Criteria for Scrapping Not Seaworthy Crude Oil Tankers and Large Ocean Vessels

The decision to scrap large ocean vessels, particularly crude oil tankers, is not a simple one. Most ships are retired due to economic viability rather than unseaworthiness. This article delves into the criteria and factors that lead to the scrapping of these vessels.

Unseaworthiness vs. Economic Viability

While the phrase 'unseaworthy' often gets thrown around, it is rare for large ocean vessels like crude oil tankers to be scrapped solely due to unseaworthiness. The majority of scrap sales are driven by the economics of ownership and operation. When a vessel becomes technically and operationally viable, it is often more profitable to build a new one or undergo a 10-year survey/refit. These events mark the highest value purchase points if the primary consideration is the value of work performed by the vessel over time.

Regular Inspections and Haul-Out Procedures

Regulated by various maritime authorities, ships undergo seaworthiness inspections at regular intervals both while in the water and during service. Haul-outs are expensive and infrequent processes that may only occur every few years. These inspections often determine that a vessel is far beyond the economic threshold of repair and compliance.

Visual inspections can quickly indicate whether a vessel will be too expensive to haul-out and restore to compliance before incurring significant costs. At this point, the vessel may be sold or sent for scrap. The cost of a haul-out can range from hundreds of thousands to millions of dollars, depending on the vessel's size and type.

Age, Corrosion, and Financial Factors

Age and corrosion take their toll on a ship's structure over time. Plating and framing inevitably deteriorate, reducing the hull's strength. The ship may either be scrapped or face the risk of disaster in the event of an incident at sea. National and international regulations may also require refits of critical machinery to meet air quality, marine sanitation, and other standards.

For a ship that is new and highly capable of meeting regulatory standards, upgrades to extend service life remain cost-effective. However, for an older ship or one designed for cargo types no longer popular in the market, the decision to lay up or scrap becomes more financially sensible. Throwing good money after bad is not a profitable strategy, and building or purchasing a newer, better-equipped ship makes more sense.

Compliance with New Regulations

New regulations, such as the requirement for double-hulled tankers, failure to meet environmental standards (NOx, CO2, SO2), and expenses related to classing, docking, and maintenance, can also motivate the scrapping of older ships. Additionally, if the ship has steel hull and tank plating that is becoming too thin (measured by ultrasound), it reaches a point where repairs and maintenance escalate to unmanageable costs.

The ship's hull may also sustain damage from incidents such as fires, groundings, or collisions that are too expensive to repair. In a market where overcapacity leads to vessels competing on price, and contracts predominantly go to newer vessels, the economics of maintaining an older ship often do not stack up.

Conclusion

In conclusion, the scrapping of not-seaworthy crude oil tankers and large ocean vessels is driven by a complex mix of technical, economic, and regulatory factors. Unseaworthiness is an infrequent reason; it is far more common for economic viability to be the deciding factor. Owners must weigh the costs of maintenance and repairs against the vessel's remaining service life and profitability.