Alang emerges as primary graveyard for sanctioned 'shadow fleet' tankers as legal pressure mounts

In a significant shift that appears to be reshaping the global maritime demolition landscape, oil tankers from the so-called "short fleet" — vessels operating under international sanctions — are reported to be increasingly making their final voyage to the shipbreaking yards of Alang-Sosiya in Gujarat's Bhavnagar district, industry data reveals.

According to latest figures from the ship recycling sector, 26 prohibited vessels with a combined deadweight tonnage of 2.1 million DWT have been reportedly sold for scrapping, with 22 of these being oil tankers. This concentration means that sanctioned tankers now account for a striking 58 percent of all tanker demolition activity worldwide, marking these restricted vessels as the dominant force in an otherwise shrinking market.

The trend reflects, say knowledgeable sources, mounting legal and regulatory pressure on the "shadow fleet" — aging tankers that have been used to circumvent international sanctions, particularly those related to Russian oil exports. As Western sanctions tighten and enforcement mechanisms expand, shipowners who once operated these vessels in regulatory grey zones are now finding it impossible to maintain insurance, classification, or port access, forcing them toward the beaching yards of South Asia.

A Market in Contraction, Except for Banned Tankers

Publicly available facts suggest that the global ship recycling industry has not been immune to broader economic headwinds. Total worldwide demolition activity has contracted by 14 percent year-on-year, falling to 6.4 million tonnes. The tanker segment has been hit even harder, with overall tanker scrapping volumes plummeting by 34 percent to approximately 2.1 million tonnes.

Yet within this declining market, prohibited vessels have carved out an outsized role. While legitimate fleet owners have been holding onto older ships to capitalize on elevated freight rates — particularly in energy transport — sanctioned vessels have no such option. Deprived of insurance coverage, classification society certificates, and banking services, these ships have become toxic assets that can neither trade profitably nor navigate legally.

Industry analysts project that this dynamic will only intensify, with forecasts suggesting that over 100 short-fleet tankers could be directed toward demolition yards in the coming year as regulatory nooses tighten further.

Alang: The World's Largest Ship Graveyard

Nearly all of this activity is converging on Alang-Sosiya, the world's largest shipbreaking facility, which handles approximately half of global ship dismantling by volume, the sources underline. The yard, stretching along 14 kilometers of Gujarat coastline, has long been the final destination for decommissioned vessels ranging from bulk carriers and container ships to naval aircraft carriers.

In recent years, Alang is said to have undergone significant upgrades to comply with the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships, which entered into force in June 2025. More than 100 shipbreaking plots in the facility now hold Statements of Compliance from international classification societies, meeting standards for worker safety, hazardous waste management, and environmental protection, official sources claim.

However, the influx of sanctioned vessels presents unique challenges. These ships often come with obscured ownership structures, incomplete documentation, and heightened compliance risks for recyclers and financial institutions involved in their purchase. Banks have increasingly refused to issue letters of credit for transactions involving designated vessels, while insurers withdraw coverage, creating bottlenecks that can leave ships stranded in legal limbo for months.

Geopolitical Context and Regulatory Framework

The surge in prohibited tankers heading for scrap is directly linked to expanded sanctions regimes by the European Union and the United States. The EU's Ship Recycling Regulation, which mandates that EU-flagged vessels be dismantled only at approved facilities, has been complemented by aggressive targeting of the "shadow fleet" — the network of aging, often poorly maintained tankers that have facilitated the movement of sanctioned crude oil.

Recent sanctions packages have designated hundreds of vessels, restricting their access to ports, insurance, and maritime services. While these measures have been effective at disrupting illicit trade, they have also created an unintended consequence: a growing stock of unseaworthy, uninsured tankers with no operational future other than demolition.

Maritime safety experts have warned that without viable pathways to scrapyards, many of these vessels risk being abandoned at sea or operated without insurance in environmentally sensitive waters — scenarios that pose significant ecological and navigational hazards.

Competition from Bangladesh and Pakistan

Alang is not the only destination for these end-of-life vessels. Shipbreaking yards in Chittagong, Bangladesh, and Gadani, Pakistan, remain fierce competitors, often offering higher prices for scrap steel due to their domestic steel industries' heavy reliance on imported shipbreaking scrap. Bangladesh, in particular, has been aggressive in purchasing decommissioned vessels, with its recycled steel covering roughly 20 percent of national demand.

However, both Bangladesh and Pakistan have historically lagged in adopting the Hong Kong Convention standards, giving Alang a regulatory advantage as Western shipowners — and now, increasingly, the handlers of sanctioned fleets — seek facilities that can demonstrate compliance with international norms.

Industry Outlook

For Alang's ship recyclers, the wave of sanctioned tankers represents both an opportunity and a risk. On one hand, the influx provides much-needed business at a time when overall demolition volumes have fallen to decade lows. In the last fiscal year, Alang beached 119 ships — only marginally better than the previous decade's low of 113 vessels — with sanctioned ships accounting for nearly 32 percent of total tonnage.

On the other hand, dealing with prohibited vessels requires navigating a complex web of sanctions compliance, frozen financial transactions, and opaque ownership structures. Several recent cases have seen deals collapse after banks blocked payments upon discovering sanctions designations, leaving vessels stranded and recyclers exposed to legal and financial risk.

As the international community continues to tighten the screws on shadow fleet operations, the shipbreaking industry finds itself at the center of an unexpected geopolitical drama — transforming from a quiet corner of maritime commerce into a critical pressure valve for global sanctions enforcement.

For now, the beaches of Bhavnagar remain the most visible endpoint of this shadow trade, where the world's unwanted tankers come to be unmade, one steel plate at a time.