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Shipbreaking in OECD

Executive Summary

This report aims at providing an overview on the driving mechanisms of the shipbreaking process, and to report on the environmental compliance in select facilities within OECD countries, which may be used to scrap ships covered by Danish regulations.

Today, almost all shipbreaking takes place in Asia, particularly in Pakistan, India, Bangladesh and China. The prices offered by ship breakers (up to twice the OECD prices) in these countries for scrap ships are attractive for the ship owners. Consequently, very few shipyards in OECD countries remain on the demolition market.

The possible capacity of Canada, France, Germany, UK and other "high-cost" OECD countries have not been investigated due to lack of record of shipbreaking. Likewise, USA was not included, although the authorities responsible for the obsolete Navy vessels have licensed four American companies to perform ship scrapping. The Mexican shipbreaking industry has downscaled over the last ten years. The company with a reported acceptable level of compliance to environmental standards decided during the course of this report to leave the shipbreaking business.

EU/OECD member states with relatively low labour costs and registered ship breakers include Spain, Italy and Turkey. Technically, their ship demolition industry may hold a potential capacity for Danish ships and are not too far from Denmark. Portugal, Poland, and Greece have also been considered, but none of these latter countries reports any significant ship demolition industry, although a capacity in terms of quays, dock facilities and work force is available.

In this report the beaching activities in Turkey, in their present conditions, are not considered an acceptable mode of demolishing ships. It has not been possible to identify Turkish facilities employing pier or dry dock breaking. A few demolition yards in the Asturias province in Spain and in Naples, Italy, are in operation and have the capacity to receive larger vessels (up to approx. 220 m).

The inspected Italian company reports that vessels up to 300 m may be demolished, but that this requires some retrofitting of facilities and lease of additional quay length. Inspection at this yard suggests it is a suitable choice for environmentally acceptable shipbreaking. At the inspected Spanish yard some improvement is necessary to comply with applicable standards.