In Depth: Two Sides to Every Story

Positive results from Dutch ship owners while global shipbreaking industry still slow to react

The NGO Shipbreaking Platform recently published a list of all the ships that were brought to Indian, Pakistani and Bangladeshi shipbreaking facilities last year. The results show that a total of 768 ships were destined for the breaker in 2015.

Crucially, according to the NGO, 469 of those vessels were broken in an unsafe and environmentally unfriendly manner. Working conditions and environmental regulations are often inadequate – resulting in numerous fatalities and injuries to personnel together with substantial regional pollution caused by poor handling of hazardous materials.

The announcement marks an important milestone: for the first time ever, not one single Dutch-owned vessel ended up on a shipbreaking beach in India, Pakistan or Bangladesh. This fact has been rightly praised by the Dutch maritime industry. Rather than selling their ships to Asian shipbreaking yards, Dutch owners sent a total of 14 vessels for recycling in controlled conditions in specialised yards in Denmark and Turkey last year.

Downstream management

Even though the Netherlands has performed well in last year’s figures, there is a flip-side to this positive news if you look at the global state of the shipbreaking industry. This involves the relevant legislation regarding shipbreaking practices: the 2009 Hong Kong Convention for the Safe and Environmentally Sound Recycling of Ships. “The problem with the Hong Kong convention is it only regulates what happens in the ship breaking yards”, states Clean Shipping Index director Merijn Hougee. “If you look at the issue of ship recycling it is much broader than that. The hazardous waste that comes from the shipbreaking process – asbestos, PCBs heavy metals, you name it – has to go somewhere.”

“Therefore downstream management is a concern because this needs to be controlled and managed in a good way. However, the Hong Kong Convention doesn’t provide for that – it basically stops at the gate of the recycling yard.” That said, having the Hong Kong Convention in place is better than having nothing, Hougee continues. “At least it tries to regulate the practices that are occurring in the yard itself.”

European influence

The Hong Kong Convention will come into force two years after 15 states, representing 40 per cent of the world’s gross tonnage, have ratified it. At the time of going to press, the Convention has been ratified by just three countries: Norway, Democratic Republic of the Congo and France.

On the worldwide level, is there a better alternative to the Hong Kong Convention? “From a political point of view this is problematic because even now only three countries have ratified the Convention. Imagine if the wording was stricter – then even fewer countries would sign.” Hougee is in favour of a more EU-centric approach to the issue. “This is happening at the moment with the European Ship Recycling Regulations. These are still in the preparation phase, with the final list of approved recycling yards expected to be published next year.” There are also plans to implement a financial mechanism to pave the way for proper ship recycling of EU-flagged vessels. “For example, ship owners will have to obtain a ship recycling licence for every ship that intends to enter a European port and the licence fee will be set aside for that specific vessel. At the end of the ship’s life, that money is made available for the shipbreaking process. This reduces the financial incentive to send a vessel to India for shipbreaking.”

Unlocking the financial potential

Just as important as the ship recycling process is the ship building process, says Hougee: “The Dutch fleet is quite young so ship recycling is not that much of an issue anymore. If you look at the concept of producer responsibilities, then ships could be better designed for end-of-life recycling. Who knows better how to break a ship than the yard who built it? In this way, the industry starts to take responsibility. Of course, there are some front-runners who are leading the way, but this is only marginal.”

Instigating recycling plans on vessels built this year will have beneficial effects to the ship recycling process decades from now. “This starts with ship owners – they need more communication. The people responsible for building the ship are not in contact with the people who are responsible for recycling the ship. This internal communication has to be improved – and it doesn’t cost anything.” With a recycling plan in place, the recycling process is far more effective. This yields significant financial benefits: “If you know where all the different types of steel grades are in the ship then the recycling is more effective. Full vessel recycling unlocks more money from the vessel. In the end the financial incentive is the most important.”

The right incentives

As well as the EU-based approach, there is also the market-orientated approach: “Why is it that some ship owners are doing a very good job already? What are their incentives?” asks Hougee. “Sometimes it’s pure marketing to attract customers. For other companies there are intrinsic motivations. Family-owned companies are a good example: if the family thinks that it is not the right thing to do they will choose a better solution. Some other companies do it because their customers don’t like it.” The last example demonstrates the influence of increased public pressure combined with action from national governments, the European Union and the IMO. “There are so many things that have to change because it is such a global sector”, concludes Hougee. “In the end it should come from regulations. The Hong Kong Convention is a small step forward. Together with the European Union, the process could be speeded at the IMO and we might get there.”

Life cycle activities

Helping the process along the way is CSR Netherlands: a network organisation and Centre of Excellence for Dutch companies that are working towards corporate social responsibility. With more than 2,000 companies from a broad scope of industries – from healthcare to agriculture – affiliated with the organisation, CSR Netherlands has a significant impact on the future of business.

With a focus on the Dutch maritime sector, CSR Netherlands has joined forces with 28 companies from throughout the maritime industry in a cooperative venture to facilitate the transition to a more sustainable maritime industry. “We have a varied group of companies that is still growing”, says CSR Netherlands maritime sector manager Mieke Bakker-Mantjes. The organisation’s activities can be divided into two areas: “The first involves the hardware – everything from vessel construction through to the shipbreaking and recycling process. And the second includes the operational phase, looking at how a ship is used in its lifetime. This, of course, will vary according to the sector concerned. For example, a shipping vessel has very different operations to a dredger.”

Aiming for 2040

“On the subject of corporate social responsibility, many people talk about 2020 and 2025, but that is very close”, continues Bakker-Mantjes, who takes a more realistic approach. “Our aim is 2040. By then, all vessels should be built from 100 per cent recyclable materials and be 100 per cent free of emissions and noise pollution.” Human welfare is also included in the scope – encompassing the construction process, the operations phase and the recycling process.

“Regarding the ship recycling procedures – this should not have any detrimental effects on people or the environment. Shipbreaking yards should have a hard floor, materials should be properly separated and toxic materials should be handled correctly. The work force should be sufficiently protected and have access to the correct equipment. And there should be no child labour.”

Getting the message accross

Financed by the Dutch Ministry of Foreign Affairs, this CSR Netherlands maritime-focused project has sufficient funds for a three-year period. “Since we started two years ago there has been an increased feeling for this issue”, Bakker-Mantjes informs. “Of course there are the leaders in this issue. In any transitional period you will always have leaders. For example, there are companies who are demanding change – demanding that their products are not transported by ships which are going to be recycled badly. And then there are the companies who are ‘following’ the leaders. These are also the people that we have to influence.”

“Sustainability is about ‘People, Planet and Profit’”, she continues. “Of course you need profit to be able to operate and to invest in new projects. But the feeling that things have to change is increasing – the younger generation think that it is completely normal to work in a sustainable way.”

Bakker-Mantjes concludes: “The aim of this three-year project is that when it ends on 1 February 2017, the commercial markets will pick up where we have left off and carry on until 2040. Ideally, we will not be needed anymore, but that will still take some time. The question will be how much have we woken up the maritime market to this issue?”

Tom Scott

This article was previously published in Maritime Holland edition #2 – 2016.

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