Ship Recycling

ICS fully accepts the responsibility of the shipping industry to promote the safe and environmentally sustainable disposal of ships throughout the world’s ship recycling yards, most of which are located in developing nations. ICS is therefore committed to ensuring that governments ratify the IMO Hong Kong Convention on ship recycling as soon as possible. 

Momentum for ratification might at last be starting to develop, with the world’s largest flag state, Panama, having ratified the Convention in September 2016 joining Belgium, France and Norway; with Denmark, Turkey and others expected to follow suit during 2017. Progress is also slowly being made in encouraging important ship recycling nations such as India towards ratification, although there is a danger that these efforts could be undermined by regional action being taken by the European Union. 

Seven years after its adoption, it is disappointing that the Hong Kong Convention has still only been ratified by a handful of IMO Member States. It is especially disappointing that EU Member States, which originally pushed hard for the Convention’s adoption, have been so slow to ratify, instead focusing their efforts on a unilateral EU Regulation on ship recycling which started to take effect in 2016. Governments need to make ratification a far more urgent priority if they are serious about improving conditions in recycling yards on a global basis. 

ICS, with the support of a wide coalition of international shipping industry organisations, continues to promote its expanded Transitional Measures for Shipowners Selling Ships for Recycling, which were published to assist the industry in 2016. Their purpose is to allow shipowners to adhere to the Hong Kong Convention’s requirements, as far as practicably possible, in advance of the full implementation of a legally binding global regime. 

The industry’s Transitional Measures set out detailed advice on the preparation and maintenance of inventories of hazardous materials as required by the IMO Convention (and by the separate new EU Regulation which has already entered into force and which also has implications for non-EU flag ships calling at EU ports). The Guidelines also address measures which shipping companies are strongly recommended to take now when selling end of life ships. As well as serving as a sign of good faith by the shipping industry prior to the entry into force of the IMO regime, these Transitional Measures should help companies avoid falling foul of the EU regime. 

An important aspect of the EU Regulation is the establishment of an EU List of approved ship recycling yards which EU shipowners will be required to use when disposing of redundant ships. However the first edition of the List, published by the European Commission in December 2016, only includes 18 yards, all of which are located in Europe, despite applications having been received from non-EU yards. 

Unless the EU recognises facilities in non-EU nations, including yards in southern Asia, it seems unlikely that sufficient yard capacity will have been approved to meet the demand for recycling from EU shipping companies once the EU Regulation fully applies, probably at the end of 2018. Of greater concern to ICS, however, is the very negative signal which the omission of non-EU yards presents to those developing nations whose support will be needed to make the Hong Kong Convention a success. 

A number of yards in India have recently made dramatic efforts to improve conditions, several gaining certification from classification societies confirming that they comply with Hong Kong Convention standards. It is important that such efforts are acknowledged by the European Commission as it expands its list during 2017. Otherwise there is a danger that the EU Regulation could actually undermine the improvement of standards worldwide if those yards which have demonstrated compliance with the Hong Kong Convention do not end up on the official list of approved yards that can be used by EU shipowners. 

The European Commission needs to demonstrate that the EU List genuinely exists to promote the raising of recycling standards globally, rather than being some kind of protectionist vehicle which is aimed at promoting ship recycling yards located within the EU. 

Meanwhile, in co-operation with ECSA, ICS is also firmly resisting proposals, developed by consultants for the European Commission, to compel ships to pay for EU ship recycling licences when calling at EU ports. Under these proposals, the money visiting ships would have to pay into a proposed EU fund, including those flying the flag of non-EU nations, would only be returned at the end of the vessel’s working life, many years later, when it will probably have a different owner, and only then on condition that the ship is recycled at a yard approved by the European Commission. 

If these draconian proposals to establish an EU ship recycling fund were taken forward, they would cause serious problems with the EU’s trading partners. As well as being unduly complex, wildly impractical and very difficult for the EU to administer, the establishment of such a fund would likely be perceived outside the EU as anti-competitive interference with the conduct of international shipping, creating the danger that other nations might apply retaliatory measures. 

ECSA and ICS have prepared a detailed commentary on the proposals for an EU fund, which they have shared with the European Commission, as well as EU Member States and the European Parliament. Discussions will continue throughout 2017. 

  • International Chamber of Shipping
  • 38 St Mary Axe, London
  • EC3A 8BH