Maersk CEO: Alang Yards Catching Up with Chinese, Turkish Rivals

Shipbreaking yards in Alang, India seem to be on the track of transformation toward becoming compliant with high safety and environmental standards, according to the Chief Executive Officer of  A.P. Møller – Mærsk A/S, Søren Skou.

“After 20 months, three yards in Alang, India, are performing at the same level or better than yards in China and Turkey, which used to be the only options for economically viable and responsible ship recycling. The door to changing an otherwise gridlocked situation has been opened, and we now need to accelerate this development,” Skou said in the group’s Sustainability Report for 2017.

In 2016 the company launched an initiative to help upgrade ship-recycling facilities and practices in Alang yards in order to make them compliant with the company’s standards.

Two container vessels, the Maersk Wyoming and the Maersk Georgia, were sent to India’s Shree Ram yard in Alang for recycling in late May 2016.

The move to demolish ships in Alang was severely criticized by environmental organizations in Europe and Asia, however, the company stood its ground saying this was “an opportunity to change the industry for the better.”

Maersk’s switch to Alang was a shock to the industry, especially taking into account that since 2009, A.P. Moller – Maersk adhered to a strict interpretation of the Hong Kong Convention regarding health, safety and environmental issues, sending its ships for dismantling at yards only in Europe, China or Turkey.

“The result was that we found ourselves in a situation where we were spending money on exceeding compliance requirements, but without this effort resulting in a spread of responsible practices benefiting the environment or the workers. Furthermore, it did not help narrow the competitive disadvantage our approach was giving us,” Maersk said in its Sustainability Report.

Commenting on the financial background of the story and claims that Alang decision is driven by cost-cutting desire, Maersk said that it would have been less costly to continue to recycle a few vessels in China every year, and sell off other ships before the end of life, or chartering tonnage rather than owning vessels.

“We believe that being on the ground could help solve this industry-wide problem,” the company said.

As explained, the company’s approach in Alang is to sign commercial deals with the best yards, where the company accepts a lower price for the ships than what is normally paid in Alang.

At the same time, the company commits to helping the yards upgrade their practices while contractually requiring full implementation of its standards controlled by on-site supervision throughout the process as well as quarterly audits by third parties.

Over the past 20 months, the company has sent six vessels to three yards in Alang.

Furthermore, Maersk cited audit results that show that all the yards it works with are operating in full compliance with its standard, and are even exceeding it by fully eliminating contact with the intertidal zone during primary cutting. According to Maersk, this means that they are operating to at least the same level as when the company recycles vessels in China and Turkey.

“Finally, we are seeing increased investments in upgrades in many other yards, and when we sold our second batch of vessels, we saw yards competing on higher standards and not just on price. We believe these results indicate that with this approach, all the ship recycling operations in the entire Alang area could become responsible,” the company said.

The situation is far from perfect, especially with relation to the prevailing health hazards in the ship breaking yards.

“Access to health care – in general, and in emergencies– was confirmed as the most urgent unmet need. As a first intervention in this area, we began a project to establish a mobile health van, which will be able to provide emergency care in case of accidents. Following on from this initiative, we will be engaging more deeply in the area of health promotion and the handling of accidents in wider Alang, in partnership with the Indian Red Cross,” the company added.

Maersk plans to continue to invest and work on the ground with selected yards in Alang. However, for a more sustainable progress to be made more shipowners need to become involved.

“We hope other shipowners will join us in transforming the entire Alang shipbreaking industry by demanding high standards for safety, human rights and the environment, and by supervising implementation on the ground on a daily basis. It is about businesses and other partners working together to solve a complex problem,” Skou pointed out.

World Maritime News Staff