Ship breaking intensifies on low freight rates, higher scrap prices

NEW YORK (Scrap Monster): More dry bulk ships are destined for demolition and end up in scrap yards for recycling due to a combination of low freight rates, high fuel costs and high prices being offered by ship breakers to owners.

The demolition of dry bulk ships has already reached record level in deadweight tonnage terms, according a report by Platts. As of October 14, 300 dry bulk carriers, aggregating 19.6 million dwt, had been sold for scrap so far this year, beating by 160% the previous record of 12.2 million dwt set in the whole of 1986, Frangou Angeliki, chairman and CEO of Navios Maritime Partners told analysts on a conference call to discuss the company's third-quarter result, Platts report added.

Meanwhile, the rise in demolition activity has raised concern about the export of hazardous wastes such as asbestos, PCBs, residue oils and heavy metals from developed nations to developing nations. Legal experts and NGOs that attended the 10th Conference of the Parties to the Basel Covention at Cartagena in Colombia voiced the voiced the concern that the International Maritime Organization’s Hong Kong Convention will not stop hazardous wastes from being exported to the poorest communities and most desperate workers in developing counties. The Hong Kong Convention, which was adopted in 2009, but has not yet been ratified by a single country, has no intention of minimizing the movement of toxic ships to developing countries.

Currently the 1989 Basel Convention is the only legal instrument on transboundary movements of waste, and the only legal tool developing countries can successfully use to stop toxic ships from entering their territorial waters.

The developing countries who wanted the Basel Convention to be in force was supported by the Basel Action Network and the NGO Shipbreaking Platform, a global coalition of labor rights and environmental organizations dedicated to promoting safe and environmentally sound ship recycling and preventing toxic ships from disproportionately burdening developing countries. "The Hong Kong Convention is radically different from the Basel Convention as it puts the costs and liabilities of waste management on the importing state and not the polluter – who in this case is the ship owner", said Ingvild Jenssen, Director of the NGO Shipbreaking Platform.

"The Hong Kong Convention does not even prohibit the dangerous beaching method, a substandard method of ship dismantling whereby ships are broken up on tidal beaches by untrained and unprotected workers, causing severe pollution, injuries and deaths." "The Basel Convention clearly considers that illegal traffic of hazardous waste is a criminal activity. The Hong Kong Convention, however, does not require the criminalization of illegal transfer of hazardous waste", added Dr. Marcos Orellana from the Centre of International Environmental Law (CIEL) 

Last year 5.8 million dwt of dry bulk tonnage was sold for scrap, representing just 1.3% of the global fleet. The number of dry bulk carriers sold for demolition so far this year represented 3.65% of the global dry bulk carrier fleet. George Achniotis, senior vice president of business development at Navios Maritime, said an average of 1.2% of the world fleet was committed for demolition each year in the period 2000-2010, inclusive.

Of the 300 dry bulk carriers sold for demolition this year, 64 were Capesize bulkers. At the current level of demolition, Achniotis said, the industry is set to commit 24.9 million dwt of dry bulk tonnage for demolition in the whole of 2011, representing 4.7% of the existing global dry bulk fleet, Platts report added.