In 2013, 1,119 ships went to the world's breaker's yards, a decline of 16 percent over 2012 which was an "exceptional year," the environmental watchdog Robin des Bois (Robin Hood) said.
The figures "confirm that the ship demolition sector is in good health," Robin des Bois said.
It is the second highest tally since 2006, when the group began compiling annual reports in an effort to boost transparency in a sector with a contested environmental record.
India headed the list in both categories, but China was also a big player, ranking second in the number of ships that it demolished and third in terms of tonnage.
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Of the 1,119 ships, 667 were scrapped after being held at ports, along with their crew, for failing to meet international safety standards, the report said.
"Port inspections are playing a solid role in cleaning up the world's merchant fleet," it said.
South Asia has long been a graveyard for merchant ships, but it also carries a reputation for poor safety and environmental hazards.
The European Union has approved regulations requiring large EU-flagged vessels to be recycled at approved facilities.
Robin des Bois described the intention as "pious," given that only eight percent of such vessels were scrapped at European yards in 2013, and many European ships were given a flag of convenience by their owners for their last voyage.