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Dollar dearth, demand drop sink ship-breaking industry

Scrap-ship imports have drastically dropped for dollar dearth and demand-side problems in Bangladesh, sources say, thus imperiling linkage industries and construction sector under knock-on impacts.

Local ship-breakers have informed that the number of imported ships for dismantling has drastically fallen during the first half of 2022 for the headwinds from both directions.

Bangladesh imported only 64 ships in total during the January-June period of the calendar year — about 59-percent lower than that of the same period of last year, according to data available with NGO Ship-breaking Platform (NSP).

During the corresponding period of 2021, the country imported 156 ships to dismantle — in a quantum leap from 74 during the January-June period of 2020, NSP data show.

The NSP is a global coalition of organisations working to reverse the environmental harms and human-rights abuses allegedly associated with ship-breaking and to ensure safe and environmentally sound dismantling of end-of-life ships worldwide.

And during the whole year (January-December) in 2021, as many as 254 ships were brought in from abroad, up from 144 scrap ships in 2020 — the year of corona onslaught that left the world in lurch.

Bangladesh dismantled a total of 236 ships in 2019, up from 185 in 2018.

The ship-breakers have said ship import started falling in the second half of 2019 and later dived deeper due to the pandemic and virus-led shutdowns in Bangladesh, as elsewhere around the globe.

But in 2021, the business showed a turnaround riding post-lockdown demand spree, they say about the ups and downs in the seaside industry — considered multidimensional in that it rolls a row of downstream productive sectors.

And, now, there comes a staggering blow to the trade from dollar crisis and galloping exchange rates of the greenback.

However, rights groups lament both human and environmental hazards associated with shipbreaking globally. Owners in Bangladesh say safeguards have been in place and accidents are on the wane.

During the January-to-June period of 2022 under review, India also imported a lower number of 88 scrap ships — down from 124 in the January-June 2021.

Pakistan dismantled 35 ships, followed by Turkey 33, the European Union 45, and China 7, according to NSP data.

When asked, Bangladesh Ship Breakers and Recyclers Association (BSBA) president Abu Taher said they had witnessed dull business in 2020 due mainly to the pandemic when import of scrap ships declined significantly.

Though last year business was good and many ships were imported amid post-covid surge in demand, business in the current year dropped again mainly because of the high rate of US dollar and its shortage.

“We can’t open letters of credit (LCs) as banks are not willing to do the same citing shortage of dollar,” he said, adding that the situation has also made many reluctant as cost of doing business also went up.

Besides, the local demand also shows a decline in recent times, he notes.

Muhammed Ali Shahin, programme coordinator of YPSA (Young Power in Social Action) ship-breaking campaign that works for labour rights, and protecting the environment, says many workers informed that ship-breakers denied the incidence of accidents in recent years.

“If any worker dies in workplace accident, owners try to hide it,” he claims.

The campaign coordinator, however, says though a few are working to set up ‘green’ yards or follow the requisite international standards, still it is far off the desired levels.

The Platform has recorded about 18 accidents in the local ship-breaking industry since January to June 2022.
Citing a latest International Trade Union Confederation (ITUC) report on ship-breaking industry, the platform says government’s “passivity” is to blame for the decline in Bangladesh’s ship-breaking industry.

“Millions of workplaces are not monitored by government labour inspectors and workers continue to be trapped in jobs with poverty wages,” it claims.

The ITUC in the report alleged anti-union discrimination, unsafe working conditions, unpaid overtime, denial of minimum wage and forced night-shift work.

Talking to the FE, AM Nazim Uddin, joint convener of Ship-breaking Workers Trade Union Forum, said owners give compensations immediately if any worker dies.

“But workers don’t get other lawful rights, including right to unionise and collective bargaining,” he said.

The owners are investing in recent years to comply with the Hong Kong Convention, which is only for business promotion as they are also reluctant to ensure worker rights.

In Bangladesh, India and Pakistan, where 90 per cent of world’s end-of-life tonnage is broken down, hazardous wastes are simply dumped, or managed in an unlawful way that puts both local communities and the environment at risk, right groups say.

There are 150 yards in the country, while 50-60 are in operation. About thirty thousand workers and employees work in the shipbuilding yards while 250,000 people are directly and indirectly dependent on this trade for livelihood.

According to industry-insiders, shipbreaking plays an important role in the national economy by supplying raw materials for local steel and light-engineering industries.

More than 300 re-rolling mills are using ship scraps as their raw materials while shipbreaking industry meets more than 60 per cent of the raw materials for local steel industry, they say.

Meanwhile, prices of MS rods have increased manifold to the detriment of construction industry, including house-building across the country, under what the sources say cascading impact of global commodity-price spirals for the pandemic and Ukraine war.
Source: Financial Express

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