Tradewinds – Hapag-Lloyd vows to use only green ship scrapping

(Written by Adam Corbett)

22 August 2014 - Carrier applauded by campaign group for taking stance on responsible demolition of vessel despite risking big loss of revenue

German containership owner Hapag-Lloyd has made a commitment not to demolish its older vessels at yards in India, Pakistan or Bangladesh that do not meet new international standards for environmental and safety reasons. It has instead has opted for China even though it could lose millions of dollars in revenue.

The first vessel to be sold for scrap since the policy was announced, the 3,000-teu New Orleans Express (built 1989), is now awaiting demolition off the coast of China.

The move is understood to be the result of negotiations with environmental lobby group NGO Shipbreaking Platform. Major company shareholder, the City of Hamburg, is also thought to have influenced the decision.

NGO Shipbreaking Platform’s Patrizia Heidegger said: “We hope that Hapag-Lloyd will be an inspiring example for more German shipowners and other leading companies in the maritime industry in Europe and beyond; more and more shipowners will realise that they do not have to sell their old ships on a shady ‘secondhand market’, and leave their ships’ fate to a non-credible shipbreaking industry, but can find financially viable solutions that are clean, safe and fair.”

Hapag-Lloyd could be taking a considerable financial hit by opting for China. With low demand for recycled steel in the country and considerable stockpiling by recyclers, brokers say breaking yards are offering around $200 per ldt less for boxship tonnage compared to India.

The decision follows the likes of Maersk Line and Teekay, which have both decided to demolish ships only at yards that meet strict international standards on ship recycling.

However, it would appear at odds with the rest of the German shipowning community, which still mainly disposes of vessels in South Asia, as they are under financial pressure to maximise returns to investors. That policy is backed by the German Shipowners’ Association.

One shipbreaking expert says he is concerned that moves like Hapag-Lloyd’s could actually work against the development of a safer and more environmentally friendly shipbreaking industry in India, Pakistan and Bangladesh.

“When a company makes such a move it does not encourage or help recycling yards in India and Pakistan to invest in facilities and improve standards,” he said.