The Messy, Booming Business of Recycling Cruise Ships
A pedestrian walks along a coastal path in view of cruise ships, from left to right, Queen Mary 2, operated by Carnival Plc, Marella Explorer. (Photographer: Luke MacGregor/Bloomberg)

The Messy, Booming Business of Recycling Cruise Ships

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Carnival Fantasy was a ship famous for its outlandish décor, all-night revelry, and size—back when 2,000 was an incredible number of passengers. The “Fun Ship” vibe it introduced in 1990 came with such whimsical spaces as an Egyptian-themed piano bar, decorated with a fake sarcophagus, and a glitzy glass-topped atrium that was the hub of the social scene.

Today, the Fantasy is attracting a whole different breed of booty-seeker. In July, the 30-year-old ship sailed to the Aegean Sea, wrapping its final voyage in the ship breaking capital of Aliaga, Turkey.

Its resting place is a demolition yard where old cargo ships, tankers, research vessels—and now, cruise ships retired during the Covid-19 pandemic—get torn apart and broken into pieces. In this case, they’re not being broken in half to get upgraded and stitched back together. Instead, circling the Fantasy’s partially deconstructed innards are buyers from all sorts of industries, looking for rock bottom deals on everything from artwork and kitchenwares to electrical wires and stainless-steel sinks.

For the cruise company, it’s an opportunity to recoup at least some value from an asset that’s currently acting as dead weight; while its value has declined with age, the Fantasy was originally built for about $225 million. For the recycling companies that buy the vessel for cash and take on the hazardous task of emptying its valuables, it’s a months-long salvage resale on steroids.

The Messy, Booming Business of Recycling Cruise Ships

Cutting the Losses

It’s hard to gauge how exactly much money is made from recycling cruise ships. Companies don’t immediately disclose the sale prices of the vessels after relinquishing ownership, and the resale value of their most sought-after commodity—scrap steel—fluctuates in each market on a daily basis. 

But the business is booming.

Next to Carnival Fantasy in Aliaga are two Fantasy-class ships built in the late 1990s. Next to them are two former Royal Caribbean vessels (scrapped by Royal’s Spanish partner line, Pullmantur Cruceros). The ships all had big fan bases, even as they aged. Fantasy and its sister ships started 2020 full of passengers bent on fun-in-the-sun activities in the Caribbean, Bahamas, and Mexican Riviera.

The Messy, Booming Business of Recycling Cruise Ships
The Messy, Booming Business of Recycling Cruise Ships

The ships would have left the fleet in coming years, even if the industry were healthy; the pandemic sped the process with owners of idled vessels hemorrhaging cash and looking to cut their losses.

In its third-quarter filing, Carnival Corp. said it planned to sell 18 “less efficient” ships in 2020, resulting in a 12% reduction of its nine-brand fleet. “Those ships were giving us a bad drain,” said Arnold Donald, Carnival’s chief executive officer during a recent webinar with the Society of American Travel Writers.

Going, Going, Gone

Without much of a market for second-hand tonnage, the ships’ main asset is the steel that makes up the superstructure.

If, for instance, the Carnival Fantasy superstructure contains 15,000 tons of steel, the scrap may sell for upward of $4.7 million, based on current global market prices—though other factors also come into play, such as local prices and demand.

Along with the risk of market fluctuation, the buyer also takes on the uncertainty of just how much metal can be salvaged. Pre-1990s ships tend to have more steel in their hulls and underwater plating; those built in the ’90s and thereafter can contain lighter, stronger alloys.

Either way, steel and metal scraps will travel to a smelter to make rebar for construction projects around the world. Steel from some other dismantled ships can find its way to Turkey’s large car-manufacturing industry, where it might contribute to parts for Toyotas or Fords.

The Messy, Booming Business of Recycling Cruise Ships
The Messy, Booming Business of Recycling Cruise Ships

Aluminum, copper, and stainless steel are also salvaged and resold, along with valuable commodities that mostly remain in Turkey. The ripped-out teak decks on Fantasy may end up in local shops, restaurants, and homes. Theater scenery and lighting may find its way into show productions. Even the tackiest artwork has some value and can end up in restaurants throughout the country.

Buyers come to the yard for everything, down to the bolts and nuts. Even if a used toilet sells for a fraction of the shelf price, multiply that amount by a few thousand—given the number of cabins and public spaces on each ship—and it can add up to a substantial sum.

According to Orbay Simsek, vice president of the Aliaga-based Simsekler Ship Recycling Co., there are markets for kitchenware, closets, and blankets. 

Basically, anything and everything that can be sold will sell. Everything must go—even the sarcophagus.

Eco-Friendly Ship Breaking

Taking apart ships is a controversial topic, thanks to concerns over both human and environmental risks. It’s one of the most dangerous jobs in the world, according to Wouter Rozenveld, director of Sea2Cradle, an expert in green ship recycling hired by Carnival to oversee the safe dismantling of its ships. Each Carnival vessel may take up to nine months to break down, he says, and the blowtorch-based work comes with constant fire hazards.

Those hazards are amplified when the recyclable component pieces, such as furniture, cabling, piping, and machinery inside each deck, must be carefully taken apart and separated, says Ehud Bar-Lev, who oversees assessment services at maritime specialist Lloyd’s Register.

The Messy, Booming Business of Recycling Cruise Ships
The Messy, Booming Business of Recycling Cruise Ships

The additional steps in disassembly also increase the potential for hazardous waste spills that contain everything from oily residues to sludge, asbestos, and refrigeration coolant.

To forestall such incidents, the Turkish ship breaking yard undertakes its work in a concrete holding area to catch debris; similar facilities in India and Bangladesh may undertake the process on beaches. Rather than letting toxic chemicals spew into the water, the Turkish yard collects the materials, has them cataloged by Sea2Cradle, and then hands them over to the government-run Ship Recycling Association of Turkey for proper disposal.

Carnival Corp. saw these precautions as a marketing opportunity and has made a highly unusual move to publicize its efforts as “responsible recycling.” But it was the shipbreaking yard, not Carnival, that saw the biggest windfall as a result: Never before has Aliaga hosted five mega cruise ships in its harbor.

More may arrive in the coming months.

“The longer the pandemic rages on in the world, the more cruise ships will end up in scrapyards—and my guess is at an increasingly younger age,” says ManWo Ng, a maritime management professor at Virginia’s Old Dominion University. “Even if a vaccine becomes available, how many of us will be comfortable jumping right back on cruise ships?”

©2020 Bloomberg L.P.

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