Ship dismantlers navigate new regulatory regimen

After what one ship dismantling company calls “decades of ongoing efforts,” the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships (the Hong Kong Convention, or HKC) entered into full force this June 26.

United Arab Emirates-based GMS Leadership, which says it is the world’s largest buyer of ships and offshore vessels for recycling, identifies the Bangladeshi and Pakistani markets as ones that have a lot of work to do for full HKC compliance.

According to GMS, ship dismantlers in both nations will need to catch up to the strides India has already made in upgrading their facilities over the last decade.

“In the short term, there is likely to be a testy period of transition whilst everyone in the industry gets accustomed to the changing regulations, inward formality procedures and additional documents required when a vessel is being transacted for HKC recycling from here on," GMS says, adding that the enactment of HKC is good news in the long run.

In its July 7 weekly e-newsletter, GMS points to the HKC as one reason (along with the weakening of the United States dollar and uncertain trade policies) as factors that have continued to deliver "an absence of recycling tonnage" for the ship dismantling markets at the bidding tables.

The ship recycling company says “HKC troubles” account for about one-third of the Indian subcontinent’s recycling destinations, which has presented ship owners and cash buyers with fewer options to consider.

One potential outcome of the HKC is to supply more obsolete vessels to dismantlers in the United States and potentially Europe, where environmental enforcement largely was in place before the HKC went into effect.

As of early July, GMS says Pakistani authorities have stated that only those yards that have committed to HKC upgrades will be issued provisional certificates to import vessels, while Indian recyclers were the only ones to have some positivity in the first week of July, with at least one fresh arrival.

The company says Bangladesh also has indicated it will not accept any non-HKC approved recyclers to import vessels.