoods of those workers), and to prevent a shipbuilding process that will take place in another country (same for the workers here), to get a ship "reconditioned" again in another country, benefiting some workers in yet another foreign country.  Even countries that build ships typically don't scrap them, so even if Italy wanted to give the subsidies, there would be fallout in other countries.

Edited July 15, 2023 by chengkp75

[JRG]

8 minutes ago, cruisemom42 said:

and IF as a result governments began offering subsidies for the latter, would it make this a more serious discussion?

 

Yes, IMO,  but it would requirie us to take a Shakespeare type journey (i.e  A Christmas Carol) to be the ghost of Cruising future and let go of what we know of the past and the present,  to think about the future.

 

That is where the future comes in and it requires  Analysis,  and some actual cruise passenger experience so that the needs analysis is correct,

 

The march toward carbon neutrality is ongoing and will eventually be the dog wagging the tail or the poker chip that is played at the right time in the big game.  It is a delicate subject here and has to be discussed with the neutrality of analysts who see it at 40k feet.

 

Subsidies are part of many economic equations in theory and in practice (real life) ,  and they exist to promote a level playing field or keep vital industries afloat. (and other reasons which I'm sure I've not mentioned here) 

[cruisemom42]

13 minutes ago, chengkp75 said:

It all depends on the business model the cruise line uses.  The now defunct Pullmantur line was moderately successful buying older ships from the mainstream lines and operating them for years.  What their profit margin was, compared to the original owner, I don't know.  Marco Polo operated for 55 years, apparently turning a profit.  It also depends on what you need to do to "recycle/upcycle" the ship.  Remember, maritime regulations are generally not retroactive, so older ships do not always have to meet new requirements.

 

A similar scenario came to mind while you were replying with the above.

 

Fred Olsen, a line operating out of Britain, purchased two older ships (built 1997 and 2000) from HAL during the pandemic, kitted them out to their standard and are now running them successfully on cruises out of various UK ports. Granted they carry some 1400 pax each, but they are certainly not charging luxury or even premium pricing for these cruises.

 

One wonders how they make it work and why it isn't done from the US?  Is it that US pax require bigger, newer, shinier ships?

[SelectSys]

7 minutes ago, JRG said:

The march toward carbon neutrality is ongoing and will eventually be the dog wagging the tail or the poker chip that is played at the right time in the big game. 

It's just a matter of time before this gets discussed by policy makers.  The net effect of these mandates will almost certainly make cruising more expensive.

 

Interestingly, the Koreans are looking at nuclear powered ships again.

https://world-nuclear-news.org/Articles/South-Korean-partnership-to-develop-SMR-powered-s

[Aquahound]

As usual, Chengkp hit very valid points and I do not disagree with him at all.

 

On the ship breaking side, the environmental impact is huge. Cruise lines send their ships to be scrapped in places like Bangladesh and India where the environmental laws are very relaxed....if they exist at all.  There are laws in the United States that prohibit shipping companies from sending their ships to these unregulated shipbreaking yards but extending that jurisdictional nexus to the foreign flagged cruise lines that are incorporated overseas has been problematic.  

Edited July 15, 2023 by Aquahound

[JRG]

1 hour ago, SelectSys said:

Interestingly, the Koreans are looking at nuclear powered ships again.

https://world-nuclear-news.org/Articles/South-Korean-partnership-to-develop-SMR-powered-s

 

If you read the trade magazines for both cruising and maritime industries you will see that alternative fuels and or marine engine retro-fit is the big ugy and has to be a big part of any discussion realted to the OP's question on applying technology.

 

 

[JRG]

6 hours ago, cruisemom42 said:

However, I also realize new technologies make newer ships "cleaner" and more fuel-efficient. Is there any way to retrofit an older ship with some of these technologies and still be more economically feasible than building an entirely new ship?

 

Only if the ROI (Return on Investment) made sense over the period of time for which the estimated life of the asset will generate revenue.   That should make sense to everybody.

 

We could turn it into an old school word problem for some users and or make it into a Profit Maximization equation and solve for 'P'

 

You start by estimating the cost of the retro-fit,  and then calculate the present value of the discounted cash flows expected from the project, er, um,   the retrofit,  for example.   

 

So one needs clean assumptions to do it this way and to answer your question properly.

[JRG]

6 hours ago, cruisemom42 said:

Rather than send some of these older, smaller ships to be scrapped, are there scenarios where it would make more sense to keep them and extensively update/renovate them? 

 

Yes,  the Prinsendam comes to mind.   So that is one possible scenario.

[SelectSys]

13 minutes ago, JRG said:

 

If you read the trade magazines for both cruising and maritime industries you will see that alternative fuels and or marine engine retro-fit is the big ugy and has to be a big part of any discussion realted to the OP's question on applying technology.

 

 

Certainly LNG ships have gone mainstream in the cruising industry although many view these solutions too dirty because of methane still emitting carbon.  I have seen discussion of ammonia as a fuel too where the ammonia is created from hydrogen produced via electrolysis.  As you suggest, doing this as a retrofit is economically untenable. 

 

One thing that might happen for smaller ships would be the development of new build sailing and solar powered ships.  The solar ships would still need backup generators, but are feasible.  The link below alludes to a 120 meter ship which would start getting towards the size of smaller cruise ships:

https://www.silent-yachts.com/

  

[JRG]

6 hours ago, cruisemom42 said:

And is there such a thing as a "glut" of ships being sent to the wreckers? What is done with leftover materials?  As we build more and more ships are we creating problems down the road with what to do with them?

 

I consider a glut you were referring to a backup of ships waiting to get dismantled (prematurely perhaps) from the supply of ships meeting their end,  not what pile is left at the end,  but how the heck do we really know what is happening in these countries,  some leftover materials are probably being dumped back at sea and we are probably seeing evidence in the ocean foodchain (i.e pcbs) .  

 

It certainly seems like there would have been a 'spike' in the numbers of vessels and probably a backup in labor and resources needed , all due to Covid-19 ,but maybe the brokers have a system where ships are kept 'at sea' until there is a vacancy in a holding area of something.