The European Commission (EC) has listened and reacted to industry’s concern about adhering to the upcoming deadline on 31 December 2020 for the European Union’s Ship Recycling Regulations (EUSRR) inventory of hazardous materials (IHM) owing to the disruption caused by the Covid-19 pandemic.

With demand for lay-up services growing, traditional parking lots for unused ships are becoming congested forcing shipowners to seek alternative sites to send their assets into hibernation.

The continued outbreak of coronavirus has forced shipowners to implement various measures to control their operating costs in order to stay in business with many of them starting to look at options to lay up their vessels.

This Risk Focus addresses the technical aspects and provides guidance to the shipowners when compiling the IHM and it covers important concepts, processes and requirements. The document aims to assist Members in ensuring compliance with the existing ship recycling regulations and reduce the likelihood or reputational risks.

Even after the corona virus pandemic subsides, Americans might still be hesitant to board cruise ships, especially following recent outbreaks across several liners that prompted the Centers for Disease Control and Prevention to extend a “no sail order" to ships under U.S. jurisdiction.

In the EU, ‘asbestos free’ means with an asbestos content of no more than 0.1%, in the US the figure is 1% and in China, there is no legal prohibition on using asbestos.

Within the last 12 months, the world's largest registry - Panama - has ratified IMO's Hong Kong Convention, Maersk has delivered two vessels to Alang recycler Shree Ram and the number of recyclers boasting HKC compliance continues to grow with a further 20+ in progress.

Ship recyclers are being forced to face up to substantial, and in some cases, existential challenges: the consequences of long-term low scrap prices, the export of Chinese semi-finished steel and the impact of Europe’s eagerly-awaited 'approved facility' list on shipowners and their recycling decisions

IHMs are becoming more prevalent in shipping. But what are the drivers - anticipation of the Hong Kong Convention, ship owners seeking to improve standards, contract negotiations with the shipyard? Many questions are being raised about varying standards, accreditation and competency of those involved in producing the inventories. 

More and more shipowners consider scrapping to be a ‘headline risk’, but still for many it’s a risk worth taking. Recycling facilities in the Indian sub continent require capital and expertise to bring them to Hong Kong Convention standards, but who will pay? Can there ever be an acceptable price worth paying for dangerous working conditions? Large scale investments in ship recycling facilities in China are planned, but are changes in global legislation needed first for such projects ever to pay?

A small but increasing number of ship owners now prefer to see their ships dismantled in so called ‘green facilities’ where waste is handled in an environmentally sound matter and workers are properly equipped. Some cash buyers are even offering to supervise the preparation and recycling process according to the Hong Kong Convention. But while more and more ship owners are interested to know what happens on the ground at the recycling facility, the vast majority will still seek the best price.

What's in it for ship owners who elect to recycle at so called 'green' facilities? What choices do owners have now and what changes to recycling do owners need to be aware of? What additional financial and regulatory burdens are ship owners going to face when selling their ships for scrap?

With the world financial crisis causing shipowners to radically reassess their fleets, is older tonnage now becoming too hot to handle? Or does recycling present an opportunity to show off green credentials? Is the scrap bonanza over for good, or will the credit crunch prompt a new boom for demolition? But when times are tough, are owners prepared to pay more for environmentally friendly demolition?