Ship Recycling: An Upcoming Business or a Predetermined Industry? How EU will deal with the upcoming situation?

It is a common truth, in maritime circles, that one sector of great importance – in terms of Environmental Protection Services – is that of the Ship Recycling Industry. As you may know, this sector is growing steadily the past ten years. With yards of significant capacity located only in India, Turkey, China and Japan, Turkey is the only country, in Mediterranean Sea but also in wider European Region, that has developed a remarkable Ship Recycling Industry, based mostly in Aliaga, although – sometimes – dismantling might be carried out in a disputable way.

However, mostly because of uncontrolled beaching activity, especially in India, IMO and EU have set some rules that are expected to make things stricter for both Ship Recyclers and Shipowners. In addition to that, EU based organisations like the NGO Shipbreaking Platform have been quite active against such practices. Lately, with Maersk announcing that they are planning on recycling their ships in India while helping Alang-based ship dismantiling facilities to improve their environmental footprint, it seems that we might be in front of some kind of continuous press releases crossfire, with a rather undetermined scope.

So, the current situation is that, since 2009, the Hong Kong Convention for the Environmentally Sound Recycling of the Ships has set a frame through which Ship Recycling has to be done. In addition, in 2013, European Union published the Directive 1257, applicable to all EU-flagged Ships as well as all ships calling at EU ports. Among the measures this Directive sets is the mandatorial of an Inventory of Hazardous Materials for all aforementioned ships as well as the development, by the end of 2016, of a list of EU-approved Ship Recycling Facilities to which ships under EU flag or ship coming from EU countries must be led to be recycled.

Additionally to all above, since April 2015, the Nairobi Wreck Removal Convention went into force. Its main objective is that all shipwrecks and ships that pose a danger to navigation and/or the Environment, must be removed by all means, in care of their owner. In case of laid-up & abandoned ships, this might be the Port Aurthority in which territory they have been laid up. Up to a point, this is in total alignment with the Greek Law No. 2881 on Removal of Ships that pose a threat to Navigation and/or the Environment.

So, these could be clear marks that Ship Recycling is about to be big business in the following years as more and more vessels, especially, Bulk Carriers are being laid up due to low demand. Keep in mind that laid-up vessels will be steadily charged with port fees and operational costs so, eventually, they will have to be either sold or recycled. There are estimates that, with the current pace, based on January’s figures, approximately 55.2 millions GT could be scrapped by the end of 2016.

As for Greece, at the moment, in Piraeus, there are about 30 ships waiting to be removed, in anticipation of the privatization of the Port under COSCO’s new ownership. Moreover, it is roughly estimated that, in Elefsis, there are over 100 ships being laid up because of unbearable operational costs and/or abandoned and about 30 ship wrecks that have to be removed in the following three years.

This could be translated to a great business opportunity, in terms of Environmental Protection Services. Some firms are already providing this kind of services but none of them have a base in Aliaga, where takes place the majority of Ship Recycling for European vessels.

It would be interesting to see how EU’s closest neighbor, Turkey, is going to absorb all upcoming changes, so that it can benefit of the distance advantage against Alang-based yards while EU State Members, Ship Owners and Ship Recycling Companies, of all kinds, are planning to establish a healthy, profitable and, in the meantime, environmentally sound chain of activities at their nearest facilities.

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