maritime dilemmas

Cleaning up the shipping industry

  • Why it matters

    Why it matters

    Shipping companies like Maersk seek to cut costs by scrapping their old ships in places like Alang, but the practice is frowned upon by environmental groups.

  • Facts

    Facts

    • More than 470 ships have been demolished in Alang since 1983.
    • There are roughly 150 ship-breaking yards in Alang.
    • Alang is notorious for its use of the so-called beaching method, which is banned in the United States, China and the European Union.
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    Audio

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Dismantling of INS Vikrant aircraft carrier in Mumbai.
More than 470 ships have been demolished in the Indian coastal city of Alang since 1983. Source: Divyakant Solanski/DPA.

The Georgia is dying a slow death. The 20,000-ton colossus once sailed the world’s oceans, but now the freighter looks like a beached whale as she lies on the shore at Alang.

Sparks spray from its hull as workers with blowtorches slice open the ship’s insides. Another ship, the Wyoming, lies next to it and is also being cut apart.

Both vessels were once owned by Danish shipping company Maersk. Both end their voyages in Alang in northwestern India, the world’s largest ship graveyard.

Shipping companies can choose from ports around the world to dismantle their vessels. Standards vary and some companies, including Maersk, cut costs by scrapping their vessels in places like Alang, controversial for conditions for workers and the environment. NGOs have called for tougher regulations to protect the environment and people and the European Union is on the verge of publishing a list of authorized shipyards for breaking ships.

While Maersk believes that its practices are exemplary when it comes to dismantling ships, Alang has a poor reputation for ship breaking, already viewed as a dirty business.

According to the Tata Institute of Social Science, more than 470 ships have been demolished in the coastal city since the first ship was broken apart there in 1983.

Visitors to Alang are greeted by a sad sight. The sand along the coast is black from the oil that has leaked from dozens of wrecked ships lying on the beach. In the distance, men wade barefoot through the mud as they try to drag a heavy chain to a ship. The homes of thousands of workers, huts fashioned out of scrap metal and waste, lie on the other side of the beach.

Maersk says it got into the business to change things, at least a little. The Danish company wants to work with a handful of shipyards to improve environmental and labor standards, but NGOs fear that the plan will not work.

Thanks to low environmental standards and wages, shipyards in Bangladesh pay up to €2 million ($2.1 million) more for a scrapped ship than those in Turkey.

Annette Stube, however, disagrees. The head of sustainability at Maersk wears overalls, blonde curls stick out of her helmet. She is disturbed by much of what she sees in Alang. “The way those workers are dragging the chain, it looks like a photo from National Geographic,” she says. “But we shouldn’t lump together all the shipyards in Alang,” she added.

Of the roughly 150 ship-breaking yards in Alang, 11 have already obtained certification under the so-called Hong Kong Convention, which is intended to set minimum standards for the industry but has not been put into force yet.

Ms. Stube doesn’t just speak for Maersk, but also for other European shipping companies. The industry is at a critical juncture. The European Commission will publish a list of authorized ship breaking yards in the coming months, and it is possible that not even the best yards in Alang will make it through the selection process. If that happens, the Europeans will lose an important ship disposal option. According to Indian ship classifier IRClass, a third of ships sailing under European flags were turned into scrap in Alang in the last four years.

The European Union decision comes at a time when more and more ships are being broken apart, due to drastic over capacities. British ship broker Braemer ACM assumes that container ships with a combined capacity of about 550,000 standard containers will be scrapped this year – the largest number ever. But because of the low price of steel, ship owners are receiving less and less for their old ships.

Under growing pressure to cut costs, Western ship owners have a strong interest in being allowed to use rundown ship breaking yards. Thanks to low environmental standards and wages, shipyards in Bangladesh pay up to €2 million ($2.1 million) more for a scrapped ship than those in Turkey, for example. Prices in Alang are somewhere in between, Ms. Stube said. Maersk alone estimates that it will save $150 million in the coming years by using Alang.

German shipping company Hapag Lloyd told Handelsblatt that it too was not ruling out a return to Alang’s beaches. It decided to pull out of Alang only two years ago, a move praise from environmental organizations. Now the company hopes that the European Union will allow ship breaking in northern India, which would save it a lot of money.

“It's impossible to break apart a ship on a beach without risks to the environment and workers.”

Patrizia Heidegger, Executive director, Shipbreaking Platform

One of the four shipyards that hope to be placed on the E.U. list is the Shree Ram shipyard on parcel 78, where the two Maersk ships are currently being dismantled. Chetan Patel runs the shipyard. He is part of an old breed of business owners, his teeth stained red from chewing betel nut. When he issues an order to workers, they react so subserviently that they practically salute.

Mr. Patel, the son of a diamond merchant, has been in the ship breaking business since the mid-1980s. Now he wants to raise standards in his shipyards so that he can charge ship owners more money.

He has invested €1.5 million in Shree Ram, said Mr. Patel, and a look at his shipyard does indeed reveal considerable differences from the other shipyards in Alang. On the day of our visit, at any rate, all workers were wearing protective clothing, and the equipment was neatly organized. But apparently this is not always the case. In the summer of 2016, a Danish research group discovered workers without protective clothing or work contracts working on the site. Metal parts were scattered all over the shipyard. The inspection led Maersk to inform the shipyard that it had to make more effort.

Critics have a deeper concern: Like all other shipyards in Alang, Shree Ram uses the beaching method, in which the ship is initially divided into several large units on the beach. The practice is banned in the United States, China and the European Union – and for good reason, said Patrizia Heidegger. “It’s impossible to break apart a ship on a beach without risks to the environment and workers,” says Ms. Heidegger. She heads the Shipbreaking Platform, a coalition of several NGOs that oppose the “uncontrolled” recycling of ocean giants in coastal locations.

“Why should we tolerate something in emerging economies that we don’t want on our own beaches?” Ms. Heidegger said. She finds it perplexing that shipping companies like Hapag Lloyd are now returning to Alang after initially deciding not to use the center, precisely because the beaching method is used there.

“You can't distinguish whether a shipyard is good or bad based solely on method or country”

Henning Gramann, Business executive, Green Ship Recycling

Henning Gramann, head of Green Ship Recycling, a consulting firm, calls this a blanket statement. According to Mr. Gramann, it’s technically possible to dismantle a ship on a beach in a partially environmentally-friendly way, if the right steps are taken.

“You can’t distinguish whether a shipyard is good or bad based solely on method or country,” says Mr. Gramann. One of the services his company provides is to advise ship breaking yards on how to meet international standards.

Mr. Patel, the head of the Shree Ram shipyard, says his yard meets these requirements. He uses a drainage system that brings clean water to the ship and removes dirty water from it. He points to an impermeable floor just off the beach, which he has extended. Maersk also has an employee on site tasked with supervising the dismantling of ships.

But it is almost impossible to verify how effective the measures are. Maersk said it is conducting a study to examine the effects of the measures, but it is unwilling to permit an independent environmental impact probe. Alang remains a mystery, as people need a permit from the local authorities to access to the coastal area.

The head of the Shree Ram shipyard said he and others in Alang are reluctant to be exposed to scrutiny. “I think NGOs are extortionists,” Mr. Patel said. “I didn’t hear that,” Maersk sustainability head Stube responded sheepishly. She later says that while NGOs were invited, they unfortunately couldn’t get visas.

Alang still has some serious problems: the city only has two hospitals for tens of thousands of workers, both in poor condition. The sinks are filthy, there are mosquitoes everywhere and the doctors say that they are unable to treat serious injuries.

But serious injuries are apparently less common, now workers attend brief safety training sessions. Rane Vidyadhar of Mumbai’s port union sees progress at a few facilities in Alang, but adds there is still much to be done. “The hospitals and living conditions are in urgent need of improvement. This applies to all shipyards,” Mr. Vidyadhar said.

Despite the shortcomings, Maersk still wants to do business in Alang. “Things will only change when we sell our ships there,” said Ms. Stube. “Otherwise the other shipyards won’t see that investing in better standards is worthwhile.”

Maersk will even use Alang if the local ship breaking yards do not make it onto the E.U. list. “We have our own standards,” Ms. Stube said, “and we think they’re good enough.”

 

Frederic Spohr is Handelsblatt’s correspondent in India and Southeast Asia. To contact the author: f.spohr@vhb.de.

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