On the hazards of ship recycling:
Chittagong Bhatiary Yard, Bangladesh. Photo credit: Naquib Hossain
In November 2016, there was an explosion at a ship breaking yard in Pakistan – killing 17 people and injuring dozens. The blast occurred as 200 workers were dismantling a retired oil tanker at Gadani, one of the world’s largest ship breaking yards, situated along six miles of coastal beaches.
An estimated one thousand ships will be scrapped by the end of this year, a majority of which will likely make their way to ship breaking yards like Gadani in India, Pakistan, and Bangladesh. In 2015, for example, 469 (or 61 percent) of the 768 large ships that were scrapped globally were broken on beaches in South Asia.
The average life of ships is about 30 years, after which they are sold to brokers and cash-buyers for the value of their steel. These third-parties are a buffer between ship owners and environmentally hazardous ship breaking yards in developing countries. The common method used in these shipyards is ‘beaching’. Retired ships are sailed to these coasts and then dismantled on the beach, by workers with little training, minimal equipment, and no safety training.
Workers are exposed to physical and chemical hazards, as the ships contain asbestos and heavy metals, and heavy steel beams and plates can fall and injure workers. Harmful substances are released untreated into the water or burned off into the atmosphere, polluting the air. Both circumstances result in severe impacts to both the environment and health of nearby communities.
There is increasing interest on the part of ship owners and brands that use shipping services to mitigate the risks to environment and workers from ship breaking. However, the Hong Kong International Convention for safe ship breaking is yet to be ratified by most nations. Like many international agreements, critics argue that it lacks teeth and is poorly defined. The European Union (EU) Ship Recycling Regulation, which is an early implementation of the Hong Kong Convention for ships with EU flags and those that dock at EU ports, has been published but the technical guidelines are still under development.
While leading shipping companies have established policies on sustainable ship recycling practices, globally 95 percent of ships are still directed to beaches in developing countries for dismantling. Four of the ten largest U.S.-listed shipping companies mention ship recycling regulations in their annual financial filings, however none disclose on whether their ships are scrapped at sustainable recycling yards.
As this issue continues to evolve, it is possible that companies may need to more directly address this issue in their financial filings. Currently, without company-level disclosure on this issue, it is difficult to determine which companies are managing end-of-life impact of their vessels. End-of-life management of ships is an emerging issue for the shipping industry which may have a material impact on shipping industry in the future.