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Ship demolition can be lucrative

If concrete actions on safety issues are taken, it would be an interesting competition to watch

Bangladesh currently tops the rank as the highest importer of scrap ships, and local yards dismantle half of the world’s discarded vessels, overtaking India and Pakistan. The total number of vessels imported for scrapping in 2021 was 254 from media reports. Yet Bangladesh is suffering from a severe deficiency in safety measures.

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When a vessel’s time is up after 30 years, it makes its way to the scrapyard. The hottest determinant is low costs, and maybe lax rules. A powerful sector in its own right, ship recycling yards have been profitable across the years. The only complaint(s) were from the activists about safety standards, and the noise were not futile.

At the bare minimum, Norwegian Ship Owners’ Association (NSA) disallowed ship demolition in Bangladesh unless those yards are compliant with Hong Kong International Convention for Safe and Environmentally Sound recycling method. Adding a feather to NSA’s hat, the European Union (EU) enforced its stand on safety by banning shipbreaking in Bangladesh and few other neighbouring countries. Moreover, EU-flagged vessels have a list of approved yards for scrapping.

Bangladesh’s Financial Express highlighted this sector is estimated to be worth around US$2 billion, providing employment for some 300,000 workers and actively supporting the engineering industries, notably construction. The country imported 144 scrapped ships in 2020, down from 236 imported in 2019. In 2021, it dismantled more than 8 million tonnes of metal. The media added there are 160 shipyards in the country, of which 70-80 are in operation. More than 300 re-rolling mills are using ship scraps as their raw materials, while the shipbreaking industry meets more than 60 per cent of the raw materials for local steel industry.

The lucrativeness is beyond obvious. However, few are prepared to deal with the tradeoffs. The percentile of actions taken against rogue yards were eclipsed by the volume of operations undertaken. Shipowners are unfortunately more concerned about cashing in on the bullish steel prices and tipping their balance sheets towards a glorious angle. Hence, Bangladesh’s edge in the tight competition against India and Pakistan can be accentuated through thorough safety measures. Otherwise, the industry may see frequent swapping of the top 3 places between these countries.

Marine Online News Team
Please email us at marketing@marineonline.com to contact the author for this article.

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