'We Will Not Stand by and Wait for Global Regulation' -Maersk Line

Maritime Activity Reports, Inc.

October 20, 2016

Photos: Maersk Line A/S

Photos: Maersk Line A/S

 Shipbreaking has become commercial due to the recycling of steel becoming a global commodity in demand. This means that the dismantling and recycling of a ship are recognized as part of the value of the ship, which has evolved into a massive challenge for the shipping industry.

"The choice is clear. One option is to continuing to wait for global agreement – while hundreds of vessels continue to be dismantled on the beaches of India, Bangladesh and Pakistan – or to act now and begin improving the conditions in yards. That is what we have done in Maersk. We have chosen to no longer stand passively on the other side of the gate of the ship yard but instead engage directly where the majority of ships are dismantled. This is why we have initiated a collaboration with shipyards in India," says a statement from Maersk Line.
The majority of the world's vessels are sent for recycling where the highest possible price for the steel can be attained. This is in shipyards on the beaches of India, Bangladesh and Pakistan. Here they are typically dismantled under poor working and environmental conditions. 
The lower standards mean lower costs which enables these yards to offer much lower prices than competing shipyards with much higher standards. The result is clear: In 2015, 74 percent of the world’s ships were dismantled on these beaches. 
Neither the industry, global society, the shipyards nor the countries concerned have been able to solve this problem. There is no global regulation and the industry has not been able to regulate itself because both shipyards and shipping companies are in fierce competition in their markets.
In addition to this, there are structural limitations to achieving a sustainable solution. More than half of the world’s container fleet today is chartered – or leased, if you will. The owners of these vessels generate their income by renting out ships to the shipping companies. As a shipowner you should however take responsibility for your own ship, also when it is scrapped. 
Regardless of the standards the shipping companies have as ‘leasee’ of a vessel, the responsibility for deciding the ship’s fate resides with the owner. In Maersk we are thus responsible for ensuring responsible dismantling of our own vessels. 
This is a responsibility we fully accept. It becomes more difficult when we divest used vessels. Lately we have taken on an extended responsibility by minimizing the financial incentive for the buyer to scrap older vessels irresponsibly.
"When we decided to collaborate with shipyards in India we were fully aware of the risk of being criticized for the yards not yet fully observing the rules. We can of course document the main improvements already achieved and we now see that the shipyards' engagement get others to follow," says the statement.
"When we begin negotiations on ship recycling of the next vessels, we will invite a number of yards in Alang that like Shree Ram already follow the Hong Kong Convention and will commit to meeting our standards. Four shipyards have announced that they are ready and have started new investments in improvements impacting hundreds of workers already," it adds.
"We have taken action instead of waiting on the sideline and the results we have achieved in six months are far more comprehensive and far-reaching than the seven years of waiting for a global agreement. We have not given up and continue to support global initiatives to ensure equal international requirements and conditions for all shipping companies and shipyards. Only global regulation will ensure a definitive stop to the critical conditions that we see today," the statement concluded.
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