On average circa 1,000 ships are demolished every year and current market reports reveal an uptick in the trend.
At a high level, the scrapping industry is not only a large and growing business but also a highly valuable market. Practically all the parts and spares of a scrap-bound vessel are reusable, thus avoiding the depletion of natural resources and the pollution generated in obtaining them; also, it is an important source of employment.
Yet, it is rather staggering that such a major industry still follows, to a large extent, primitive and harmful practices. Over two thirds of the world’s end-of-life ships are demolished by the so-called practice of beaching, mostly in South Asia. Beaching is the process of running a ship ashore and resting it on a tidal mudflat for her dismantling, which results in the release of pollutant and toxic substances to the atmosphere, sea, and shore. Furthermore, it is relevant to mention that these practices are generally carried out by unqualified labour in precarious conditions: by hand and without any safety gear.
The International Maritime Organisation, with the objective of tackling this issue, approved the Hong Kong International Convention for the safe and environmentally sound recycling of ships on May 19th, 2009. The Hong Kong Convention constitutes an exhaustive regulation of ship recycling activities, ruling the most relevant aspects throughout the entire lifecycle of the vessel, from her design and construction to her dismantling.
The highlights of the foregoing Convention are: the requirement imposed on Owners to carry on board an Inventory of hazardous materials contained in the vessel’s structure or equipment, their location and quantities; the obligation to undertake an initial survey before the vessel is put in service, a renewal survey within the following five years, an additional survey after carrying out any substantial repair or fitting, and a final survey before the withdrawal of the vessel. All of them with the purpose of verifying the Inventory of hazardous materials as well as compliance with the Convention.
The provisions of the said international set of rules are not only applicable to owners but also to shipyards located in the States Party. The latter will be responsible for, inter alia, the preparation of a Ship Recycling Facility plan, the safe and environmentally-sound management of hazardous material and the production of a detailed Ship Recycling Plan specific to each vessel to be scrapped in their facilities.
However, the Hong Kong Convention has not yet entered into force. It will come into effect 24 months after its ratification by a minimum of 15 States whose fleet represent 40 percent of the world’s merchant shipping by gross tonnage and whose combined ship recycling volume per annum amounts to at least 3 percent of their combined gross tonnage.
To date, it has been ratified by 15 countries, a standout point being that 9 of them did so in 2019. However, the major breakthrough was the fact that India and Turkey, two of the five states with the highest annual recycling volume, were among those countries.
That said, in order to meet the third condition for the Convention to enter into force, the ratification of either Pakistan, China or Bangladesh would still be required since the rest of the countries’ combined gross tonnage does not total the required threshold.
In this respect, analysts surmise as a fair expectation the entry into force of the Convention in the near future, on the basis of the fundamental remodelling of the main Bangladeshi yards to comply with the Convention.
At the European level, in 2013 the EU approved the Regulation 1257/2013 of the European Parliament and of the Council on Ship Recycling, intending to boost and accelerate the ratification of the Hong Kong Convention both within the European Union and in third countries.
The Regulation 1257/2013 is applicable to large vessels flying the flag of a Member State, which by virtue of the same, shall only be dismantled in ship recycling facilities included in the European List.
Delving into the European List, it is noteworthy that inclusion is not restricted to solely European ship recycling facilities. Yards located in third countries will be allowed to apply and be incorporated to the List insofar as they fulfil the requirements laid down in the Regulation 1257/2013. As of January 2020, the European List encompasses a total of 41 yards.
As a brief summary of the most relevant duties of the Owners under the aforenoted Regulation, they will have to notify the flag state of their intention to demolish the vessel indicating the recycling facility, produce an Inventory of hazardous materials and secure a “Ready for recycling certificate”.
From a critical perspective, while the Regulation constitutes a laudable initiative which has brought closer the idea of sound and sustainable ship recycling further afield than solely in the EU, its effectiveness is open to debate.
In numbers, only 10,000 vessels (approx. 20 percent) of the total global fleet fly an EU Member State flag and just 7 percent are demolished in the EU. Most EU vessels at the end of their life span are reflagged in a flag state with minimal to non-existent standards regarding recycling, with the purpose of avoiding the stringent requirements of the EU Regulation and benefitting from the reduced costs of beaching the vessel. Moreover, the yards recorded in the EU List are inadequate and insufficient in capacity to demolish all the retired EU ships.
On balance, we are undoubtedly heading down the right pathway towards the institution of a green and safe ship recycling system. Although, to reach such end, greater endeavours are required, especially the cooperation and commitment of the international community (commencing from States, Owners and shipbreakers) to eradicate the practice of beaching vessels.
In addition, the ratification and subsequent entry into force of the Hong Kong Convention is also paramount so as to provide certainty and homogeny in the ship scrapping industry.
Ultimately, this switch of practices will definitely prove beneficial not only for the environment, but also for the society and global economy.
