Examination of Witnesses (Questions 1-19)
30 JUNE 2004
MR MARK
BROWNRIGG, MR
EDMUND BROOKES,
CAPTAIN NIGEL
PALMER AND
MR TOM
PETER BLANKESTIJN
Q1 Chairman: Good afternoon. Could I
apologise to our witnesses for keeping you waiting. Unfortunately,
the Committee has a number of forthcoming attractions and Reports
on a wide range of subjects and I am sure you are very interested
to read what we have been up to, but we have to go through the
process of approving them before we can publish them and it took
a little longer than we had anticipated. Our apologies for keeping
you waiting, but nonetheless you are very welcome. For the record,
we have before us from the Chamber of Shipping Mr Mark Brownrigg,
the Director General of the Chamber, Mr Edmund Brookes, the Deputy
Director General, Captain Nigel Palmer, the Director of Government
Affairs of BP Shipping and Mr Tom Blankestijn, the Manager of
Maritime Policies and Regulatory Affairs for P&O Nedlloyd.
Gentlemen, you are very welcome indeed. Looking at your submission
to the Committee[3]I
was struck by the fact that you are almost saying that those shipping
companies who appear to be the initial owners of the vessel might
not have as much direct interest in seeing through to the end
the way that the ship might ultimately be broken up once it is
declared as defunct because of the very nature of the dismantling
operation and the way that those commercial transactions transpire.
Yet you go on in your submission to make it very clear that as
an industry you take your responsibilities very seriously indeed.
Now, the reason this Committee has got involved in this is following
up the short, sharp inquiry we did into the problems that Able
UK had in terms of their arrangement initially to deal with American
military vessels which (if I do not use the wrong phrase) ran
aground because of all kinds of regulatory problems[4]In
the course of that inquiry we learned that some 2,000 single hull
tankers within the foreseeable future are going to have to be
taken out of service and replaced and we decided that because
of the environmental consequences of that we should hold this
inquiry. Given my opening remarks and the slightly sort of arm's
length position that you have about this, could I just ask how
seriously you and your members do take the need to influence the
way at the end of the day ships are broken up. Do you feel that
you have a continuing responsibility for these matters even though
the ownership of the vessel might have passed to a third party
on its way to the breakers' yard?
Mr Brownrigg: Perhaps I could
start and then others could chip in, Chairman. Firstly, if I could
say that we welcome the opportunity to come and answer your questions
and are delighted to do so. I think the starting point is that
a ship is not like another piece of industrial equipment or what
have you, it is a unit which underpins and facilitates the carriage
of international trade. By definition it does not stay in one
country, it moves around the globe and it may well move through
different ownerships over its life cycle. So you are not talking
about someone who is building something to stay with it or keep
with it, or operate it from beginning to end. That said, there
are international and a huge range of detailed international regulations
which deal with the structure of ships, with their operation,
their maintenance and the whole process. There is a concern with
quality right from the start. The fact is that if a ship moves
from one owner to another during its lifetime it may well not
be the original owner who is scrapping or recycling that ship.
It is the case that the shipping industry is a global industry
in this respect, and indeed so is the recycling industry, so perhaps
it is not quite the same as buying a piece of factory equipment.
Q2 Chairman: Just for the benefit of
the Committee, and perhaps I will look to our colleague from BP
to help us through this, what actually is the decision-making
process, for example, when BP says, "Right, one of our tankers
has come to the end of its life and we think it should be scrapped,"
what do you do? Just take us through the process that determines
how it is going to be broken up.
Captain Palmer: I can answer that
fairly well. The simple answer is that sometimes we dispose of
ships before the end of their economic life because they no longer
fit our own requirements, in which case we will sell them to somebody
else to continue using them. If a ship has reached the end of
its economic life and so we are actually looking then to send
it on to be dismantled, then although we may well use brokers
as part of the process of disposing of the vessel we take our
responsibilities on that very seriously and the history of that—and
I was involved with the project of disposing of some of our single
hull tankers a few years ago—in, I think, 1994 we put one
of our VLCCs to Pakistan for breaking and we were—
Q3 Chairman: Could I just stop you. You
used shorthand, VLCC?
Captain Palmer: Very Large Crude
Carrier. I will try not to do the jargon. Okay, a very large crude
carrier to Pakistan and we were so disturbed by what we saw there
that we were determined that we would not do it that way in the
future. So in 1997, when we had some more coming up over the next
couple of years, we started a process to actually go around the
world looking at all the recycling facilities to find out which
ones actually met our own standards for health, safety and the
environment. We determined there were a number and then it became
an economic decision which one we went to. In fact we actually
went to China as a result of that, into a facility there which
could meet our own standards on being able to demonstrate—and
for us to be able to audit throughout the process—that they
were dealing properly with all the hazardous material, that their
staff were being properly protected and that all of the materials
were either disposed of in a responsible manner or resold as appropriate,
depending on whether they could be reused. So the process for
us is fairly simple in that we do take the final resolution of
what happens to the unit at the end of its life, if we are the
end user, very seriously. So we do not just pass it to somebody
else and then forget all about it.
Q4 Diana Organ: You have made it quite
clear that you have seen a system of breaking up in Pakistan and
you said that you were not happy with it. I wonder if you could
tell me what it was about what was happening in Pakistan that
made you unhappy and choose not to use that facility again, and
the other is that when you are making a decision about where you
go for the disposal or recycling of your ships you led us to believe
from what you have just said in reply to the Chairman that environmental
issues were top of your agenda. Are you saying that the economics
never comes into it? Surely as a business you are looking at that
first?
Captain Palmer: Two questions.
First of all, what disturbed us in Pakistan was the manner in
which the breaking took place, the safety standards of the staff
who were working there, the people who were working there and
the environmental issues as a result of that. To take the second
part of your question, the first requirement for us is that it
meets our HSE objective, our health, safety and environmental
standards, for any facility. If they meet that, then it becomes
an economic decision of which one is the best solution for us.
So if you have got two yards, both of which meet our standards
and can conduct the operation properly, then clearly we will go
for the one that is economically the best result.
Q5 Diana Organ: But the facility in Pakistan
that you looked at and thought, "No, this is not good enough
for health and safety reasons", had you used that previously?
Captain Palmer: Not in living
memory, no. I think if I go back far enough, I think the last
time we went through large demolition processes would have been
in the early 1970s when I think Taiwan was the world leading ship
breaker in those days. They are no longer in the business at all.
Mr Blankestijn: What I would like
to add is that it is not only Pakistan, it is India, Pakistan,
Bangladesh, the Philippines, where the vessels are actually beached
and where there is the unsafe situation for people and for the
environment. In our search, when we looked at our ship recycling
project, we had a couple of other aspects as well because we wanted
a good relationship with the national government to also ensure
that there are proper waste management structures in place, that
as soon as you offload hazardous material it is treated in the
proper way and also there needed to be further investment at the
yard facility in order to cope with our requirements. So there
were various reasons also for us to choose China because there
all these elements were in place: we could train the staff ourselves;
we could have our own supervisors at the facility; we could deal
with the state environmental protection agency within China; and
it safeguarded us also that what we wanted to do is outside of
the standard of the beaches in India, Pakistan and Bangladesh,
that what we paid for was indeed done in the proper way and safely.
Q6 Mr Mitchell: You say that given the
environmental considerations, which you are satisfied on, it is
basically a question of price. That must surely load preferences
to the Far East, to China you have said, because if you had them
dismantled at home you have got what Charles de Gaulle would call
the Chen Yi here in this country, all the environmental protests
and presumably a lower price for the scrap because there you have
got an expanding steel industry in China, or indeed India, whereas
it is less necessary here?
Captain Palmer: It is a question
of what you mean by "home", I guess. We are a UK-based
shipping organisation of the BP group. We have ships that we were
recycling that were built in Japan, that spent their entire lives
trading around the world. If they had ever come to this country,
they would only have come on a few occasions and were then finally
dismantled in China. Where is "home" for that ship?
Q7 Mr Mitchell: So there is no preference
for British knackers yards?
Captain Palmer: Well, there are
no British facilities that could take a ship of that size anyway.
Q8 Chairman: The message that is very
clear from what you have both said is that in the case of a company
that owns the ship and makes the final deal you can exercise the
responsibility that you have indicated, but if you dispose of
it using third parties can you have influence over how they then
subsequently dispose of the vessels?
Mr Blankestijn: They will come
under the international legislation or guidelines that have been
produced within International Maritime Organisation (IMO), and
in which the International Chamber of Shipping (ICS) has been
also very instrumental on behalf of the industry. The guidelines
were put together in such a way that anyone who would buy a ship
even for twenty-four hours is identified as a shipowner. So he
should take the same responsibilities under those guidelines.
Another part is that we propose a green passport during the lifetime
of the ship, so that from the new building up until the final
moment, details of all the hazardous materials (they make an inventory
of these materials, of where they are and their quantities) can
be passed on more easily from one owner to the other. Now, that
is not perfect yet, but it is in the process of being further
developed within IMO.
Q9 Chairman: We are going to come on
to talk about that and Ms Ruddock is going to ask you some more
detailed questions on that, but just before that what statistics
are there available to give us some idea of the number, scope,
scale and the size of the ships which are disposed of?
Captain Palmer: The industry disposes
of somewhere between 500 and 1,000 ships a year. It will vary.
The average number is about 700 ocean-going vessels are dismantled
every year globally. The number will vary between 500 and 1,000
because when ships go will depend on economic circumstances at
that time, and that is roughly equal to the number of ships that
are built every year, so it is not a surprise. Ships have a life.
So many are built every year. The number grows slightly as well
with world trade growth, but it is almost static, so effectively
the same number drop off the back end as come in at the front
end.
Q10 Chairman: As far as the single hull
tankers are concerned, has anybody made a projection as to the
volume year by year as we go forward as to how many will have
to be dealt with?
Captain Palmer: Yes, there is,
but the vast bulk of those have already gone. I think we have
some numbers. Over the next few years the ones that have to be
phased out (this is legally when they have to go): in 2004 there
are fourteen, in 2005 twenty-nine, none in 2006, five in 2007
and two in 2008-09. So it is not an enormous number. That is the
smaller sizes.
Q11 Chairman: That is the small size.
On that basis that is just over forty. How come we think there
are two thousand to go?
Captain Palmer: Because a lot
of those are not due to be phased out by 2008-09. Those are the
years I have got up to.
Q12 Chairman: So whilst there is a larger
quantity, it is at some point in the future?
Captain Palmer: Correct, but those
are mostly in the smaller sectors and the smaller tonnage ranges,
many of which are in Europe because they are the small coastal
tankers.
Q13 Chairman: A final question before
we pass on to Ms Ruddock. Are there any specific legal requirements
as far as the UK or the European Union are concerned which you
have to adhere to when you are starting the process of disposal
of the ships?
Captain Palmer: There is very
little legal regulation around this area. Most of the stuff that
is in place has been voluntary codes generated by the industry,
such as the Ship Recycling Code, which started off as a voluntary
process put together by the International Chamber of Shipping
by a number of shipowners.
Q14 Chairman: That is the one you have
put with the evidence?[5]
Captain Palmer: Correct, and that
then was adopted by IMO, not as legislation but as recommended
good practice.
Q15 Joan Ruddock: I think you have just
answered my first question, which was going to be that there is
no regulatory process here, we are just dealing with voluntary
agreements? Both the IMO and the ICS guidelines are entirely voluntary
agreements?
Captain Palmer: Yes.
Q16 Joan Ruddock: So the first interesting
question will be what proportion of ships that are being dismantled
and recycled are actually following these guidelines? Have you
any idea on that?
Mr Brownrigg: It is too soon to
say. The guidelines were only adopted last December, following
the sequence that has been described. What one can say is that
guidelines are available. They are available for the shipping
industry, they are available for the recycling countries and it
will be monitored within the International Maritime Organisation
process over the coming years.
Q17 Joan Ruddock: But can you make a
guess? What is the kind of cooperation that occurred during the
development of these guidelines? Is it thought that the majority
are going to follow them or not?
Mr Brownrigg: Before I hand over
to others, perhaps I could just say that normally things do not
go through the IMO if there is no intention to pay good attention
to them.
Mr Blankestijn: One thing I would
like to add is that for shipowners it is very difficult also to
know which facilities can cope with these requirements because
most of the facilities are still on the beaches. So there is no
other alternative available in capacity to handle this as per
the guidelines, so it is almost the chicken and the egg situation
of where are the investments for the new facilities versus the
shipowners, and then it becomes also much clearer what the commercial
elements are of the pricing effects of the labour cost, of the
waste management handling, etcetera. As soon as that is more settled
then the voluntary option is followed more easily.
Mr Brookes: Could I add to the
comments that were made and come back to the way the process has
been developed because this may help you. There are something
like thirty-five or thirty-six members of the International Chamber
of Shipping and we in the UK are proud to be the founding member.
They all contributed to the development of the guidelines (of
which we have given a copy to the Committee), which led to the
International Maritime Organisation's guidelines. All the individual
members of those thirty-five organisations take the work of the
International Chamber of Shipping and put it out and spread the
message. As has been said to you, it is voluntary but you have
heard from my colleagues the way they have picked up even before
this and developed it. So we are doing our bit in trying to move
the whole process forward, I am not saying to take the moral high
ground but to try to put forward a process which is sustainable
in all contexts.
Mr Brownrigg: Could I add to that,
if I may, that it was not just one international association of
the size you have heard, but in fact a number of sectoral shipowner
organisations came together with us too and they are listed in
the industry code, which really does mean that the vast majority
of the world shipping industry is covered. The Baltic and International
Maritime Council, the International Association of Dry Cargo Owners,
the independent tanker owners, and the Oil Companies' International
Marine Forum. They are representative of sizeable shipping interests
and really do cover pretty much the world fleet except for those
who never join these sorts of things.
Q18 Joan Ruddock: Okay, so you are obviously
hopeful of a positive outcome, but in terms of getting to the
point where you can break up safely and recycle we had evidence
from you about the green passport. Now, that presumably is something
that is already under way. Again, have you any idea how many ships
would have green passports and how many ships belonging to UK
companies, for example, might have green passports?
Mr Blankestijn: It is still future
work for IMO because there is no standard yet and preferably if
you take something from new build up until, say, the phasing out
of the ship it is more easy to administer a standard document
and ensure that it is adhered to. So that is definitely something
which needs to be developed and it is being developed at the moment.
Captain Palmer: The only thing
I would add is that as things move on things change. The issue
of hazardous materials. Materials are not hazardous when they
are on board the ship. They are there for a reason. Asbestos was
used as a fire precaution on ships in the past. It is no longer
fitted to ships, and you are coming towards the end of that being
an issue with ships because the majority of ships that were constructed
with asbestos in place have already reached the end of their lives
or are in the process of doing so now. So as time has gone on
you have probably less hazardous materials in ships than existed
twenty, thirty years ago. Now, that is not to say that in twenty
or thirty years' time something that is being used today will
not be determined to be hazardous. Asbestos was regarded as perfectly
safe in the days when it was put in; it would not have been used
had it not been. So the logic of the green passport is to ensure
that there is a record with the ship of what is actually contained
in it and where it is, which is rather more important perhaps
than what it is or indeed the quantity. It is where it is and
then ensuring that when you take it to somebody part of your process
is to determine that they can actually manage, handle and dispose
of that or reuse it in an appropriate manner, protecting their
people. The answer to your earlier question is responsible shipowners
will follow these guidelines and people who value their reputations
will follow these guidelines. Will everybody follow it? Does everybody
dispose of their car in this country in a responsible manner?
Most do.
Joan Ruddock: No, they dump in on my
streets in my constituency!
Mr Mitchell: There is no international
fly-tipping?
Q19 Joan Ruddock: One might argue there
is.
Captain Palmer: That is a question.
The ships are valuable assets. They are not fly-tipped to the
extent that the materials they contain are actually quite valuable.
You are not talking about things that are sold for pennies. There
is a lot of steel in a ship and the majority of it is steel, copper
and things like that. It is quite right that that should be reused.
It feeds the electric arc mills of a lot of the world.
3 Ev 1 Back
4
Environment, Food and Rural Affairs Committee, Minutes of Evidence
and Memoranda, Session 2002-03, US "Ghost Ships", HC
1336 Back
5
www.marisec.org/resources/shiprecylingcode.pdf Back
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