Myriads of responsibilities and possibilities for ship owners seeking to recycle end-of-life tonnage

26 Sep 2017
Author: Dr. Kanu Priya Jain

For ship owners, it is critical to manage the recycling of end-of-life ships and offshore assets carefully, keeping in mind the relevant national and international regulations and the CSR policy of their company. However, most ship owners lack time and resources to dedicate specifically to such tasks because their main focus is on operations, not on the intricacies of the ship recycling industry. In recent days, managing end-of-life ships is becoming increasingly complex due to revamped international and national regulatory landscape. Moreover, environmental protection has taken the spotlight amidst the talk of corporate social responsibility towards the environment and climate change. Therefore, ship owners, besides seeking the best possible monetary value for their end-of-life ships and offshore assets, are also in need of partners capable of end-to-end management of such projects in the ship recycling industry.

The entire end-to-end management of such ship recycling industry projects includes a memorandum of agreement between the shipowner, the last voyage owner, and the end-buyer, i.e. the ship recycler; the technical management of the ship’s last voyage to the recycling yard; and the safe and environmentally sound management of the ship recycling process with a continuous supply of technical expertise and supervision. All these tasks must be undertaken within the purview of a complex mesh of national and international regulatory regimes governing the ship recycling industry. With such tasks, responsibilities related to legal, technical, regulatory, and social must be diligently undertaken by the concerned parties.

In the current ship recycling industry, India, Pakistan, Bangladesh, China, and Turkey continue to be the major recycling countries in terms of recycled tonnage volumes. However, within each country many different types of ship recycling facilities co-exist. The facility types can be broadly classified as non-ISO-certified, ISO-certified and Hong Kong Convention (HKC)-compliant. Usually, ship owners are free to choose the type of yard they want their ships to recycle.

Since GMS’ inception over two decades ago, the company has successfully negotiated about 3200 ships for recycling. Our job in tandem with the ship recycling industry goes beyond negotiating ships for our principals. We monitor the recycling process with monthly reports created by our Green Team of dedicated Ph.D. professionals from the moment a ship is sold to our principals till the completion of the recycling process,  keeping the shipowner informed about and involved in the entire procedure. The decision on critical aspects such as the selection of the recycling yard is also left to the shipowners during initial negotiations. In the past few years in the ship recycling industry, we have seen an increase in demand for the HKC-compliant facilities as more and more ship owners are seeking environmentally conscious options to dispose of end-of-life tonnage and we have been strongly advocating in favor of Responsible Ship Recycling at HKC compliant recycling facilities

Amongst major recycling centers in the ship recycling industry, India is now emerging as a leader of HKC-compliant yards where almost half of the operational yards now have acquired an HKC Statement of Compliance (SOC) issued by reputed (IACS members) classification societies. Also, Turkey, which has recently taken legal steps towards ratifying the HKC, and China, too have several HKC-compliant yards. Interestingly, quite recently (19th Oct 2017) we saw the first recycling yard in Bangladesh receiving a SOC with HKC from the classification society RINA. We hope this trend amongst yards to become HKC-compliant keeps growing in all major countries with a prevalent ship recycling industry. It will create fair competition between major recycling regions and increase the options for shipowners seeking the services of ‘green’ yards.

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