Ship breaking

Could Brownsville be the next Alang?:

US ship recyclers eye new European market source
John Gallagher, Senior Editor | 19 May 2016
Regulations that could drastically limit the ability of European-flagged vessels to be broken up on foreign beaches have the potential to create a significant new market for ship recyclers in the United States.

As part of the EU’s Ship Recycling Regulation, adopted by European Parliament in December 2013, the European Commission is compiling a list of ship recycling facilities in Europe and around the world where EU-flagged vessels will have to be scrapped.

To qualify for the list, ship recycling yards have to meet strict requirements, including showing proof of certification by a classification society or other third-party non-governmental organisation with expertise in environmental control services.

The regulation incorporates the provisions of the 2009 Hong Kong Convention, which is aimed at ensuring that ship recycling poses no unnecessary risk to human health and the environment.

While the convention has yet to be ratified, the Commission’s strict guidelines will in practice make it extremely challenging for shipowners to send their ships to shipbreaking beaches in Bangladesh, India, and Pakistan, where much of the world’s ship recycling occurs but where there is a notoriously poor record of safety and environmental compliance.

“The EU list can really play a strategic role in motivating recycling yards all over the world to be compliant with Hong Kong requirements, ahead of the entry into force of the convention,” said Benoit Loicq, safety and environmental director for the European Community Shipowners’ Associations (ECSA), in a statement on 4 May.

The ECSA has warned against the Commission being overly restrictive on facilities to be included on the list, however, as such a stance could discourage participants and thus delay the Hong Kong Convention from coming into force, the group claimed.

Ship recyclers have until 1 July to apply for inclusion on the EU-approved list to be assured of being published in the Official Journal of the European Union and on the Commission’s website, which is scheduled for no later than the end of 2016.

Ranked by gross tons (gt), eight of the 28 EU countries rank within the world’s top 25 ship registries. The group is led by Malta, the world’s sixth-largest registry, with 1,782 vessels (weighing 1,000 gt or more) representing 42 million gt, according to data compiled by the US Maritime Administration in 2015. EU-flagged registries represent roughly 16% of the world’s total tonnage.

It represents a major potential supply for the United States, where the six major shipbreaking facilities, operating mainly in Texas and Louisiana, have been keeping a close eye on the roll-out of the EU’s shipbreaking regulations.

“We do see this as opening up a new market,” a US ship recycling executive told IHS Fairplay. He estimated the available capacity at US yards at roughly 1.5 million light displacement tons (ldt), which represents the weight of the material involved in the recycling of the vessel (as opposed to the ship’s volume-based gt weight).

Capacity for dismantling large ships at US recycling yards has traditionally been taken up by contracts issued by the US Maritime Administration (MarAd), which is responsible for qualifying US yards for scrapping vessels in its National Defense Reserve Fleet (NDRF) through the agency’s ship disposal programme.

As of the end of fiscal year 2015 (FY 15), the number of ships waiting in the NDRF queue was at “a historic low”, according to MarAd, with only three of 57 vessels remaining to be removed by the end of FY 17 – thus opening up capacity for a potential new supply of commercial vessels from the European Union.

The US recycling executive noted, however, that for the EU regulation to be viable and effective, there must be 3.5 million ldt of shipbreaking capacity available internationally for scrapping. “There are going to be yards in Europe that will open up to absorb the supply as well,” he said, which could limit the tonnage available to the US market.

Another factor weighing on recycling yards in the United States and around the world has been historically low steel commodity prices, which plummeted 58% in FY 15 from USD320/ton to USD135/ton, according to a MarAd report. Such prices fail to provide recyclers enough compensation for the high-cost, labour-intensive dismantling process. Ship recyclers in China alone lost over USD77 million in 2015.

But short-term fluctuations in steel prices are imbedded in the ship recycling sector, and therefore should have minimal effect on the long-term goal of reducing the safety and environmental hazards associated with shipbreaking, according to the environmental group, NGO Shipbreaking Platform.

“We’ve been very supportive of the EU approach, and we think the EU list will provide a reference point for sustainable recycling,” NGO Shipbreaking policy adviser Ingvild Jenssen told IHS Fairplay.

“Cargo owners and financiers are demanding better ship recycling practices, and we think this list is a perfect tool for identifying those types of recycling facilities and at the same time increasing the potential market share for those facilities as well.”

Contact John Gallagher at john.gallagher@ihs.com and follow him on Twitter: @JohnAGallagher1

That should give work to a large number of Mexican guest workers.

Why pay for ships to breake when the Navy will pay you to do so: http://www.brownsvilleherald.com/news/texas/article_ba6cde46-f513-5fe6-bd74-ebfd5a7afe6c.html

This carrier is reportedly 61000 ton, which I assume is max displacement. The LWT may be half of that, after stripping off any “strategic” equipment. It should fetch a good price “as is. where is” in the open scrap market.

The Navy would rather PAY to get rid of it. Why??

Correction. I found the following info:

Class and type: Forrestal-class aircraft carrier
Displacement:
[B]60,000 long tons (61,000 t) standard
80,643 long tons (81,937 t) full load[/B]
Length: 1,070 ft (326.1 m)
Beam:
130.0 ft (39.63 m) waterline
270 ft (82.3 m) extreme
Draft: 37 ft (11.3 m)
Propulsion:
4 Westinghouse geared turbines, four shafts, 280,000 shaft horsepower (210,000 kW)
8 Babcock & Wilcox boilers
Speed: 33 knots (61 km/h)

Based on a LWT of 60,000 tonnes and a scrap price of UD$ 220/LWT, that should put the value of the USS Independence at approx. USD 13 Mill. “as is,where is”

[QUOTE=ombugge;189804]Why pay for ships to breake when the Navy will pay you to do so: http://www.brownsvilleherald.com/news/texas/article_ba6cde46-f513-5fe6-bd74-ebfd5a7afe6c.html

The Navy would rather PAY to get rid of it. Why??

[/QUOTE]

As you said, most ship breakers will pay to purchase the hull and then make a profit on reselling the steel, copper in the wires, and machinery. But it is a narrow profit margin. Labor rates make a big difference and can quickly tip the scales where the ship breaker can not afford a purchase. Given that the ship you mentioned was build in 1958, I think the major difference here is asbestos. If that ship has any asbestos on it, you have little chance of making a profit. The asbestos removal is just too costly. In the USA, it takes skilled workers going slowly to get everything. That is why the Navy traditionally pays to recycle the ships, because no ship breaker can cover the asbestos removal otherwise.

This situation may change in another 10 - 20 years. Eventually, we will be finished with ships that have asbestos in them.

Skilled workers to break ships? In Brownsville, it’s all Mexicans coming over the border to work

[QUOTE=nickninevah;189967]As you said, most ship breakers will pay to purchase the hull and then make a profit on reselling the steel, copper in the wires, and machinery. But it is a narrow profit margin. Labor rates make a big difference and can quickly tip the scales where the ship breaker can not afford a purchase. Given that the ship you mentioned was build in 1958, I think the major difference here is asbestos. If that ship has any asbestos on it, you have little chance of making a profit. The asbestos removal is just too costly. In the USA, it takes skilled workers going slowly to get everything. That is why the Navy traditionally pays to recycle the ships, because no ship breaker can cover the asbestos removal otherwise.

This situation may change in another 10 - 20 years. Eventually, we will be finished with ships that have asbestos in them.[/QUOTE]

Removing asbestos is a costly affair, but not to the tune of $6 mill or more.

In a ship like this there is also a lot of non-ferrous metal, which fetch a much higher price. There is not likely to be much re-usable machinery or equipment though.

The question is: Do they HAVE to break it in the US? If so, why??
Don’t tell me it is to protect Mexican jobs.(The Donald wouldn’t like it)

[QUOTE=ombugge;189970]Removing asbestos is a costly affair, but not to the tune of $6 mill or more.

In a ship like this there is also a lot of non-ferrous metal, which fetch a much higher price. There is not likely to be much re-usable machinery or equipment though.

The question is: Do they HAVE to break it in the US? If so, why??
Don’t tell me it is to protect Mexican jobs.(The Donald wouldn’t like it)[/QUOTE]

I believe by law that former US naval ships must be disposed of in the US.

[QUOTE=cmakin;189973]I believe by law that former US naval ships must be disposed of in the US.[/QUOTE]

Probably right. So taxpayers fork out millions to break US Naval vessels in US yards because it was once profitable, or strategically important to do so?
But at least it creates American jobs right?

Europe is going the same way. It cost more to break small navy and commercial vessels etc. in Europe then the value of the scrap and spares etc. that can be gained from them.

But in this case we are talking about a large vessel that could fetch millions if allowed to be done abroad.

For those who remember Paladin, new Marad business card: Have Ship Will Destroy.

[QUOTE=ombugge;189977]Probably right. So taxpayers fork out millions to break US Naval vessels in US yards because it was once profitable, or strategically important to do so?
But at least it creates American jobs right?

Europe is going the same way. It cost more to break small navy and commercial vessels etc. in Europe then the value of the scrap and spares etc. that can be gained from them.

But in this case we are taking about a large vessel that could fetch millions if allowed to be done abroad.[/QUOTE]

Well, I guess also the perceived exposure of Navy “secrets” to foreign governments would be a factor, too.

[QUOTE=cmakin;189998]Well, I guess also the perceived exposure of Navy “secrets” to foreign governments would be a factor, too.[/QUOTE]

Give them some credit. I’m sure they have removed anything that can remotely be called “secret”, or even “sensitive” before allowing the scrappers to take charge.
There cannot be too many things about the basic hull and equipment that is classified on a nearly 60 year old vessel, or is there?
“Perceived” is the key word.

[QUOTE=ombugge;190002]Give them some credit. I’m sure they have removed anything that can remotely be called “secret”, or even “sensitive” before allowing the scrappers to take charge.
There cannot be too many things about the basic hull and equipment that is classified on a nearly 60 year old vessel, or is there?
“Perceived” is the key word.[/QUOTE]

Yes. . . remember we are still somewhat of an isolationist nation. Less now than in the past, but these laws were written a long time ago, and congress is too busy trying to be reelected to do anything effective.

Why break old navy vessels when they could still be useful for something: http://www.maritime-executive.com/editorials/us-homeless-could-move-into-navy-ship
How many more ships could be match with cities that need homeless shelters?

[QUOTE=ombugge;190170]Why break old navy vessels when they could still be useful for something: http://www.maritime-executive.com/editorials/us-homeless-could-move-into-navy-ship
How many more ships could be match with cities that need homeless shelters?[/QUOTE]

And who would pay the fuel and other costs?

[QUOTE=cmakin;190206]And who would pay the fuel and other costs?[/QUOTE]

Whichever city, or charitable organization, the ship is given to for free. Isn’t that who take care of the homeless usually?
Credit for the idea goes to the Mayor of San Francisco, not me. He must have done is sums.

That sounds like a nightmare. Who is going to ensure the ship stays clean inside, who is going to police the inside of the ship? What about a fire? I hate to sound cruel but a lot of homeless people are homeless for a reason. Drug and alcohol abuse, mental problems… These type of people aren’t conducive to living in the close confines of a ship.

[QUOTE=Bayrunner;190211]That sounds like a nightmare. Who is going to ensure the ship stays clean inside, who is going to police the inside of the ship? What about a fire? I hate to sound cruel but a lot of homeless people are homeless for a reason. Drug and alcohol abuse, mental problems… These type of people aren’t conducive to living in the close confines of a ship.[/QUOTE]

hence why the homeless problem in the US is simply unfixable…no matter what the public provides to help, the homeless will reject it with their behavior

for any homeless housing (ship based or otherwise) to work it has to be run like a prison to not be destroyed by the tenants and the do gooders won’t allow that

…and I am a liberal saying this

So true!   This proposal will be a colossal failure.

[QUOTE=salt’n steel;190217]So true! This proposal will be a colossal failure.[/QUOTE]

Because, like most charitable housing, the tenants are not invested in the property. . .

crazy schemes to use old ships for housing aside:

http://gcaptain.com/12-dead-scores-injured-huge-blast-pakistani-shipbreaking-yard/

it turns out that paying to have your ship recycled safely is the right thing to do, whether it happens on your beach or someone else’s. This kind of catastophe isn’t uncommon in that industry. Surely much of the responsibility should lie with the former ship’s owner. I want to know who they are. That should be part of the story. Who cheaped out on their recycling obligations and got 12 men killed and more than 80 injured? Its not like someone’s going to pay their medical bills and give their families disability cheques while they get better. Its not like anyone except those workers, and their daughters, and their sons, and their wives, and their sisters, and their parents is going to even remember this by the end of next week. What caused the explosion? Cargo vapours seems likely, doesn’t it? Reporters need to tell us who owned the ship, they have to be held resonsponsable for making this right, and for doing it right in the future.

If we care about terrorism, war, drugs, kids getting an education, people having food to eat; might be a good idea to support jobs in places like Pakistan. We can do better than this, though. And the first step is to know who the shipowner was. News-outlets cannot let the responsable parties hide behind their piles of documents. Transparency is the only way to stop this kind of thing from happening.

[QUOTE=Emrobu;192087]crazy schemes to use old ships for housing aside:

http://gcaptain.com/12-dead-scores-injured-huge-blast-pakistani-shipbreaking-yard/

it turns out that paying to have your ship recycled safely is the right thing to do, whether it happens on your beach or someone else’s. This kind of catastophe isn’t uncommon in that industry. Surely much of the responsibility should lie with the former ship’s owner. I want to know who they are. That should be part of the story. Who cheaped out on their recycling obligations and got 12 men killed and more than 80 injured? Its not like someone’s going to pay their medical bills and give their families disability cheques while they get better. Its not like anyone except those workers, and their daughters, and their sons, and their wives, and their sisters, and their parents is going to even remember this by the end of next week. What caused the explosion? Cargo vapours seems likely, doesn’t it? Reporters need to tell us who owned the ship, they have to be held resonsponsable for making this right, and for doing it right in the future.

If we care about terrorism, war, drugs, kids getting an education, people having food to eat; might be a good idea to support jobs in places like Pakistan. We can do better than this, though. And the first step is to know who the shipowner was. News-outlets cannot let the responsable parties hide behind their piles of documents. Transparency is the only way to stop this kind of thing from happening.[/QUOTE]

Why would the responsibility fall on the previous owner? This responsibility, in my view falls on the current owner and operator of the scrapyard. . . but they will most likely not be held accountable in Pakistan, or even in India for that matter.