Ship recyclers in India and China will recycle eight vessels owned by Maersk Line. The ship recyclers have agreed in full to the A.P. Moller - Maersk Responsible Ship Recycling Standard. The deal gives Maersk Line greater fleet flexibility and vessels will be transferred to the recycling yards within coming months.
In the coming years, Maersk Line expects to recycle a larger number of vessels than in previous years as more vessels are coming to their economical end of life. With Maersk Line’s fleet of more than 600 vessels, owned and chartered, any decision to recycle depends on a broad set of variables – not least the state of the market.
In November, Maersk Line and Maersk Transport&Logistics Sustainability selected five ship recycling facilities in China and India for a tender to recycle eight Panamax vessels. All ship recyclers agreed to the A.P. Moller - Maersk Responsible Ship Recycling Standard (RSRS) as a prerequisite to enter the tender.
“These vessels represent roughly 1% of our fleet, so this is a small but meaningful capacity reduction, which will contribute to achieving a better balance between supply and demand for Maersk Line” says Maersk Line COO, Søren Toft.
Adding flexibility to fleet
To secure the best outcome of the sale, A.P. Moller - Maersk furthermore reviews the market development in relation to operational factors such as the vessels’ fuel efficiency, running and maintenance costs.
“The cost of replacing the vessel – hereunder its operational profile, its segment fit and how this segment is covered within the needs of our network – also impacts our considerations as to whether to recycle a vessel. Finally, external factors such as steel price developments and global or regional trade outlooks play a role in our decision making process,” says Peter Lund, Head of Chartering at Maersk Line.
The decision to scrap the 8 vessels was in part driven by an ambition to enhance flexibility in the 4-5,999 TEU network, where 60-65% of the total Maersk Line fleet is owned. Deals for the vessels were struck in early December with two ship recyclers in India and one in China.
In India, four vessels will be recycled by Shree Ram (2) and Y.S. Investments (2). Shree Ram is currently recycling two Maersk Line vessels (plot no. 78), whereas the Panamax vessels will be recycled at a different Shree Ram facility (plot no. V7).
Recycling supervision will be carried out by Maersk QHSE superintendents and external consultants to ensure responsible ship recycling operations according to the A.P. Moller – Maersk RSRS.
“Since our first vessels arrived in Alang earlier this year, we’ve seen significant progress – at the facility we are working with now, at the facilities that will recycle these next four vessels, and even at other facilities that have been encouraged to invest and upgrade,” says Annette Stube, Maersk Transport&Logitics Head of Sustainability.
Compete on quality
The remaining four vessels will be recycled at Jiangyin Xiagang Changjiang Ship Recycling in China, a Lloyd’s Register certified facility, which has agreed in full to comply with the A.P. Moller - Maersk RSRS. Here, supervision will be carried out by Sea2Cradle, an external company.
“With this tender, we have for the first time seen that the ship recyclers compete not only on price but also on standards. This indicates a move towards higher standards, and we will continue to encourage this development,” says Annette Stube.
Estimated transfer dates of the vessels to the ship recycling yards are between mid-December 2016 and mid-March 2017.