Scrapping business in the EU: regulations exist but the market doesn't
While attending the convention arranged by Siccardi Bregante, Italian shipowners (Confitarma and AssArmatori) asked new global regulations and the listing of Asian yards within Brussels' records
Genoa – For the time being the European scrapping market still doesn't exist. “Regulations were issued, however, until they won't be enforced globally and they'll continue being infringed by simply changing flags, Old Continent's yards will hardly receive any order”, clearly reported Gian Enzo Duci, President of Federagenti, while attending Ship recycling convention arranged during latest Genoa Shipping Week, by Siccardi Bregante legal firm on board Luigi Bergamini frigate.
As illustrated by Duci, shipowners have always sold their ships to be scrapped to specialized cash buyers who in turn used to sell them to scrapping yards handling all related procedures. In essence, shipowners exclusively sold a second- hand unit being paid for hull and components' weight.
The ship's value resulted in a positive figure within the financial statement, while today the global scenario has changed and ships scrapping in EU authorized yards, pursuant to regulation n. 1257/2013, will definitely generate extra cost. Maybe not for bulk carriers and some tankers, but definitely for more complicated units and ferries.
The Concordia, whose scrapping was cared by a consortium between Saipem and San Giorgio del Porto – as illustrated during the convention by Valerio Mulas, managing Genoa-based yard, who recalled how, within the overall 100 million Euro cost, 22 were spent to safeguard the environment – represented, according to the President of shipagents and Italian brokers, “an extraordinary technical example which could be implemented just because an insurance had paid for the damages, which would have been in turn totally unbearable in a traditional market environment”.
Shipowners will hardly accept scrapping their ships in Europe, supporting far higher cost, than sending them to the Far East and yield a profit.
European regulations, only enforced on community ships, will be easily infringed, at least until the Hong Kong convention will be enforced.
Two thirds of the global fleet flies a different flag from the ownership country of origin.
According to Italian shipowners, represented at latest convention – introduced by Lawyer Francesco Siccardi, associate partner in Genoa-based law- firm which arranged the event - by Fabio Faraone, head of technical, security and environmental service at Confitarma and by Matteo Catani Managing Director at Grandi Navi Veloci and Assarmatori's consultant, major problem is that no global regulations exist.
Both associations agrees that a mutual regulation (as outlined by Lorenzo Schiano di Pepe, professor at Genoa University, by Captain Alberto Bottarel of Genoa Harbour's Master office), which exclusively hurt community ships, unavoidably and substantially cut their competitiveness on the global scenario.
“As shipowners, we agree with stricter scrapping regulations – confirmed Catani – but, having the Hong Kong convention only be approved by 10 Countries, and being the EU regulation
exclusively enforceable on community flags, there is a clear unfair situation. A global law must be enforced.
Confitarma, – as recalled by Faraone – “already urged the Minister of the environment to take due steps to amend the Hong Kong convention.
Moreover, only 3 of the 34 structures listed by the EU Commission – pinpointed Catani – exceed 100,000 dwt annual capacity. Which is in fact insufficient”.
According to GNV's managing director and to Confitarma, Far Eastern structures should be urgently included in the European list for having essentially upgraded security and environmental standards in compliance with Brussels regulations.
Both the Commission and RINA's representatives confirmed this process is being developed.
Ferdinando Garrè, Managing Director at San Giorgio del Porto, only Italian structure approved by the European Commission states taking into account their customers' requirements substantiating the fact that Asian yards should be encompassed in the European list.
“We started with the Concordia to help an old dating customer and enter a new business, subsequently SGdP determined betting on this market sector by establishing PIM (Piombino Industrie Marittime), however bureaucratic hindrances are the major Italian problem.
We took 4 years to be given all required authorizations and green light to start developing infrastructures in Tuscany-based yard was given few days ago.
We confide PIM could start operating as from next September”.
A further problem, according to Garré, is represented by cost: “The Concordia was a very expensive test, we could not repeat the same deal in a free market, we could specialize in some particular sectors turning to units which couldn't reach Turkey or the Far East, but sooner or later a new change of mind will influence all corporate policies”.