23 October 2017

Bangladesh top buyer of scrapped ships

Bangladesh was the top buyer of scrapped ships in the world in the third quarter of 2017, followed by India, according to a study of Brussels-based Shipbreaking Platform.

During the period, 50 scrapped ships were brought to Bangladesh and 44 to India, making South Asia the most preferred destination for scrapping old vessels, which is a hazardous practice for human health and environment.
A total of 227 ships were broken between the months of July and September, 124 of which ended up on the beaches in South Asia, according to the organisation which is a coalition of environmental, human and labour rights organisations.

Greek ship owners sold 11 ships to the beaching yards this quarter, which is the highest, followed by South Korea and Singapore at 6 vessels each. Shipping companies from the US sold 5 vessels.

Singaporean Continental Shipping Line remains the worst corporate dumper, though it currently shares this position with the Greek Anangel Shipping Enterprises and Iran Shipping Lines.

In total, the companies had three vessels each beached in South Asia this quarter.

Bermuda-based Berge Bulk, Greek Costamare, Swedish Holy House Shipping and American SEACOR are close runners-up, with two ships each sold for dirty and dangerous scrapping on the beach.

Brazilian-owned product tanker LOBATO, which was reportedly sold by Petrobras to Indian breakers, ended up on the muddy shores of Chittagong instead, the report said.

Although 33 out of the 124 beached vessels this quarter were European-controlled, only three of these had a European flag when they arrived on the beach.
“All ships sold to the beaching yards pass via the hands of scrap-dealers, also known as cash-buyers, that often re-register and re-flag the vessel on its last voyage,” said the report.

In this regard, flags of convenience, in particular those that are grey- and black-listed, are used by cash-buyers to send ships to the worst breaking locations.

“Almost half of the ships sold to South Asia this quarter changed flag to the grey- and black-listed registries of Comoros, Niue, Palau, St. Kitts & Nevis, and Togo just weeks before hitting the beach.”

The flags are not typically used during the operational life of ships and offer “last voyage registration” discounts.

It is not due to a lack of awareness concerning the dire working conditions that the international ship owners continue to favour in the infamous beaching yards in South Asia, the Shipbreaking Platform said.

“Rather, it is the fact that dirty and dangerous breaking brings in more money.”

There is little or no investment in proper infrastructure to contain pollutants and ensure safe working conditions.

The proper disposal of hazardous wastes is overlooked and the migrant workers exploited, said the Brussels-based organisations.

Moreover, the prices offered for ships this quarter have been high in South Asia, especially when compared to the figures of the first half of the year.
Monsoon rains caused a shortage of local products being available to the domestic steel mills and have, therefore, driven up prices for end-of-life ships, the report added.

Source: hellenic shipping news. 23 October 2017

Ship demolition activity grinds to a halt

The rebound of dry bulk freight rates, as well as ships’ values has resulted in the halt of demolition sales, triggering fresh concerns regarding the long term viability of the market’s rebound. In its latest weekly report, GMS, the world’s leading cash buyer of ships said that “a shocking collapse in price and sentiments over the last few weeks resulted in a grinding halt to a lot of the offerings / ongoing negotiations with end Buyers in the various subcontinent locations this week. Most sub-continent recyclers are entering the dreaded wait and-watch mode to see where prices are headed, before committing themselves on new units”.


GMS added that “depending on which report you rely on, prices have declined anywhere between USD 30/LDT to about USD 50/LDT since the peak seen during August / September. Much of this can be attributed to the fact that local steel plate prices have been rather volatile, resulting in recycled material not moving quick enough from local yards. This has in turn left Recyclers increasingly reluctant to take in new inventory. In China, the Communist Party Conference has seen a halt to virtually all ship recycling activity and the lack of any meaningful negotiations and acquisitions is having a knock on effect throughout the Indian sub-continent and Turkish markets. As local steel plate prices cooled (significantly) over the last few weeks and currencies (in both Turkey and India) depreciated overall as well, a perfect storm of declining prices and negative sentiments sweeps across the industry. Moreover, upcoming Diwali holidays will likely ensure that the lull in activity and sales will continue for at least another week”.

According to GMS, “as such, most cash buyers remain unwilling to commit their unsold tonnage at some of the exploitative numbers currently being tabled by end users. Not all however, is doom and gloom. There has been a noticeable slowdown in potential tonnage for sale as freight rates (in the dry bulk and container sectors) push on. Although down overall, steel prices in China and Turkey too improved marginally this week, in the first green shoots of a possible upcoming recovery and the industry could see a sustained recovery once Diwali and the Communist Party Conference in China conclude from the end of next week onwards, leading into November”.

In a separate report, shipbroker Intermodal noted that “the first cracks that appeared in the demolition market at the end of last month have been slowly transforming into full on pressure on prices, with average bids across the most popular demo destinations moving down for a third week in a row. The shaky Chinese market has been greatly impacting sentiment and lately prices as well in the Indian subcontinent where softer local currencies have brought about additional pressure on the markets there. As a result, activity has been slowly softening, with the number of cash buyers who feel comfortable enough to commit themselves amidst a falling market seriously limited at the moment. The Diwali holidays that will kick off tomorrow are also expected to affect activity in the following days as well, while the one silver lining at the moment is the supply of demo candidates that has been substantially softening amidst improving freight markets in all of the more conventional sectors during the past weeks. Average prices this week for tankers were at around $255-415/ldt and dry bulk units received about 245-395 $/ldt”, said Intermodal.

Similarly, Allied Shipbroking noted that “despite the fact that we continue to see fairly firm prices being quoted by breakers and with appetite holding at firm levels across most of the Indian Sub-Continent, activity has remained relatively slow, compared to the average levels noted in the year so far. The considerable improvement in the dry bulk freight market and the sharp increase in asset prices that have emerged as a consequence has limited the supply of demo candidates from this vital sector. We have seen a fair rise in the volume of tanker vessels being sent to be beached but nothing extra-ordinary, given that the overall tanker fleet has a very limited number of vessels that can be considered overage. This general lack in demo candidates is likely to keep the competition amongst cash buyers at firm levels, helping to support the current highs being noted in terms of prices for scrap for a at least a little while longer”, the shipbroker concluded.

Source: hellenic shipping news. 19 December 2017

22 October 2017

Bangladesh was preferred shipbreaking nation for carriers in Q3

Carriers scrapped the most ships in Bangladesh in the third quarter, followed by India. Altogether, 124 vessels were scrapped in South Asia from July to September, shows a study from NGO Shipbreaking Platform.

Bangladesh was shipowners' preferred destination for scrapping old vessels in the third quarter, shows the latest commercial fleet scrapping review from NGO Shipbreaking Platform. Altogether, 227 vessels were scrapped from July throughout September. Of these, 124 ended on the beaches in South Asia, where they were scrapped at the notorious beaching yards in Bangladesh, India, and Pakistan. At the top of the list is Bangladesh with 55 vessels, while India follows in second place.

As always, Greek carriers in particular make use of the South Asian yards. Altogether, Greek shipowners scrapped 11 vessels, followed by South Korean and Singaporean owners with six vessels each. Beaching yards have been criticized for their bad conditions for both workers and environment. According to Shipbreaking Platform, one yard worker was killed in the third quarter in India's Alang, while another was gravely injured in Bangladesh.

Source: shipping watch. 20 October 2017

21 September 2017

Alang: Looking at a healthier future

Alang, the world's largest graveyard for ships, has been notorious for its human and environmental safety standards. But it could now be looking at a healthier future

Chetan Patel of the Shree Ram Group, which owns two ship recycling yards at Alang

There is always something morbid about a place where things are taken apart, piece by piece, after the end of their useful lives, and sold off as scrap. A once grand, or at least useful, creation is systematically stripped and wrenched apart, and reduced to a pile of junk; its utility down to the cost of scrap metal.

Alang, the world’s largest graveyard for ships, would score high on such morbidity. No wonder then that it found a place in Max Brooks’s 2006 novel World War Z: An Oral History of the Zombie War. But what Brooks did not include in his depiction of humans turning into zombies, because of a global pandemic, were the real life horror stories of Alang’s ship breaking yards that have been notorious for endangering human lives as well as the environment for decades.

But as global calls for sustainable business practices across industries gather volume, a few ship owners and recyclers are determined to mend Alang’s notorious image and position it as a global hub for responsible ship recycling.

Alang, situated 50 km from the city of Bhavnagar in Gujarat, is a 10 km sandy stretch, facing the Gulf of Khambhat; it is dotted with battered ships of all shapes and sizes, anchored perpendicular to the shore. Oil and gas tankers, container vessels and even cruise liners wait to be reduced to scrap. The yard became operational in 1983, when the state government conceived it to create mass employment for low-skilled workers. Alang’s yards have a capacity to break 450 ships annually, and the industry is now worth around ₹6,000 crore.

A partially dismantled ship at Alang. The Gujarat town accounts for half of all ships recycled globally

The barren landscape on either side of the well-laid road that leads from the highway to the Alang-Sosiya Ship Recycling Yard is lined with shops selling every imaginable item that has been ripped from the ships—engines, pumps, crockery, dishwashers, lifebuoys and wooden furniture, for instance.

Deeper within Alang, the road that runs adjacent to the 170-odd shipbreaking plots (of which around 130 are operational) developed by the Gujarat Maritime Board (GMB), gets bumpier and dustier. The GMB gives out yards on long-term leases to private companies to operate them.

Most of the 17,000 men working at the yards leave their shanties early in the morning, and head to work wearing yellow or white hard hats, dark blue jumpsuits, and industrial boots. But despite the safety standards that their attire suggests, most of the yards function like haphazard junkyards: Harmful substances, such as asbestos and oil, often spill into the water, contaminating the marine ecology; workers who use gas cutters are exposed to hazardous fumes; there have also been reports of workers dying due to gas explosions. A 2014 study commissioned by the National Human Rights Commission and conducted by the Tata Institute of Social Sciences confirmed the poor working conditions at Alang and pointed to lax implementation of safety regulations. It found that, according to official records, 470 deaths were reported between 1983 and 2013, with a possibility of the number being higher.

This is the price Alang pays to keep its shipbreaking industry competitive. Similar substandard working conditions are also rampant in the shipbreaking industries of Gadani in Pakistan and Chittagong in Bangladesh. It is not surprising then that these three locations account for close to 90 percent of all ships recycled in the world; Alang alone accounts for about half.

Both yards of the Shree Ram Group have been certified by the Hong Kong Convention

The other large global ship breaking centres are in China (Zhejiang and Jiangsu, among others) and Aliaga in Turkey, where safety standards for workers and the environment are higher than at Alang.

The continuing slowdown in global trade, and the consequent excess capacity in the shipping industry, means shipping companies are scrapping more of their vessels than before. Shipping yards in China and Turkey pay less to shipping companies for their retired ships owing to their higher operating standards, compared to yards in Pakistan, India and Bangladesh. But as global regulations governing ship recycling become more stringent, shipping companies are under pressure to send their old vessels to yards that follow safety and environmental norms, where they fetch a lesser price.

In order to get a better price for retired ships from yards that operate with high safety standards, a few shipping companies are now trying to develop Alang as a yard adhering to global benchmarks. One of the shipping lines implementing this strategy is Denmark-based publicly listed company AP Moller-Maersk, which has $35 billion (around ₹2.24 lakh crore) in revenue. In 2015, it tied up with Chetan Patel, owner and director of the Shree Ram Group, and the Masani family, which owns YS Investments, to create a benchmark for others to hopefully replicate. In 2015, China Navigation Company (CNCo) also committed itself to the development of Alang.

“We are working with the more far-sighted ship recycling facilities in Alang, who committed significant quantities of their own money to raise standards with zero guaranteed return, to move the safety, environmental, social and operational standards from the previous, often very poor, practices to those of a responsible industry,” writes Simon Bennett, the Singapore-based general manager of sustainable development at CNCo, in an email.

Annette Stube, head of sustainability at AP Moller-Maersk’s transport and logistics division, says her company has been sending its end-of-life ships to only responsible ship recyclers in Turkey and China since 2009. But occasionally, if there is more life left in the ships, the vessels are resold. “Sometimes, people reused the ships that we sold and sent them for recycling to Pakistan or Bangladesh eventually,” says Stube.

Naeem Masani, MD of YS Investments, whose facility at Alang rakes in ₹100 crore annually

To clamp down on this practice, and to increase the number of responsible ship recyclers to choose from, in 2015, Maersk decided to work with some progressive recycling yards at Alang and bring them up to global standards. “Any business would like to have many options. It is a strategic business consideration where our position is stronger or weaker depending on the bargaining power of the procurers,” says John Kornerup Bang, head of sustainability strategy and shared value initiatives at AP Moller-Maersk.

CNCo’s Bennett also mentions that the recycling capacity in Turkey and other European Union countries is “woefully inadequate” to handle the number of ships getting scrapped. “Additionally, it would be prohibitively expensive for CNCo to send ships trading in the Asia Pacific region to Turkey for recycling. The market price for ships to be recycled in China is currently skewed because of government subsidies that keep shipyards competitive,” he adds.

While CNCo’s and AP Moller-Maersk’s rationale for upgrading Alang is clear, what is in it for Alang’s shipbreaking companies?

Patel (42), whose business group’s interests range from ship recycling to real estate, owns two yards at Alang that have been certified by the International Maritime Organization’s (IMO) 2009 Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships. The certification was awarded by ClassNK, a Japanese ship classification society in 2015. Patel’s and Masani’s yards are among at least 17 yards in Alang that have been certified by the Hong Kong Convention, which sets out standards that cover the handling of hazardous materials, recycling facilities, the design and construction of ships, and the preparation of ships sent for scrap. However, it won’t come into force until it is ratified by 15 countries, representing no less than 40 percent of the world fleet’s tonnage.

So far the Convention has been ratified by only six countries around the world—Norway, Congo, France, Belgium, Panama and Denmark. It is expected that by 2018-19, many more countries will ratify the Convention, which would make it difficult for the non-certified yards at places like Alang to get new business.

The breaking and recycling of ships in India is supposed to follow the Shipbreaking Code 2013, issued by the Union ministry of shipping.However, the ministry itself had come under flak from environmental groups for not factoring in pollution. Consequently, the ministry issued amendments in 2016 that covered issues such as treatment of radioactive and hazardous waste material.

Patel’s father Mukesh started the Shree Ram Group in 1994. It has recycled close to 280 ships since then, and brings in ₹300 crore in revenues each year. He has spent ₹2.5 crore for one yard, and a little more for the other (which is bigger in size), to instal impermeable flooring in the front yard (where metal blocks from the ship first land) and backyard (where the blocks are cut into smaller pieces) to prevent soil and water contamination; a mechanism to use the hull of the ship as a safety net to prevent metal blocks falling into the sea; a high-tonnage crane to lift the blocks and bring them to shore; pipelines for transferring used ship oil; and high-quality safety gear and emergency response systems.

YS Investments has spent close to ₹13 crore on similar upgrades at one of their facilities, which has an annual turnover of ₹100 crore. “We are thinking about how our business will evolve over the next 10 years,” says Naeem Masani, 28, managing director of YS Investments. For the Masanis, their Alang yard is also a source of scrap steel for their steel rolling mills in Bhavnagar, and the used ship oil is utilised in the lubricants they manufacture.

In addition to the Hong Kong Convention, AP Moller-Maersk has made Shree Ram Group and YS Investments adhere to its own Responsible Ship Recycling Standards (RSRS), which prescribe additional safety measures under which its own experts stationed at the yards have the authority to stop work if they observe any lapses. AP Moller-Maersk has decided to sell two ships to Shree Ram Group and one to YS Invesments at a discount, and has committed a steady supply of ships to these facilities as long as they maintain their standards.

While the Hong Kong Convention doesn’t specifically address the working conditions for yard workers, AP Moller-Maersk and CNCo are trying to ensure that Masani and Patel construct International Labour Organization-compliant dormitories for workers as part of the overall facelift of their facilities.
The next goal for Patel is to get his yards certified according to EU’s standards, so that he can then buy retired ships from European shipping lines (the EU Ship Recycling Regulation of 2013 require EU-flag ships to be recycled only at facilities they recognise).

But even as Patel aims to further improve his yard, a canister of chemical falls into the ocean from a ship at a yard next to his. The chemical fumes rising from the water serve as a grim reminder that while a beginning has been made to redeem Alang, more needs to be done to break old mindsets and not just ships.

Source: forbes india. 20 September 2017

20 September 2017

Ship breaking zoning in CBRM (Cape Breton Regional Municipality) questioned

Northside councillor wants facilities ‘listed in black and white’

SYDNEY, N.S. - There will be no ship breaking in North Sydney

That was the word from CBRM planning director Malcolm Gillis after Dist. 2 Coun. Earlene MacMullin questioned whether municipal zoning permitted such activity at the Canadian Marine Engineering ship repair yard located on the Northside waterfront.

MacMullin said her confusion on the issue stemmed from a 2016 Transport Canada report that listed CME’s North Sydney location as a site where ship breaking could be carried out on steel-hulled vessels up to 2,500 tonnes.

“That’s what prompted me to ask what was going on, so when I asked the question Malcolm Gillis of the planning department responded in an email that CBRM zoning doesn’t allow it, but unfortunately later that same day I got another call from someone inside saying that they can (break ships in North Sydney),” said MacMullin, who added she felt compelled to get clarification on the matter during this week’s council meeting.

Gillis reiterated his initial response stating again that Cape Breton Regional Municipality zoning does not allow ship breaking at CME’s North Sydney facility.

Although the question was answered, MacMullin still insisted on a staff report on the issue.

“Originally, I was seeking clarification for the North Sydney CME facility … I figured I would ask for it all as it would clear up any issues for fellow councillors further down the road. As a result of this staff paper we will have it listed in black and white what facilities can and cannot (handle ship breaking),” she said.

Earlier this month it was announced that Marine Recycling Corp. had won a $12.6-million federal contract to dismantle two former Canadian Navy ships. The work on the HMCS Preserver and the former research vessel CFAV Quest is to be carried out at Sydport Industrial Park in Edwardsville. The former is docked at Sydport, while the latter has yet to arrive.

Source: cape breton post. 16 August 2017