Shipbreaking industry faces challenges amid dollar crisis, scrap ship shortage

The shipbreaking industry in Bangladesh is grappling with unprecedented challenges, including a dollar crisis, discrepancies between local and global markets, and unavailability of scrap ships due to rising shipping freight costs.

Though there was a slight rise in the number of dismantled ships during the first half of 2024, the industry's outlook remains uncertain.

NGO Ship Breaking Platform, a global rights body, identified the challenges in its latest South Asia quarterly update published on Monday.

"Key factors contributing to this crisis include the high cost of the dollar, discrepancies between international and local markets, and a reduced number of ships available for scrapping due to rising shipping freight costs," reads the update.

Further complicating matters are stringent central bank regulations requiring approval for Letters of Credit exceeding $3 million, it added.

Geopolitical tensions, including the Russia-Ukraine war, the Israel-Palestine conflict, and a Houthi attack on a merchant ship in the Red Sea, have intensified challenges for the shipbreaking industry.

"These factors have made shipbreakers in Chattogram increasingly cautious about importing end-of-life vessels," reads the update.

Consequently, over 50 shipyards have shut down in recent years, with another 20 ceasing operations in the past 18 months. The remaining yards face significant uncertainties, and industry stakeholders fear the sector may not survive without government intervention.

According to the update, five accidents at the shipbreaking yard killed six people and injured 12 people in the July-September period of this year.

Some 96 ships were dismantled worldwide during the period, of which 24 turned into scrap metal in Chittagong.

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