UK-based brokers Clarksons reported that vessel demolitions rose 14% year-on-year in 2016, representing 933 ships or 44.4m dwt for the year.
Demolition trends are a symptom of the markets and regulatory pressures: Freight rates, steel prices and special survey costs are some of the commercial pressures, while pending cost of compliance with regulations on ballast water system installation and sulphur emissions could also drive owners to sell off older tonnage.
This older tonnage consists largely of less efficient, more expensive-to-run vessels, which could then make way for the delivery of more efficient, advanced newbuildings By breaking ships as cost-effectively as possible, shipowners have more capital to invest in ships that possess greater technological innovation. Clarksons data from 2016 also shows that vessels are younger than before, but with low newbuilding orders it hardly points to a revialtising of the global fleet.
Maersk Line is the top ship owner with 647 vessels as of the start of the year, according to Clarksons. The company made a significant U-turn on its recycling policy recently. It once publically eschewed the beaching method of scrapping, agreeing with environmental lobby groups that it needed to end immediately. It has since rescinded that view, and as the container markets struggled with overcapacity, gained the ire of those same NGO’s by scrapping ships on Asian beaches.
Following the revelation,Maersk came out in defence of its u-turn stating itbelievesit is important to create change in the existing facilities by working with them rather than ignoring them.
“Our presence in Alang is a huge encouragement to the ship recyclers because they feel that someone is supporting their will to improve their operations and the investments they have made,” said Maersk’s head of ship recycling Capt. Prashant Widge.
If shipbreaking is to increase in order to drive transformation of a more digital, safer and less environmentally impactful global fleet, it needs solid regulation and it needs to be overseen, says the NGO Shipbreaking Platform, which wants to see an end to the beaching method.
In short it argues that whatever shippng transforms into, the sustinable, green aspects of it need to be reflected in the whole ship lifecycle, from drawing board to scrapping. And that latter part includes transforming ship recycling.
The International Policy Law and Institute released a report in 2016 that stated there are around 40,000 workers employed in shipbreaking in Bangladesh and 35,000 in India. As shipbreaking increases, work for these employees increases too. Recent fatal incidents in Pakistan highlight ongoing concerns and question this idea of transforming the cradle to grave lifecycle of shipping.
But with the IMO’s Hong Kong Convention on Shipping waiting in the wings to come into force, and the European Union’s shiprecyclng regulations forcing yards to up their safety and environmental stewardship levels, there are incentives.
International class societies, such as Class NK, have issued certificates of compliance with the pending IMO rules to some of India’s yards and Cash buyers such as GMS have long supported the Asian recycling facilities that have been the backbone of ship scrapping, as well as the Asian second hand steel markets.
As GMS has pointed out many times, there is ongoing support for these beaching plots in places like India’s Alang region to make improvements, and this should be encouraged.
But whether one supports a cleaned up beaching method, or only recycling in contained places such as docks, the future trend will be increased scrapping.
All ships should now have inventories of hazardous materials, according to the rules, but they will likely come with increased amounts of technology to dismantle along with the steel. The transformation of shipping needs ship recycling, and sustainable shipping needs sustainable recycling.
fathom-news.com
editor@fathom-mi.com
