The majority of the global ship recycling activity is operated from a handful of countries such as India, Pakistan, Bangladesh, China, and Turkey. Within the last few years, we have witnessed a rapid growth in the ship recycling yards looking to upgrade their facilities in these major recycling countries. In India, almost half of the active yards are operating under a Statement of Compliance (SOC) with the Hong Kong Convention (HKC) and recently, the first yard in Bangladesh also received the same certification. These developments in the market have led to an increase in the capacity of the ‘green ship recycling’, which denotes the safe and environmentally sound disposal of ships and offshore assets. Ideally, this increased capacity should attract owners of all ship types to opt for green ship recycling of their end-of-life tonnage, however, in our experience, we have witnessed a fragmented demand. It would be interesting to analyze which industry segment is lagging in availing green ship recycling services and the reasons behind it.
The data required to analyze the market of green ship recycling is generally confidential. Therefore, we will use the data of our company in aggregate form. Being the leading company in the ship recycling industry, the dataset used for the analysis represents the general trend of the industry. Within the last few years, we have undertaken about 30 projects annually under our ‘Responsible Ship Recycling Program’ (GMS RSRP) which caters to the needs of the shipowners interested in green ship recycling, or recycling end-of-life ships, and offshore units in a safe and environmentally sound manner. Interestingly, none of the projects are for tankers, whereas 38% of projects are for container ships, 29% of projects are for offshore units, 17% are for car carriers, followed by 8% for bulkers, and 4% for reefers and LPG carriers.
The percentages above, especially that of tankers are quite concerning because, despite the fact that tankers pose the highest risk during the dismantling process, owners are not very keen to avail green ship recycling options. This is quite worrying because the availability of the HKC-compliant yards has increased significantly in recent years. Such a trend doesn’t augur well for yards willing to upgrade their facilities as they do not find enough incentive to do so considering the fact that not all ship types reach green ship recycling yards. These numbers reflect the defensive strategy adopted by the tanker owners which tend to go for ‘as is’ deals at the end of ships’ economic life to condone their duty of recycling end-of-life ships responsibly.
When an industry transits towards enhancement, all stakeholders must assume a collective responsibility of equal and meaningful contribution to achieving an effective progression. Presently, we are seeing more and more yards inclined towards the upgrading of their facilities to meet the standards of the HKC and be considered a ‘green ship recycling’ yard, especially in India. Certain Classification Societies have voluntarily started providing Statements of Compliance (SOC) to the recycling yards that wish to upgrade their infrastructure and processes in line with the HKC. At the same time, we as a vital link between the ship owners and the recycling yards, have been contributing to the industry by delivering workers’ training programs in association with Classification Societies (such as IR CLASS), offering additional services to the ship owners such as supervision, monitoring and reporting of the recycling process, and providing technical expertise to the yards for the upgrading of their facilities. A bigger contribution and will to embrace green ship recycling options from the ship owners’ side is required to boost the ship recycling industry in the right direction.