The process of dismantling or scraping the parts of an old or useless ship for the purpose of reuse is called Shipbreaking. This industry has made notable contributions to the economy of Bangladesh. According to Shipbreakingbd, there are about 150 shipbreaking yards in the northern coastal area of Chittagong, among which 50 to 60 yards are active all through the year. At present, the average annual turnover of the shipbreaking industry in Bangladesh is 12,750 crore BDT. In addition, the industry is creating employment opportunities for thousands of people in the poverty prone areas of the country.
Overview of Ship Breaking Industry
The practice of shipbreaking in the world started mainly during the British Tudor Dynasty (1475-1603). Before this, the old wooden ships were burned. Meanwhile building a new ship required lots of expense, effort and time, which is why the practice of reusing the parts of old ships began. Besides, even after a ship is old and discarded, the value of some material remains the same. To utilize this value, parts from dismantled wooden ships have been used to make new ships and wooden furniture. And because of this model, the British were called the pioneers of the shipbreaking industry, which was adopted by Italy in 1892 and Japan in 1896. Shipbreaking being a heavy industry based sector, was initially developed in developing countries such as the US, UK, Germany and Italy. However, due to strict environmental regulations and high tax fines, the work was subsequently relocated to shipyards in Asian countries such as China, India, Bangladesh, Pakistan, the Philippines and Vietnam. As the environmental regulations and wages in these countries are relatively low.
The journey of the shipbreaking industry in Bangladesh began due to a natural disaster instead of proper planning and implementation. During the cyclone of 1960, a tidal wave in the Bay of Bengal caused a Greek ship named ‘MD Alpine’ to capsize off the coast of Faujdarhat in Sitakunda Upazila. Due to the ship being severely damaged to an unrepairable condition, The Greek company did not take any action to rescue the ship and it was stranded for a long time. In 1964, Chittagong Steel House purchased the ship and began dismantling it for scrap.
After several years of labor intensive work with a very limited number of machinery and unskilled labor, the ship was able to be scrapped and hence the birth of Bangladesh’s Shipbreaking Industry. In 1971, during the liberation war of Bangladesh, a series of bombings was carried out on a Pakistani ship named ‘Al-Abbas’. Later, a Soviet rescue team collected the remaining scrap of the ship and brought it to Faujdarhat beach. In 1974, Karnafully Metal Works Ltd. Bought the ship. That’s when the commercialization of Bangladesh’s ship breaking industry began. In the 1980s, Bangladesh’s ship breaking industry grew very fast due to the lack of proper labor laws and weak environmental policies, and hence this period is known as the golden age of Bangladesh’s shipbreaking industry. According to research, the industry has maintained an average growth rate of 14% since the 1980s.
According to the World Labor Organization (ILO), there are currently about 90,000 fleets in the world, amongst which about 500-700 ships are scrapped each year, but if the number of tankers, cargo and container ships are added then the number will reach around 3000. In the world, 92% of all shipbreaking takes place in Asian countries like Bangladesh, India, Pakistan and Turkey. According to TBS, since the last six years, Bangladesh has been at the top position in the list of shipbreakers in the world. In the first three quarters of 2021, 582 ships were scrapped worldwide, amongst which 197, or about 34 percent, were scrapped in Bangladesh.
Currently, there are 200 active shipbreaking yards in the country, of which 50 to 60 operate all through the year. Some of the notable companies in this industry are PHP Ship Breaking and Recycling Industries, Sagarika Ship Breaking Industries, Ratanpur Ship Recycling Industries Ltd., Chittagong Ship Breaking Yard, Habib Group, Khwaja Steel, S.N corporation and Arefin enterprise etc.
In 2020, out of about 15.8 million tons of metal produced worldwide by dismantling ships, about 7 million tons are produced in Bangladesh alone. 60 percent of the steel in the shipbreaking industry is supplied to 350 re-rolling mills. As a result, relatively less steel has to be imported, which reduces the foreign reserve cost of the country. Similarly, the government collects a good amount of tax through the various activities of this industry. In addition to steel scrap, shipbreaking yards recover furniture, appliances, sheets, nets, bar materials, pipes, chains, boats, anchors, propellers and many other things that are recycled, reused or sold at the yard gate or local market. At present, the market size of Bangladesh’s shipbreaking industry is around BDT 13,000 crore.
At present about 50,000 employees are directly and 1 lakh people are indirectly working in this sector. Workers are hired based on the availability of the ship that needs to be scrapped. According to the demographic distribution statistics of the labors, mostly young labor are hired in this sector to utilize their physical strength and stamina. 40.75 percent of the total workers in the industry are between 18-22 years of age. On the other hand, only 1.13% of workers are aged 46 to 60 years. Here, laborers are classified as skilled and semi-skilled, including supervisors, fitters, gas cutters, crane operators, truck drivers, truck helpers, lifters, loaders, cutters, wire-pullers, etc. According to the president of the Bangladesh Ship Breakers and Recyclers Association, the first year of the Corona epidemic had a devastating impact on the shipbreaking sector, but no critical issues were seen in 2021. Despite the continuous shutdown in 2021, shipbreaking activities were running, as a result of which Bangladesh secured the top position in the list of global shipbreakers in the first nine months of that year.
Implementing Greener Policies
In 2016, the Bangladesh Ship Recycling Act came into force, in accordance with the Hong Kong Convention (HKC) urging companies in the country to adopt safe and environmentally friendly methods. In Bangladesh, PHP Shipbreaking and Recycling Industries has recently invested BDT 55 crore and is following the standard of the Hong Kong Convention. In addition, companies like Khwaja Steel, SN Corporation and Arefin Enterprise, based in Sitakunda, Chittagong, are working to develop a green shipbreaking yard. According to TBS, the Bangladesh government has set a target of transforming all ship-breaking yards into green facilities by February 2023.
Reasons Behind The Growth
Ease of Doing Business
In Bangladesh, there is a lack of proper policies when it comes to environmental sustainability. Additionally, it is very easy to bypass environmental policies in Bangladesh. As a result, the developing countries feel comfortable sending their ships to Bangladesh. In addition, local shipbreaking businesses are not bound by any of the policies associated with ecological protective measures, making business easier. As a result, Bangladesh’s ship breaking industry has grown quite fast.
Cheap Labor Cost
Shipbreaking is a highly labor intensive task. As a result, it is quite expensive for developing countries to do such work. On the other hand, the socio-economic condition of Bangladesh as compared to other countries of the world has resulted in adequate labor supply at low cost. As a result, Bangladesh’s shipbreaking industry has flourished.
Domestic Steel Demand
Currently massive infrastructure development is taking place in Bangladesh. According to TBS, huge demand for steel has been generated in the country’s ongoing mega projects including Padma Bridge, Metro Rail, Elevated Expressway, Rooppur Nuclear Power Plant, Matarbari and several other large power plants. Besides with the economic development of the people of the country, the tendency to build new housing and infrastructure has increased, resulting in increased demand for steel. And one of the major raw material suppliers of these steel mills is the country’s shipbreaking industry. Therefore, the shipbreaking industry has grown along with the growing demand for domestic steel.
Exposure to Chemical
As shipbreaking is a very risky business, the workers in this industry have to deal with a constant supply of toxic and harmful substances due to the lack of adequate protective gear. When scrapping ships, the paint used in the steel coating contains a number of chemicals, such as lead, cadmium, organotin, arsenic, zinc, and chromium, which cause a number of workers’ inflammatory diseases, putting them at serious health risk. In addition, the shipyards do not have a proper waste management system to prevent environmental pollution. About 7 tons of harmful asbestos is collected from an average size ship scrapping, which is later sold illegally in the local markets. As such harmful substances spread locally, the environment becomes quite threatened. Shipbreaking waste, on the other hand, is dumped in the surrounding soil and coastal area, causing massive damage to the local environment.
Workplace Safety Issue
According to a survey conducted by Young Power in Social Action, YPSA, 86.44% of the workforce in this industry has no access to labor medical insurance. But the daily work of these laborers is quite life threatening. Incidents like explosions caused by gas leaks, and heavy metal plates falling from high decks, workers being crushed in steel beams are very common. In the last one decade, 210 laborers have died in such incidents. According to the survey, only 4.15 percent of workers have a slight first aid facility. Again, depending on the situation, the chances of workers getting health care are less than 2 percent. Meanwhile, the rate of child labor in this industry is much higher. At least 13% of the total workforce is estimated to be under 18 years of age. The toxic environment in shipbreaking yards is a serious risk, especially for children in the developing stage. Working in a toxic environment surrounded by harmful substances such as asbestos increases the possibilities of cancer. To hide child labor allegations and avoid criticism, employers usually force children to work night shifts.
Heavy lifting gear should be provided for the worker to facilitate the scrapping process in shipbreaking. To prevent accidents, such as explosions or fire incidents, better safety protocols need to be implemented, and fire service and ambulance arrangements should be made in the event of any accident. For dismantling, shipyards should be coated with plaster or concrete to prevent harmful chemicals from mixing with the surrounding water or soil. Meanwhile, electric cargo ships have started to be introduced in the developed world. According to an NDTV source, the world’s first electric autonomous cargo ship was launched in Norway in November 2021. In addition, to reduce the number of trucks on the roads, different countries have initiated the use of smaller ships to travel short distances in various waterways. It is likely that the use of such ships will increase further in the future, resulting in the need to dismantle and scrap large ships powered by fossil fuels. Bangladesh will be able to capture this market if the environmental problems can be solved and the labor force can be upgraded.