Bangladeshi Marine Community, Singapore

Bangladeshi Marine Community, Singapore

Can the Global Shipbreaking Industry Survive without Negative Externality?

Dr. Ishtiaque Ahmed

Associate Professor and former Chair of the Department of Law, North South University, Bangladesh.

Shipbreaking is a notoriously polluting activity and regarded by the International Labour Organization (ILO) as the most dangerous occupation in the world. The main segment of this global industry is currently located in South Asia namely Bangladesh, India and Pakistan which processes annually about 90% of the obsolete global merchant ship tonnages. The nearest competitor of these giant three shipbreaker is Turkey, whose global share is almost 7 % and the rest of the world constitutes no more than 3% that includes dismantling naval ships under compulsory regulation with government subsidy like in the USA and domestic only government subsidized ship recycling industry like in China. Despite its truly global character, commercial shipbreaking seems therefore is virtually absent in the developed parts of the world, who remain mostly the beneficial owners of merchant fleets, and has flourished mainly in the three developing states of the southern peninsula of Asia as noted above. Among them, Bangladesh is currently occupying the leading position in global ship recycling marketplace, dismantling annually almost half of the total shipping tonnages of the world alone ignoring its international commitment related to sound management of hazardous waste and human rights of workers at shipbreaking facilities.

The history of commercial shipping can be traced back in 5000 BC, but metal hulled giant ships came in appearance only about 170 years ago replacing wooden hulled ships whose maximum dimension could be found 138 meter in maritime history. These wooden ships used to be safely burned down ashore after their lives are ended within 20 to 30 years of operation. The life span of a metal hulled ships is in average 30 years. The history of dismantling metal hulled vessels seems therefore little more than a century old. Until 1950s, ship breaking used to be carried out by those countries who were responsible to build them. It was a highly mechanized activity used to be carried out in drydocks. Britain and America were the chief processors of this industry in association with other industrialized developed nations mostly in Europe. Historically these countries soon started to face multifaced and million-dollar legal claims by the victims of fatal accidents, deaths, skin cancer in mass scale such as asbestosis contracted to workers from handling asbestos at shipbreaking yards while breaking ships and many recyclers became bankrupt paying compensations to the workers.

Over times, the highly dangerous and pollutive character of shipbreaking has almost forced the industry to move towards the poorer economies of the world beginning from the eastern Europe, followed by Southeast Asia, and lastly during 1980s settled in the Southern part of the Asian peninsula namely Bangladesh, India and Pakistan, a society of least resistance and least expense who hardly care about human rights and the environment. Environmental rights and human rights are considered by many, in these part of the world as a form of luxury of rich people of developed world. Interestingly, these three countries enjoy similar geographical phenomena with significantly higher tidal differences in their coastal belt. This has made possible for them to use a typical method of recycling, namely tidal beaching. In tidal beaching, ships are run in full ahead during high tide towards the shore and until its grounded on the mud flat of the beach. When the tidal water goes away in low tide, the ship finds itself on the dry part of the beach. Thousands of workers, often bare feet, get onboard the dead ship to begin dismantling operations using mainly gas cutters and other ordinary handheld tools. The tidal difference in these zones goes up to 36-40 feet seasonally and that helps bring the ship close to the shore using winches. Besides, the availability of colossally cheap labor, lack of enforcement of environmental regulations, lack of regulatory awareness in health and safety at work and bare minimum need for investment have created a boon in business for South Asian recyclers which can hardly be chased by any other competitors even in Asia. China, the former third largest ship recycler had to give up ship recycling business recently in 2019 due to unwarranted monopoly exercised by three giant South Asian shipbreaking nations. Beaching in such a huge tidal difference is not only a rare phenomenon in other parts of the world but also remained illegal including in China & Turkey, the nearest competitors of South Asian shipbreakers.

Shipowners around the world naturally look for the place to send their ships for dismantling where labor cost is significantly low and environmental pollution is not a far-reaching issue. Given the peculiar circumstances of South Asia, shipowners find this irresistible to make lucrative profits by exporting their junk vessels to these beaches. The environment of these countries of South Asia is available to exploit at almost zero cost, unlike most of the developed and even semi developed nations in the world. In developed countries, shipowners are required to pay in average 10 to 20 million US dollars to dispose their obsolete vessels in an environmentally sound manner let alone making profit from it. Whereas shipowners earn windfall profit, near about 5 to 10 million US dollars by selling an average sized obsolete ship to the South Asian beaches

Domestic initiatives by the courts of these poor nations against these environmental massacres have failed to bring about any desired solution as the business is truly global where multinational players play part from different parts of the world and are not subject to domestic laws. Moreover, a slight attempt to curb the industry by the intervention of courts has resulted into loss of business for that country to its nearest competitor. The apex judiciaries both in Bangladesh and India have consequently been compelled to bring down their local standard forced by the reality and economic vulnerability of the society. These countries inherited a large body of legal principles from British colonial regime, their constitutional and environmental provisions are stronger than many developed societies in the world, but all remain dormant in the face of hunger and poverty.

To curb this situation, international law for the Safe and Environmentally Sound Recycling of Ships (The Hong Kong Convetion) was adopted under the auspicious of International Maritime Organization (IMO) in 2009 and the law is yet to enforce. However, while its adoption, this Convention was heavily & unduly influenced by the dominant international players, the shipowners, and the countries with active shipping interests who enjoyed almost exclusive dominance in all the IMO meetings where the Convention was discussed, drafted, formulated, and adopted and this dominance continued till the end of the adoption of this Convention. Under the Convention, ship recyclers have been imposed with unwarranted financial burdens such as precleaning of ships before dismantling, whereas no mentionable duty has been entrusted upon the beneficial owner of ships except preparation of an inventory of hazardous material (IHM) which, according to many experts, a merely paper obligation. Shipowners can even bypass these paperwork responsibilities finally by selling their ships to some camouflaged entities namely cash buyers who take over the ships just before the ship is sent to the beaches for recycling. In most cases they change their flags to open registries of blacklisted categories declared by the international community.

It’s mentioned that the principal revenue of IMO comes from the annual subscription of the flag states representing mainly the shipowner’s interest. Developing states including the ship recycling states are traditionally underrepresented in IMO. Bangladesh, the largest ship recycling state, failed to send any delegate in any single IMO meeting of the working group related to Hong Kong Convention. China participated in the meeting, but it is also among the largest ship owning nations and represented mostly the interests of shipowners rather than ship recyclers. Moreover, the safer method of ship recycling in China known as alongside or top-down method, is not tainted with human casualty and environmental catastrophe which are common phenomena in beaching method of recycling practiced only in Bangladesh, India, and Pakistan exclusively. India, however, participated in several IMO working group meetings but measurably failed to get its voice heard by others present in the meeting and almost all substantive proposals made by India were robustly rejected by the powerful cohort of shipowners and shipping nations combinedly, without showing any cogent grounds.

Having disgracefully failed to secure a minimum success in the international level, these poorer ship recycling states have drafted highly flexible and pro-business laws to govern their own industries domestically, where almost all the substantive obligations designed to protect and prevent marine pollution and safeguard workers can be avoided effortlessly by cutting corners. The reason is that, domestically, the ship recyclers, using their strong social and economic power as well as dominance, had been able to influence the law makers and executives who were involved in the domestic legislative decision-making process. This strategy has been implicitly supported and promoted by the respective governments to protect their own economic interest and their domestic shipbreaking industries being exported to more impoverished countries of the world. Notably, there are countries in Africa, who even do not recycle, and are prepared to open their beaches to direct dumping of ships simply for money.

The ultimate effect of these global and transnational legal arrangements has been to externalize the burden of international shipping to the domestic recyclers of the recycling states, followed by further externalization of burden to the impoverished members of the society i.e., the inanimate environment and unfortunate workers, the most important stakeholders but with least voice. The NGOs have played active role in both international and domestic forums but have been effectually sidelined by the powerful presence of shipowners, internationally and by ship recyclers domestically. To restore the balance of interest between the stakeholders, several reports have been published recommending urgent reform of law primarily the Hong Kong Convention. Unilateral law making by a recycling state is bound to fail, which is clearly visible from the experience of India, before the adoption of the Hong Kong Convention. In the event of failure to negotiate further by these poor ship recycling nations in an international forum including the IMO, the major South Asian ship recycling nations may look for regional cooperation as an attempt to jointly safeguard their own interests in a concerted action. In other words, to bring sustainability in business, these countries can create a responsible cohort of ship recycling & control the market by further adjustment of the leverage, as and when necessary, followed by substantive development of their conditions of ship recycling through enforcing polluter pay principle and other important environmental principles that the Hong Kong Convention has shamefully ignored. This could be an effective pressure upon the beneficial owner of ships in global level.

Sending obsolete vessels for recycling from the OECD countries to third world nations which have no capacity to dispose ships in environmentally sound manner is now illegal vide the Basel Ban amendment enforced globally since 2019. Other than the above three countries of South Asia and Turkey, which covers only 7-8% of the global demand, the rest of the world virtually has little capacity to dispose obsolete ships feasibly at a bargain price. Other than Bangladesh, India, Pakistan and Turkey, the rest of the world are hardly involved in breaking ships currently. There remains therefore limited option for the shipowners to send their ships for dismantling to anywhere other than South Asian beaches. In default of which their options remain mothballing of ships like the ghost ships of US Navy or allow them just to get rot for indefinite period or sending them to the drydocks dedicated for dismantling of EOL ships maintaining all the global regulations in an optimum level. However, in the current world order of shipbreaking market that would be notoriously expensive for the shipowners and commercially an infeasible exercise.

(This is a revised version of an abstract published by the author in 2019 at the 1st Int. Conference on Social Sciences and Law” Barishal University).

Dr. Ishtiaque Ahmed is an Associate Professor and former Chair of the Department of Law, North South University, Bangladesh. He completed his Doctor of Juridical Science (J.S.D.) in Int. Maritime Law & Policy from the University of Maine School of Law, USA. He is a qualified Barrister of UK and an Advocate in Bangladesh. He is a former 3rd Engineer of ocean-going merchant vessel and an ex-cadet of Bangladesh Marine Academy, Chittagong, 29th batch.  

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