Turkey’s small catch-22:

The country has lost out as higher costs mean larger ships tend to go further east.

Turkey remains one of the world’s big 5 ship-scrapping locations but its inability to compete on price with yards further east meansit has missed out on the boom in larger vessels being recycled.

The country has recently been offering around $340 per ldt, as compared with up to $500 per ldt in the Indian subcontinent.

Dimitris Ayvatoglu of Leyal Ship Recycling says Turkey is handicapped by higher costs associated with the management of hazardous materials and labour, as well as earning less because of very limited re-rolling capacity.

The country is classed alongside China as a green recycler because vessels, instead of being beached, are dismantled using heavy equipment on areas of hardstanding. It also has a well established waste-disposal infrastructure.

Of the 341 ships dismantled in 2011, the average size was less than 2,000 ldt. 

This is not due to operational or technical constraints, says Ayvatoglu, but the “market reality” of the price end-users can offer.

Turkey has the advantage, however, of being located closer to many owners in the Mediterranean and Western Europe for whom despatching smaller vessels to the Indian subcontinent or China is often not feasible.

It is also an Organisation for Economic Co-operation and Development (OECD) country and therefore an acceptable destination for ships exported from European countries where the Basel Convention and European Waste Shipment Regulation is concerned.

Ayvatoglu points out that yards are filling a lot of their capacity these days — the approximately 650,000 ldt (1.1 million gt) dismantled in 2011 compares with nominal maximum annual capacity of around 900,000 ldt.

Last year’s performance marked a big improvement on 2010 when some 238 ships of 420,000 ldt (875,000 gt) were recycled.

The country is still used extensively for scrapping military vessels, with Leyal, for example, completing in November 2011 the dismantling of the British aircraft carrier HMS Invincible.

Leyal, says Ayvatoglu, only secured the contract following an extensive public tendering process and by complying with strict health, safety and environmental requirements. Three British destroyers followed — HMS Exeter, HMS Southampton and HMS Nottingham.

Source: TradeWinds Business Report. By Geoff Garfield. 9 March 2012