12 March 2012

Green ship recycling: Grieg grabs green baton

The fledgling Norwegian company is helping green recycling in China.

Norway has been one of the drivers behind moves to raise international safety and environmental standards in ship recycling, so it comes as no surprise that it is also the location for companies in the vanguard of so-called green scrapping.

Among them is the fledgling Grieg Green, part of family-owned Grieg Shipping Group, which has recently recycled its first vessel in China, Oslo-based Hoegh Autoliners’s pure car/truck carrier (PCTC) Hoegh Trotter (built 1983).

Grieg Green, headed up by chief executive Petter A Heier, differs from some other companies offering green-recycling supervision in China by acting also as a cash buyer.

Consequently, it actually purchased the 3,700-car-equivalent unit (ceu) Hoegh Trotter and, following owner’s delivery in China, has now overseen its scrapping.

Grieg Green began more as a broker and consultant but, faced with an uphill struggle to find customers prepared to adopt green recycling, soon changed its business model to include purchasing ships. Green recycling remains a low priority for owners facing tough economic times, says Heier.

Taking on the role of cash buyer is also intended to provide a “safe and reliable counterpart” for both owner and recycling yard.

“We charge roughly the same commission as a broker and cash buyer would but we include our services for free,” he said.Those services cover arranging for inventories of hazardous materials (IHMs), negotiating with recycling yards to secure competitive offers, advising clients on documentation compliance and then supervising the recycling process.

Although not everyone agrees that recycling in China is as environmentally sound as the yards would have us believe, Grieg Green claims to have hand-picked the best available.

Feedback from Hoegh, claims Heier, has been excellent. The owner has a history of recycling its car carriers in China where it has in recent times also used the former Maersk Ship Recycling.

Heier started with the Grieg group as a superintendent and drew up its green-recycling business plan as a consequence of his Master of Business Administration (MBA) thesis.

Grieg Green buys vessels on a back-to-back basis with a yard recycling contract. There is no speculation or price-movement risk, says Heier. Owners are required to deliver their ships to the appointed yard and are given regular progress reports.

News of the Hoegh Trotter project has, it is claimed, led to more potential customers coming forward rather than Grieg Green having to always chase work. “It has given us a lot of confidence that there is reason for this company to be here,” said the chief executive.

He adds that the Grieg group is a long-term shipping-industry player and he is sure it will continue to invest in Grieg Green because “for sure this will be an important part of the recycling industry in future”.

Heier is open about the fact that very few owners even consider green recycling in a place like China. Ships are not beached but instead dismantled alongside concrete piers, with large sections removed by cranes and cut again on land.

The momentum toward green recycling, says Heier, should increase once the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships (HKC) enters into force.

He is disappointed, however, at the pace of progress in countries ratifying it, including Norway.

Heier says a mental shift of attitude is required with regard to corporate social responsibility (CSR), including the environment, among shipowners, in the same way they are now focussed on emissions and fuel saving — topics that were not discussed 10 or 15 years ago.

Grieg Green is negotiating its second vessel, with two other owners, each with four or five ships for scrapping this year, showing an interest in the company’s services, says Heier.

He says that despite slow progress so far, he is confident that the company will eventually be a force for change in the industry.

Substantial charitable contributions are made each year by Grieg Group to the Grieg Foundation and now, it says, it wants to contribute to making ship recycling sustainable.

Meanwhile, Heier says he hopes to handle some of the group’s superannuated vessels in future years but he is not taking anything for granted. “Competition is competition,” he said.

Source: TradeWinds Business Report. By Geoff Garfield. 9 March 2012

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