Bangladesh maintained its position as the world's top ship-breaking destination in the first nine months of 2023, with imports of scrapped vessels rising 36 per cent compared to the same period last year.
However, industry insiders claimed that this surge in numbers masks a significant decline in tonnage due to letter-of-credit (L/C)-opening issues thanks to the ongoing US dollar crisis.
Data from the Ship-breaking Platform (NSP) -- an NGO advocating for safe and ethical ship dismantling-shows that Bangladesh imported 144 scrapped ships between January and September 2023, compared to 92 in the previous year.
This seemingly impressive increase, however, hides a business-concerning trend: the total tonnage of imported ships fell sharply, hinting at a shift towards smaller vessels.
"Due to dollar shortage, we can't open L/C for large sized vessel," said Kamal Uddin Ahmed, senior vice president of the Bangladesh Ship Breakers and Recyclers Association.
According to Mr Ahmed, ships brought in previously used to weigh 40,000 to 50,000 tonnes on average. But ships imported are now weighing about 2000 tonnes.
Fluctuating market trends
During the first nine months of 2023, India led the way in importing scrapped ships, with 90, followed by Pakistan (11), Turkey (25) and the European Union (32). China dismantled nine ships during the period, according to NSP.
In 2022, Bangladesh imported 122 end-of-life ships for dismantling, down from 254 in 2021. This follows a downward trend since 2019 when the country brought in 236 ships. The figures for 2020 and 2018 were 144 and 185, respectively.
Local ship-breakers attributed the decline starting in late 2019 to factors including the Covid-19 pandemic and subsequent shutdowns. They reported a business rebound in 2021 due mostly to pent-up demand, but the recent dollar crisis and high-interest rates are again negatively impacting trade.
Ship-breakers said they now face additional hurdles beyond market fluctuations. According to them, obtaining various approvals, including environmental clearances, can take up to two months, accruing bank interest during the delay.
Besides, the industry's recent reclassification from "orange" to "red" has increased the number of required certifications.
Despite the industry's assurances of improved safety measures and declining accidents, rights groups remain concerned about the human and environmental hazards associated with ship-breaking globally.
'Dangerous and polluting' A recent report by Human Rights Watch (HRW) has accused European shipping companies of knowingly sending their end-of-life vessels to be dismantled in "dangerous and polluting" scrapyards in Bangladesh.
Titled "Trading Lives for Profit: How the Shipping Industry Circumvents Regulations to Scrap Toxic Ships on Bangladesh's Beaches", the report details widespread violations of environmental and labour standards.
According to the HRW report, Bangladeshi shipbreaking yards often cut corners on safety protocols, putting workers at risk of injuries and fatalities.
Besides, hazardous waste, including asbestos, is dumped directly onto beaches and the surrounding environment, contaminating the local ecosystem and harming nearby communities.
The report accuses the industry of labour exploitation as workers are denied living wages, adequate rest periods and proper compensation for workplace injuries.
Julia Bleckner, a senior Asia researcher at Human Rights Watch, urged shipping companies to take responsibility for their waste disposal practices.
She said, "Shipping companies should stop exploiting loopholes in international regulations and take responsibility for safely and responsibly managing their waste."
Continued risks overshadow green efforts
Kamal Uddin Ahmed, senior vice president of the Bangladesh Ship Breakers and Recyclers Association, said that vessels built after 1985 do not contain asbestos.
However, HRW countered that most ships currently being scrapped in Bangladesh pre-date this ban and therefore pose a potential asbestos hazard.
The shipbreakers association also claimed that safety and compliance have improved in recent years, with some yards even achieving "green" certification.
Mr Ahemd told The Financial Express that four of their yards have already received green certification while an additional 10 are in the pipeline.
"Owners are heavily investing to comply with the Hong Kong Convention (HKC)," he said, adding they also provide workers with safety training.
However, independent experts, like Mohammad Ali Shahin of Young Power in Social Action (YPSA), pointed out the continued risk of asbestos exposure in older vessels.
Explaining the harmful effects of asbestos, he told The Financial Express that regular exposure to asbestos can cause asbestosis and lung cancer.
munni_fe@yahoo.com