How Ship Scrapping Works: Rules, Safety, and Value

Ship scrapping is how commercial vessels are retired: after roughly 25 years of service, an owner sells the ship to a recycling yard, where it is documented, certified, delivered, and then cut apart for its steel and other recoverable materials under a set of international rules that took full effect in 2025. Global ship recycling reached 7.9 million gross tons in 2025, and the process is now governed primarily by the Hong Kong International Convention, which entered into force on June 26 of that year as the first treaty written specifically for safe and environmentally sound ship recycling.¹

The decision to scrap is economic. A shipowner compares what the vessel can still earn in freight against its scrap value, measured in dollars per light displacement ton. Rising repair costs, weak charter rates, and tighter efficiency rules for active fleets push older ships toward the breaking yards.

Where Ships Are Scrapped

More than 80 percent of the world’s ship tonnage is broken on the tidal beaches of South Asia, primarily in Bangladesh, India, and Pakistan. Turkey handles a significant share of the rest, and China historically processed large volumes before scaling back. Bangladesh, India, Pakistan, and Turkey are all parties to the Hong Kong Convention.¹

India’s Alang complex in Gujarat is the world’s largest, stretching 14 kilometers along the coast with 183 yards and a combined capacity of 4.5 million light displacement tons. Chittagong in Bangladesh and Gadani in Pakistan round out the South Asian concentration. Turkey’s yards at Aliaga operate on a smaller scale and under stricter environmental controls, which shows up in the lower per-ton price they offer shipowners.

The Legal Framework

Three regimes shape almost every ship scrapping today: the Hong Kong Convention, the Basel Convention, and the European Union’s Ship Recycling Regulation. Which set of rules bites hardest depends on the ship’s flag and the country of the receiving yard.

Hong Kong Convention

The Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships applies to vessels of 500 gross tonnage and above engaged in international voyages. It does not cover warships, naval auxiliaries, government vessels used solely for non-commercial service, or ships operating entirely within their flag state’s own waters.²

The Convention takes a “cradle to grave” approach. Ships must be built and maintained with their eventual recycling in mind. Every covered vessel carries an Inventory of Hazardous Materials specific to that ship. Recycling facilities must be authorized by the government where they operate and must prepare a ship-specific recycling plan before cutting begins. Flag states ensure their vessels comply, and recycling states ensure their yards meet the Convention’s standards.¹

Appendix 1 bans new installations of asbestos, PCBs, and organotin-based anti-fouling compounds outright. Ozone-depleting substances are also banned in new installations, and the exception that had allowed hydrochlorofluorocarbons expired in January 2020. Appendix 2 lists additional substances — cadmium, hexavalent chromium, lead, mercury, brominated flame retardants, radioactive substances, and others — that must be tracked in every ship’s hazardous materials inventory even though they are not banned.³

Basel Convention

The Basel Convention on the Control of Transboundary Movements of Hazardous Wastes applies to end-of-life ships because their structures contain toxic substances: asbestos, heavy metals, oil residues, and contaminated paint.⁴ The treaty requires prior informed consent before hazardous waste crosses international borders, so a ship destined for scrapping in another country triggers notification and approval obligations. A 1994 Ban Amendment would prohibit exports of hazardous waste from developed to developing nations. In practice, Basel and Hong Kong operate in parallel, and shipowners must satisfy whichever set of rules is more restrictive in the countries involved.

EU Ship Recycling Regulation

Since December 31, 2018, EU-flagged commercial vessels above 500 gross tonnage may only be recycled at facilities on the European List of approved ship recycling yards.⁵ The list includes yards inside and outside the EU, but every facility on it must meet requirements covering worker safety, environmental protection, waste management, and emergency preparedness.⁶

Non-EU yards seeking access apply to the European Commission for inclusion. Each listing is valid for up to five years before renewal, and facilities that stop meeting the standards are removed, which effectively bars them from handling any EU-flagged vessel.⁵ EU member states enforce the rule at the port level, and can warn, detain, or exclude ships whose owners cannot produce a valid inventory certificate or Ready for Recycling Certificate.⁶

Preparing the Ship: Inventory and Certificates

Before a ship can go anywhere near a breaking yard, its owner has to build the paperwork that lets the yard cut into it safely.

The foundation document is the Inventory of Hazardous Materials, which catalogs the type, location, and approximate quantity of every hazardous substance on board.⁷ It has three parts:

Part I covers materials in the ship’s structure and equipment: asbestos in insulation, lead in paint, PCBs in electrical components, ozone-depleting substances in refrigeration and fire suppression. This part is maintained and updated throughout the ship’s operational life.
Part II covers operationally generated wastes such as oily sludge, bilge water, and sewage.
Part III covers stores on board — paints, cleaning chemicals, lubricants.

Parts II and III are compiled once the decision to recycle has been made.⁶ Compiling Part I requires authorized specialists to physically sample materials throughout the vessel — cutting into insulation, testing gaskets, analyzing paint coatings — before submitting samples for laboratory analysis. The completed IHM must be verified by a recognized organization or the flag administration, and any structural changes after verification, including during the final voyage, require an update.

With the IHM complete, the owner obtains a Ready for Recycling Certificate from the flag administration. This certificate confirms that all three parts of the IHM and the recycling facility’s approved plan are compatible, meaning the chosen yard can safely handle whatever hazardous materials are on board.⁸

For tankers and any vessel that has carried flammable liquids, a gas-free-for-hot-work certification is critical to prevent explosions during cutting. The IMO has called this “the single measure with the greatest impact on safety in recycling facilities” and has urged all recycling states to make it mandatory.⁹ A certified marine chemist or petroleum inspector tests oxygen levels and combustible gas concentrations in cargo tanks, bunker tanks, and enclosed spaces before any hot work begins. Individual port states often have their own gas-free requirements; Singapore, for instance, requires a gas-free certificate before any vessel that last carried petroleum may proceed from the petroleum anchorage to a shipyard.¹⁰

Without valid documentation, ownership cannot legally transfer to the yard and no dismantling can begin.

How Ships Are Physically Broken Apart

Four methods dominate, and they differ sharply in cost, safety, and environmental control.

Beaching is the dominant method in South Asia. The ship is driven at full speed onto a tidal mudflat during high tide. Once the tide recedes, workers cut the exposed hull with oxy-fuel torches and mechanical shears, gradually working through the structure over several months as successive tides expose lower sections. The method requires almost no infrastructure investment, which is why it persists, but it offers virtually no containment. Oil residues, paint chips loaded with heavy metals, and asbestos fibers wash directly into the intertidal zone. Studies at Bangladesh’s Sitakunda ship-breaking area have detected elevated levels of PCBs, polycyclic aromatic hydrocarbons, and heavy metals in sediment and air samples near active yards.¹¹ Mangrove clearance to expand yard space has destroyed feeding and breeding grounds for marine species in the area.

Slipway breaking uses a concrete ramp or rail system to pull the vessel partially out of the water, keeping it clear of the seabed during cutting. Workers get a more stable surface than a mudflat, and falling debris is easier to contain, though environmental controls still vary widely by facility.

Alongside dismantling keeps the ship moored at a pier or wharf in deep water. Shore-based cranes remove components from the top down, starting with the superstructure and working toward the waterline. It works well for upper structures but requires careful planning once cutting reaches the hull below the waterline.

Dry-dock recycling is the most controlled approach. The ship sits in a sealed chamber that can be drained, letting workers access the entire hull while all materials, fluids, and debris are contained by the dock’s drainage system. Nothing escapes into surrounding water. Infrastructure costs are high, which is why the per-ton price paid to shipowners at these facilities tends to be substantially lower.

Standards the Yard Must Meet

Every authorized recycling yard maintains a Ship Recycling Facility Plan covering its operational procedures, safety protocols, and environmental controls.¹ At a minimum the plan addresses worker safety and training, protection of human health and the environment, emergency preparedness and response, and systems for monitoring, reporting, and record-keeping.

In practice, yards must demonstrate containment systems that prevent spills of heavy oils, hydraulic fluids, and bilge water from reaching soil or groundwater. The plan describes the physical layout of the facility, the capacity and type of operational equipment such as cranes, shears, and lifting gear, and the qualifications of the people operating it.¹² All wastes generated during recycling are tracked from generation through final disposal or recovery, and on-site emergency capabilities including fire suppression and medical response are audited as part of authorization.

On top of the facility-wide plan, the yard prepares a ship-specific Ship Recycling Plan before work begins on each individual vessel. That plan accounts for the ship’s particular size, structure, and hazardous materials inventory, laying out exactly how it will be dismantled.¹³

From Notification to Statement of Completion

With certificates in hand and an authorized yard chosen, the shipowner notifies the flag state of the intent to recycle. The notification includes the final voyage plan and the estimated arrival date at the recycling facility.¹⁴ A final survey by a government official or class surveyor confirms that the ship matches the descriptions in its documentation, that no unauthorized hazardous materials were loaded, and that the vessel remains in a safe condition for delivery.

When the ship arrives at the yard, its operational status officially ends. Yard management takes control and begins stripping non-metal interiors, draining fluids, and removing equipment before cutting into the hull structure. Throughout the dismantling, the facility documents the weight and destination of all recovered materials and hazardous wastes.

Once the ship is fully recycled, the yard issues a Statement of Completion. Under Regulation 25 of the Hong Kong Convention, this must be issued within 14 days of completion and must include a report on any incidents or accidents that harmed human health or the environment. The recycling facility’s government sends a copy to the flag administration that originally issued the Ready for Recycling Certificate.³ That document is the final legal proof that a vessel has been disposed of in accordance with international law.

Worker Safety and the Human Cost

Ship scrapping is among the most dangerous industrial activities in the world. The Indian Supreme Court has noted that the fatal accident rate in ship breaking, roughly 2 deaths per 1,000 workers, is nearly six times higher than in mining. In Bangladesh alone, more than 1,000 workers have died in shipbreaking yards since the 1980s, according to research by the Bangladeshi organization YPSA. At India’s Alang yards, at least 490 deaths have been documented between 1991 and the mid-2020s.

The immediate physical dangers include falling steel beams and plates, explosions from residual fuel vapors, fires from torch-cutting, and suffocation in enclosed spaces. On beaching yards, the shifting tidal mudflats cannot support heavy lifting equipment or allow rapid emergency vehicle access, so injuries that would be survivable at a controlled facility become fatal.

Slower-acting chemical hazards are equally serious. Workers cutting through painted hulls inhale lead dust, chromium compounds, and asbestos fibers. Anti-fouling paints contain tributyltin, a highly toxic organotin compound. The combustion byproducts from torch-cutting painted steel include dioxins and furans. These exposures cause cancers, respiratory diseases, and neurological damage that may not appear for years. In many South Asian yards, workers’ sleeping quarters sit adjacent to the breaking areas, extending exposure beyond the workday.

What a Scrapped Ship Is Worth

A ship’s scrap value is calculated from its light displacement tonnage, the weight of the empty hull and permanent machinery, excluding cargo, fuel, ballast, and stores. The price per LDT moves with global steel demand and varies significantly by country. As of mid-2026, indicative prices for container vessels run roughly $450 to $500 per LDT in Bangladesh, $450 to $460 in India, $475 to $485 in Pakistan, and $285 to $295 in Turkey. Tankers typically fetch slightly less because of the added cost of handling oil residues and gas-freeing.

The gap between South Asian and Turkish yards reflects the difference in environmental and safety overhead. Turkish yards operate under EU-aligned standards with built infrastructure and stricter waste management. South Asian beaching yards have lower operating costs and can therefore offer higher per-ton prices. A 20,000 LDT vessel sold to a Bangladeshi yard at $490 per LDT brings the owner roughly $9.8 million; the same ship at a Turkish yard might fetch around $5.7 million. That $4 million spread explains a great deal about where ships end up.

Scrapping in the United States

Ships scrapped inside the United States sit under a separate layer of federal regulation, so the international framework above is not the whole story for a U.S.-based operation. The Maritime Administration runs a Ship Disposal Program for government-owned vessels in the National Defense Reserve Fleet, under which domestic recyclers can bid for dismantling rights or MARAD may directly contract for disposal. Eligible vessels are merchant-type ships of 1,500 gross tons or more no longer needed for defense or aid missions.¹⁵

Worker safety at U.S. shipbreaking operations falls under OSHA’s shipyard employment standards at 29 CFR 1915, with Subpart Z covering toxic and hazardous substances including asbestos and lead.¹⁶ PCB-containing components found during dismantling, common in older fluorescent light ballasts and electrical equipment, must be handled under EPA regulations at 40 CFR Part 761.¹⁷

1
International Maritime Organization. Recycling of Ships and the Hong Kong Convention
2
International Maritime Organization. Frequently Asked Questions Implementing the Hong Kong Convention
3
Basel Convention. Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships
4
Basel Convention. End-of-Life Ships
5
European Commission. Ships
6
EUR-Lex. Regulation (EU) No 1257/2013 on Ship Recycling
7
International Maritime Organization. Resolution MEPC.379(80) – 2023 Guidelines for the Development of the Inventory of Hazardous Materials
8
Norwegian Maritime Authority. IHM and Ready for Recycling Certificates
9
International Maritime Organization. Implementation of the IMO Guidelines on Ship Recycling
10
Maritime and Port Authority of Singapore. Gas Free Inspections for Vessels
11
International Maritime Organization. Evaluation of Environmental Impacts of Ship Recycling
12
GOV.UK. Guidance on Completing Ship Recycling Facility Plans
13
International Maritime Organization. 2011 Guidelines for the Development of the Ship Recycling Plan
14
Human Environment and Transport Inspectorate. Dismantling and Recycling a Seagoing Vessel
15
Maritime Administration. Ship Disposal Program
16
Occupational Safety and Health Administration. Shipyard Employment – Shipbreaking – Applicable 1915 Shipbreaking Standards
17
US EPA. Policy and Guidance for Polychlorinated Biphenyls