08 July 2011

From Cradle to Grave – Value Chain Responsibility in the Ship Scrapping Industry:

The World fleet plays a crucial role in the world economy. With growth in world trade the world economy has expanded, facilitated largely by shipping. The profitable trading life of a ship, however, is limited to 25-30 years. Each year approximately 3.5 to 4 % of the world fleet or 4,000 vessels are sent to recycling yards around the world. The majority of commercial vessels are dismantled in Asian countries where health and safety and environmental protection standards remain unacceptably low by developed world standards. At present, however, there are few viable alternatives, with recycling facilities in the developed world incapable of dismantling the largest ships, and current IMO legislation remaining voluntary and difficult to enforce. In this thesis the value chain responsibility of shipping companies will be discussed in the context of the current industry conditions in terms of market circumstances and legislative landscape.

Conclusion on Bergesen

The three areas of ship scrapping described in this report, the economies of ship scrapping, the current legislative landscape and the business ethics of shipping companies have clearly affected the operations and decisions of Bergesen.

  • The company is, like most shipping companies, affected by business cycles, selling fewer vessels for scrap as freight rates increase.

  • The case of Hesperus clearly illustrates that Bergesen has experienced the effect of the regulative framework of the ship scrapping industry, especially in terms of the Basel Convention and the Basel Ban.

  • Finally business ethics and level of moral development have ensured that Bergesen is willing to sell its vessels to Chinese scrap yards with better environmental conditions, despite lower scrap prices. Based on information in newspapers and press releases one may say that Bergesen has, like many of its industry counterparts, yet to reach the highest level of moral maturity, the post-conventional level, where full value chain responsibility is admitted. It does, however, seem like Bergesen is striving towards this level.

Author: Katrine Vetaas Vedeler

Author Affiliation: Norwegian School of Economics and Business Administration

Bergen, May 2006
This thesis was written as part of the master program.

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