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Tuesday, January 10, 2006


From the Wall Street Journal:

The "Ghost Fleet" contains 129 old naval ships that sit idle in a half-dozen ports around the U.S. These ships, maintained by the U.S. Navy and the U.S. Maritime Administration have become the target for the industry known as shipbreaking. All but shut down for a few years in the late 1990s amid environmental concerns, the shipbreaking business in the U.S. is now making a comeback. It is being fueled by a convergence of government action with developments in the global steel, energy and freight industries.

The driving force is the steel business, which is booming amid demand from China and other fast-growing economies. Just under two-thirds of the one billion tons, or $400 billion, in new steel produced each year comes from iron ore; the rest is recycled from torn-up cars, washing machines, ships and other forms of scrap metal.

But there's a shortage of old ships available to feed the steel industry's voracious appetite. With a global commodity boom under way, older ships are being kept in operation longer than normal to carry freight, oil, coal and other raw materials, not to mention huge amounts of scrap steel. Shipbuilders are expanding production, but it typically takes three years to build and launch a new freighter. Despite the huge demand for steel, Lloyd's List, a London-based maritime-industry trade publication, reports that about 232 vessels were scrapped in the first 10 months of 2005, down from 422 ships scrapped during the same period last year.

The U.S. has one of the largest government-owned stockpiles and an active program to get rid of the ships for scrap or other uses. Marad maintains three fleets in Virginia, Texas and California, spending thousands a year per ship trying to prevent corrosion, mold and mildew growth. As ship custodians for the federal government, the agency decides when to get rid of ships by paying a company to scrap them. Otherwise, the agency can sink ships in the ocean, either as part of military testing or to create artificial reefs for fish and scuba divers.

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