Interview: Most Ship Owners Still Opt for Worst Yards

In light of the overcapacity issue currently causing the majority of woes in the shipping industry, this year could be the busiest year on record in ship recycling, as the total amount of scrapped tonnage in 2016 is likely to increase to some 40 million dwt, compared to 30 million dwt which were demolished in 2015, according to BIMCO’s forecasts.

Therefore, more end-of-life tonnage could hit the South Asian beaches of Pakistan, India and Bangladesh. The first quarter of 2016 saw a scrapping spree, as 239 large commercial vessels were sold for dismantling, out of which 189 were beached in South Asia, according to the information collected and analysed by the NGO Shipbreaking Platform.

The driving force behind the increased number of scrapped tonnage is the price difference between clean and safe recycling and worst yards in South Asia, NGO Shipbreaking Platform’s Executive Director, Patrizia Heidegger, tells World Maritime News.

Heidegger: As the prices for scrap steel are still comparatively low in South Asia, the price gap has become smaller in 2015, but even if the price gap between, for instance, a yard in China and a beaching yard in South Asia is less than USD 50 per ton, most ship owners will still opt for the highest price, that is, the worst yard.

So this is nothing new: European, American and Chinese ship recycling yards cannot grow their capacity as ship owners are unwilling to calculate in the cost of proper recycling.

The price gap fluctuates strongly, in particular as the price offered for end-of-life vessels in South Asia is highly volatile. It has been less than USD 200 per LTD, but also close to USD 500 per LTD. In Europe, a ship recycling yard can offer more than USD 100, but this also depends on the age and type of the vessels and the amount of hazardous waste on board.

WMN: How would you define the overall situation at these shipbreaking yards? Has there been any improvement with regard to safety and working conditions? Where is the situation in this respect the worst?

Heidegger: Based on our findings, the situation is the worst in Bangladesh where the workers dismantle the vessels on an intertidal mudflat and cannot even wear protective shoes. Illegal child workers is still a major issue that is completely denied by both the shipbreaking industry and government. Like Pakistan, the shipbreaking industry in Bangladesh has no access to hazardous waste management facilities, for instance, an asbestos landfill, incinerators and proper water treatment plants, thus all hazardous wastes are dumped or re-sold.

The situation has improved in India, however, the Indian government has not been willing to move the industry to modern industrial platforms. Law enforcement with regards to pollution, hazardous waste management, occupational health and safety and basic workers’ rights in India remains weak. The Alang shipbreaking yards, for instance, do not offer accommodation to the workers, there is a lack of proper sanitation and access to drinking water, and there is no proper hospital available in case of severe accidents. The Indian shipbreaking cluster is completely sealed off from any kind of public scrutiny and does not have to undergo environmental impact assessments.

WMN: How are the governments of Pakistan, Bangladesh and India battling the issues arising from beaching?

Heidegger: The governments in South Asia need to properly enforce their own laws and international obligations. They need to understand that only sustainable development is beneficial to their societies, while the perpetuation of exploitation and environmental pollution mainly benefits international companies rather than local communities and their own populations. The younger generation in South Asia is fed up with pollution and the sellout of their country to foreign business interests and to the profits of a few local business people. The pressure on the governments in South Asia and in Europe to regulate the negative impacts of global economy is growing and this gives us hope that things will ultimately change.

WMN: The European shipowners recently visited the Indian beaching yards to assess to what extent operations in intertidal zones can be sustainable and thus be potentially compliant with the provisions of the EU Ship Recycling Regulation. In your opinion, can a tangible progress be seen at these yards and can beaching ever be compliant with the EU provisions?

Heidegger: We believe that beaching is a substandard method of shipbreaking that was meant to phase out already ten years ago. It is a wrong approach to try and improve something which will never fulfill all requirements. We ask European ship owners to invest in modern ship recycling facilities off the beach. State-of-the-art ship recycling facilities can be highly efficient and sustainable at the same time, and this is where the future is to be found.

The concerns relate to various issues such as the environmental impact of toxic paints and impossible spill remediation in the intertidal zone; release of debris by use of gravity method; occupational health and safety concerns such as lack of access for emergency response; lack of government overview and law enforcement; intransparency of shipbreaking industry and access denied to NGOs, researchers and the media; working and living conditions of migrant day labourers; as well as lack of hospital facility.

WMN: In February, Danish shipping company Maersk Group said it would commit to creating more responsible recycling operations in Alang, India. Does NGO Shipbreaking Platform have any updates on the works that Maersk is performing? Are any other major companies expected to follow in Maersk’s footsteps?

Heidegger: Two Maersk vessels have arrived in Alang and are being beached and dismantled now. Maersk’s big mistake apart from stalling the beaching method, which they would never be allowed to use in Denmark, anywhere else in Europe, China or Japan, is that they have sold end-of-life vessels to a yard in Alang before they are able to implement improvements. We fully disapprove of an approach based on ‘trial and error’.

One example: the environmental assessment of the chosen yard has been done by a doubtful local company that has found ‘nil’ pollution with copper, which is very common in ship paints. Neither the certifier of this yard, ClassNK, nor Maersk, have questioned and reacted to the lack of proper sampling and impact assessment. It is sad that one of the world’s leading shipping companies has abandoned its formerly progressive ship recycling policy including its cooperation with some of the world’s most modern ship recycling facilities in China.

Obviously, other ship owners will use this as an excuse to continue to use the beaching method. Maersk was a role model to follow when it had its vessels recycled in China. This was a strong incentive for others to follow its good example. Now we will see the opposite trend: Maersk has legitimised beaching instead of hitting the mark by investing in a modern ship recycling facility in India – off the beach.

WMN: Most of the vessels that end up on South Asian beaches for recycling are from the EU. Many EU shipowners turn to reflagging ships before they are sent for recycling, thus avoiding the EU laws. Can this be prevented with the EU’s new ship recycling regulation? How can this problem be solved?

Heidegger: This is a major flaw of the EU Ship Recycling Regulation. It is nothing new that ship owners can resort to flags of convenience, and in particular to non-compliant flags, at any time. This is a well-known, fundamental system failure in the governance of global shipping: while the world’s merchant fleet is owned by European and East Asian owners, most of the shipping community conveniently leaves the regulatory control of vessels to flag states where hardly any beneficial owners are actually based or exercise control over their fleet.

Nevertheless, the EU is setting the world’s first standard for clean and safe ship recycling that is based on a robust system of checks and balances and transparency. We have shown in our analysis ‘What a difference a flag makes’ how ship owners use grey and black listed end-of-life flags for last voyages. This is why the regulation of shipping has to go beyond the flawed flag state jurisdiction: unwilling ship owners use non-compliant flags. We advocate for a Ship Recycling License that will affect all vessels calling on European ports regardless of their flag and which will ensure that the shipping industry will have to contribute financially to the end-of-life management of its fleet.

WMN: In your opinion, what should be the best approach to solving the issue of breaking ships on beaches in South Asia and who should lead the way in that respect? What activities is NGO Shipbreaking Platform undertaking regarding the issue at the moment?

Heidegger: There is no simple solution for a complex issue like substandard shipbreaking. We need a smart mix of solutions. Our members in South Asia are busy ensuring that their governments enforce domestic law and international obligations on the shipbreaking industry. Of course, South Asian states are responsible to protect their workers and local communities. Moreover, we need a legal framework on the international and regional levels to regulate the shipbreaking issue that goes beyond flag state jurisdiction which closes loopholes and holds ship owners accountable for dirty and dangerous shipbreaking.

Two important steps forward are the standard set by the EU SRR and the Ship Recycling License to push more vessels towards sustainable recycling. But also cargo owners using the global shipping industry and ship financers are more and more sensitive to this topic and have started to raise the issue with ship owners. One day, ship owners simply won’t have a chance but do the right thing.

We both work on policy developments such as the implementation of the EU SRR and we advocate for a Ship Recycling License which is gaining traction with different stakeholders. We continue to work with ship owners who want to make a difference and advise them on alternatives. We engage actively with cargo owners and banks: they increasingly demand clean and safe recycling policies from shipping companies. Our members in South Asia continue their struggle for better law enforcement: for instance, we have a court case pending in the Supreme Court of Bangladesh.

There is still a long way to go, but things have started to move and the shipping industry is forced to become more responsible.

World Maritime News Staff; Image Courtesy: NGO Shipbreaking Platform/Tomàs Halda 2010/YPSA 2009