Refurbishing can extend life and unlock better fuel efficiency, but yard time and capital can bite hard. Scrapping converts steel to cash fast and resets risk, but you lose earning days. The right move depends on steel prices, yard quotes, compliance upgrades, and the charter market. Use this quick map of tradeoffs before you run the numbers.
🛠️
Refurbish the Vessel
Extend useful life, hit compliance targets, and lift charter appeal if the hull and machinery are still sound.
- Works best when 5 to 10 years of service remain
- Yard slot and parts availability are confirmed
- Upgrades deliver measurable fuel savings
- Post refit the ship meets EEXI and CII targets
Typical capex bundle:
- Dry dock, steel and coatings
- Main engine and generator overhaul
- BWTS, scrubber or alternative compliance kit
- Navigation, safety, and electrical upgrades
Payoff levers:
- Lower fuel burn and lube oil spend
- Charter premium for compliant tonnage
- Residual value uplift at sale
- Lower off hire risk after overhaul
Risks:
- Scope creep and yard overruns
- Downtime with lost earning days
- Financing friction if payback is unclear
♻️
Scrap and Reinvest
Convert metal to cash, exit rising opex, and redeploy into younger or more efficient tonnage.
- Best when steel wastage or class issues are heavy
- High scrap steel prices improve proceeds
- Next special survey looks costly
- Demand outlook is weak for this class
Cash and timing:
- Scrap proceeds less cleaning and tow costs
- Settlement window from yard or buyer
- Regulatory and green recycling requirements
Reinvestment paths:
- Acquire younger ship with better CII
- Shift to a different segment
- Bridge with a time charter or bareboat lease
Risks:
- Scrap price volatility vs timing
- Lost optionality if the market turns
- Compliance obligations for scrapping location
📉 Off hire days vs current spot rate
🧾 Capex for refit vs scrap proceeds
🛢️ Fuel burn change and CII score
🧭 Survey timing and class recommendations
Next step: plug your figures into a simple model that compares refit capex and downtime against scrap proceeds and reinvestment returns.
⚖️ Refit or Retire — Full Economic Model
Model NPV, payback, IRR, fuel and carbon savings, downtime, scrap proceeds, and reinvestment.
Global
Fuel & Carbon
Assumes 3.114 tCO₂ per ton of fuel.
Baseline Revenue/Opex
Refurbish: Capex & Downtime
Refurbish: Performance
Negative means lower opex after refit.
Refurbish: Financing & Exit
Scrap: Proceeds
Scrap: Timing & Reinvest
Comparator
If > 0, applies to operating profit deltas only.
