Shipwrecking industry hurts Mother Earth and its workers
The Shipwrecking industry, also widely known as ship demolition, ship dismantling, or shipbreaking, involves the breaking up of End-of-Life Ships (EoL) to extract recyclable parts or scrap. Upkeep, fuel inefficiency, metal fatigue, excessive carbon emission, and a lack of parts’ availability are key factors driving the decision to dispose of ships.
When ships reach ‘end-of-life’ in about 25-30 years, they are sold to shipbreakers often in markets of London, Dubai, Singapore and Hamburg. Most EoL ships are transported to low-labour cost locations in Asia where they are dismantled and then disposed as waste, scrap metals, or other products. Metals, plastics, woods, glasses, and steels are generally extracted and recycled for use in other industries such as iron foundry, plastic factory paper-mill, and glass factory. Despite the high and widely known risk of irreparable environmental damage to pristine and fragile coastal ecosystems from shipbreaking, the industry has attracted little attention from academics, media and policymakers.
Modern slavery argument
Ship dismantling involves low-skilled and low paid workers who operate in poor working conditions in the highly polluted environment. They are often coerced to work in dangerous conditions and held in modern slavery or servitude. This is despite the enactment of Modern Slavery Acts that prohibit slavery and the slave trade in all their forms. Increased awareness and regulations to eliminate modern slavery however has somewhat improved the working conditions. Yet, more targeted approach is needed in labour markets where extreme poverty, limited or no alternative employment, and the greed of the corporatized global supply chains to save labour costs are deeply rooted and widely prevalent.
Dismantling ships: Is it bad for society and the environment?
The shipwrecking industry is known as “the dirty industry”. Highly toxic wastes generated in shipbreaking pose numerous dangers for shipbreakers such as burns and inhalation of toxic gases. Risks of injuries and fatalities escalates with lax industrial safety standards and poor technology adoption. Research from YPSA and Toxics Watch Alliance, over 1000 workers have died since 1980s in Bangladesh and over 400 have died in shipbreaking yards between 1991 and 2012 respectively. According to the latest brokerage rates, South Asian shipbreakers will pay up to $450 per LDT for outdated vessels, up to twice as much as the rates found at facilities in Turkey and China. This translates into a multi-million-dollar price differential for the seller of the vessel.
The average number of large ships being scrapped each year is about 500-700, but considering vessels of all sizes, this number may be as high as 3,000. Almost 90% of shipbreaking in the world is carried out in Bangladesh, China, India, Pakistan and Turkey. Most ship wrecking yards have no waste management systems to prevent pollution, which result in enormous toll on the surrounding environment, the local communities, fishery and agriculture.
“The first step to solving a problem is to be aware of it”
Businesses should raise awareness and implement plans to address issues of forced labour and human trafficking within their broader supply chains. The United Nations supported that slavery must be prohibited. The Universal Declaration of Human Rights (1948) states: “No one shall be held in slavery or servitude: slavery and the slave trade shall be prohibited in all their forms.” Australia’s Modern Slavery Act 2018 maintains a Register which was launched in 2020, that records close to 2500 modern slavery statements from close to 4500 reporting entities.
Modern slavery is common in garment industries, fishing industries and in recent times, identified in global supply chains simply because consumers are constantly demanding low prices. In shipwrecking businesses, widely known concerns such as its detrimental impacts on the environment, poor working conditions and exploitation of labour haven’t been adequately addressed.
Ship Remanufacturing can save lives, environment, and costs
Ship remanufacturing produces or assembles a new ship from reusable, repairable, and replaceable parts extracted from EoL ships. This facilitates circular economy by generating a closed-loop supply chain involving collection, distribution, repair, recycling, and assembly. It improves the availability of cheaper parts and a reduction in the consumption of raw materials, energy, and toxic wastes. Such improvements help mitigate the risk of degradation of fragile ecosystem, whilst generating employment opportunities with adequate labour laws to protect basic rights and decent wage to reduce the vulnerability of workers operating in harsh conditions.
Our case in India
We conducted a case study on a cluster of shipwrecking industries in Western region of India and built a model that estimated the number and potential sites for remanufacturing that optimised product flows to minimise the operational cost of remanufacturing. In our case, four distribution centres, which cost US$61 million to build, were allocated in the proximity of Recycling centres in the Western coast to minimise logistics costs considering the forecasted demands.
The variable costs, including costs associated with transportation, processing, assembling, and dissembling, and new components, is estimated about US$423 million per year. The total estimated costs of remanufacturing of these ships are USD$462 million per annum. We also found that the highest cost is related to remanufacturing and assembling process, which constitute about 80% of the total cost. Therefore, to remanufacture 30 ships a year, the discounted payback period of this project is estimated to be less than two years.
“Remanufacturing is good for Mother Earth and humans”
Government subsidies can stimulate growth of strategic industries such as ship building which help increase demand in the remanufacturing industry by reducing taxation and making labour costs competitive. However, they tend to be diverted to industries where marginal productivity would be higher and may distort open markets with increased likelihood to lead to perverse economic effects. In the case of ship wrecking, we found that the Indian government has no plans to subsidise improvements simply because of the general perception of it being a ‘dirty’ industry. A Greenpeace-FIDH report also raised the urgent need for the industry to protect the environment and human rights.
Ship remanufacturing is vital from a public policy perspective as its impact is not restricted to a region or a nation. It is an effective strategy to operationalise a sustainable system of resource distribution, consumption, disposal, and recycling of EoL products in a circular economy. Collective and shared responsibility is paramount to promote recycling or remanufacturing of EoL ships in least-cost locations where the societal benefits of ship-wrecking business remained unseen. Yet the deleterious impact on fragile and pristine ecosystems is most severe. Funding mechanisms to subsidise ship remanufacturing should be debated to benefit the workforce whilst ensuring ecological sustainability and financial viability of ship remanufacturing to businesses.
Author: Professor Prem Chhetri, PhD, RMIT University
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