Maersk Line, the world’s biggest container shipowner, is steering the debate on responsible ship recycling to a different course by announcing last week its “commitment to help selected ship recycling yards in Alang upgrade facilities and practices to comply with the company’s standards”.
The announcement by the poster boy of container shipping to use its leverage to create more responsible ship recycling options is music to the ears of ship breakers along a 10-km stretch of beach at Alang in Gujarat state’s Bhavnagar district. The work practices followed on the beaches of Alang—the world’s largest stretch of ship breaking beaches—have often been vilified for its negative human rights impacts and environmental degradation, including child labour, frequent fatalities, inadequate working and living conditions, lack of access to hospitals and proper waste facilities.
Out of the 768 ships recycled globally in 2015, 469—representing 74% of the total gross tonnage (capacity) scrapped—were sold to facilities on beaches in India, Pakistan and Bangladesh.
Critics of Maersk such as non-governmental organization Shipbreaking Platform have dubbed the company’s decision to recycle its end-of-life ships in Alang as “rubberstamping practices that they previously denounced to boost profits in times of low freight rates”.
Since 2009, Maersk Group, which owns Maersk Line, has been pursuing a policy of recycling ships responsibly. Responsible recycling, however, is only feasible in a limited number of yards in China and Turkey. Besides, on average, using one of these yards has an added cost of $1-2 million per recycled vessel, says Annette Stube, head of sustainability at Maersk Group.
The number of vessels up for recycling by Maersk Group has been limited for the past decade; but in the next five years, a larger number of ships owned by the group will reach the end of their life. Using only responsible recycling facilities is estimated to incur extra costs of more than $150 million, compared with using upgraded facilities in India, according to Stube.
With more vessels to recycle, the current cost of sustainable ship recycling is not feasible for Maersk as it looks to shore up its profitability. It is clear that with an ageing fleet, Maersk needs more options to recycle ships cost-efficiently and responsibly. Regulatory developments are further putting pressure on the industry to push for global availability of responsible practices.
Responsible and sustainable ship recycling was intensely debated by the global shipping industry for many years, culminating in the adoption of the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships by the International Maritime Organization (IMO) in 2009.
Four year later, in 2013, the European Union published its own regulation on ship recycling.
While the IMO’s Hong Kong convention does not prohibit dismantling of redundant ships by the beaching method practised in Alang, the EU regulations have banned this practice.
Under the beaching method, ships are first grounded and then broken in an unprotected marine environment. Critics say this method is polluting and unsafe for workers.
The Hong Kong convention is yet to come into force because it has not been ratified by at least 15 states, representing 40% of world merchant shipping by gross tonnage (capacity), to take effect globally.
The requirements of the EU ship recycling regulation will be phased in between now and December 2020.
A key aspect of the EU regime is the development of a list of ship recycling facilities that are compliant with its standards. Once this is compiled by December this year, ships flying the flag of an EU member-state will only be sold for recycling to facilities that are included in the list.
European fleet owners such as Maersk fear that the EU regulations would deprive them of adequate, responsible facilities, fetching lower prices while selling their old ships.
Steady improvements in conditions have been witnessed in Alang over the last two years. Four of the 167 recycling facilities located there are now certified to the standards of the Hong Kong Convention.
These four recycling facilities—Priya Blue Industries Pvt. Ltd, RL Kalthia Ship Breaking Pvt. Ltd, Leela Ship Recycling Pvt. Ltd and Shree Ram Group—do not comply with the EU regulations.
Recyclers such as RL Kalthia say it will work towards compliance with the EU regulations by filling the gaps, “if possible, within the method used for ship recycling in India (read beaching)”.
Following a couple of visits to the four IMO-certified ship recycling facilities in 2015, the Maersk Group concluded that responsible recycling can be accelerated in the area.
Maersk’s decision to look at Alang for its ship recycling needs is seen as an endorsement of the beaching method banned by the EU, without being “irresponsible,” by suitably upgrading facilities and practices that comply with the standards set by the company. The decision, though, could be a bit of an embarrassment for the EU, given Maersk’s European roots.
And, Maersk is not hiding its views behind the niceties even while reiterating its policy to “only recycle ships responsibly”.
The group says its goal is “to make more responsible ship recycling facilities available, regardless of location and method applied” by developing a standard that combines the Hong Kong convention and demands of the group’s third-party code of conduct on anti-corruption, labour, human rights and sub-contractor matters. Maersk is, however, silent on the EU regulation in its pursuit of this goal.
Maersk says it will not only work directly with the four IMO-compliant ship recyclers to upgrade their practices to comply with its standards, but also engage a broader coalition of shipowners to help upgrade a larger Alang area to get better waste facilities, hospitals and a general upgrade of all the facilities on the beach. The more shipowners that commit to engaging over this issue, the greater the leverage for change, says Stube. This could well be the road to redemption for Alang.
P. Manoj looks at trends in the shipping industry.