Responsible ship recycling

recycling during the year. However, our commitment to Alang stands and our hinterland engagement continued uninterrupted throughout 2022. Our mobile health unit, which we have supported since 2018 to improve healthcare access in Alang, reached a significant milestone of 75,000 out-patient department services this year.

Ambition

Ensure safe and responsible ship recycling globally to the benefit of workers, environment, responsible yards and shipowners.

Targets

• Create global opportunities for responsible post-Panamax ship recycling

• Work with stakeholders to support EUSRR compliance and the Ship Recycling Transparency Initiative

• Continue wider Alang area development

• Identify Maersk’s role in decarbonising the global steel value chain

Since 2016, A.P. Moller - Maersk (Maersk) has responsibly recycled sixteen vessels at seven yards in Alang, India, and this engagement has been a catalyst driving a transformational change in the ship recycling industry. As global ship recycling volumes are set to quadruple by 2033, there is an urgent need to ensure that demand is met by suppliers with responsible environmental and social practices. A key focus for Maersk is to increase the global capacity and capability for responsible ship recycling. We continue working to better understand our role in decarbonising the global steel value chain, these efforts helped us affirm and sharpen the focus of our 2023 ship recyling goals, with more precise targets.

Creating supply for unprecedented demand

A significant share of the anticipated rise in global recycling volumes comes from the largest vessels in the so-called post-Panamax category. Few recycling yards today have capability and capacity to handle these vessels. In 2022, we sent clear demand signals and strengthened our support for creating new opportunities via dialogues with underutilised or defunct ship repair yards, as well as potential new industry entrants, to identify and build cases, and execute due diligence. While pursuing solutions globally, we are also aware of the fact that 98% of global ship recycling is carried out by the top five ship recycling nations: Bangladesh, India, Pakistan, Turkey and China, owing to the inherent steel demand in these countries with minimal last-mile costs and high commercial feasibility.

Activities in Alang in 2022

2022 continued to be another strong year for the container shipping business as we deployed all available capacity to serve our customers’ global supply chains. We completed the recycling of one vessel in Alang in the first quarter of 2022, and no additional vessels have been sent for

11 https://safety4sea.com/wp-content/uploads/2022/10/BIMCO-Report-on-the-EU-List-3rd-Edition-2022_10.pdf

A training programme for shipyard workers, funded since 2019, continued raising awareness on personal hygiene, substance abuse, sexually transmitted diseases, material handling and ergonomics. In response to the community’s evolving needs, several health services were introduced at scale, including screening nearly 600 workers for oral cancer, another 4900 for diabetes, and supporting about 1750 people at specialised skin care camps.

As we have started witnessing the normalisation of market volumes, we anticipate increased ship recycling activity from 2023.

Regulatory developments

Recycling options within European Union member states are limited for shipowners, as an industry study confirms11. Capacity for ship recycling within EU countries remains strained, with only a very few yards on the EU list capable of handling post-Panamax vessels (i.e. too large to go through the Panama Canal). Even fewer yards are willing to accept commercial vessels for recycling as they prefer ship repair, conversions, decommissioning and offshore recycling, which are far more lucrative. To address capacity and capability challenges, we continue to work actively with industry stakeholders to have yards in non-OECD countries included on the EU list of approved yards to recycle vessels registered in EU countries.

The legal overlap between the EU Waste Shipment Regulation (WSR) and the Ship Recycling Regulation (SRR) is still in process of being clarified. Maersk fully supports the proposal that SRR will take precedence over the WSR when it comes to European-flagged vessels that become waste outside of EU territory.

Meanwhile, work has begun in the EU to revise the SRR. Maersk participated at an initial hearing by the European Commission in June, where we highlighted the fact that the auditing and inclusion of non-EU yards on the approved list has been lacking in practice. The fact that yards located within the EU are not audited does not raise the standards at those yards. We further pointed out that a revision of the SRR should be tied more closely to the EU circular economy action plan to leverage the potential for re-use of steel from ship recycling. More details on Maersk’s position can be found here12

Transitioning the transparency initiative

The Ship Recycling Transparency Initiative (SRTI), to which Maersk was a founding signatory in 2018, is a collective effort to bring together different players across the shipping industry value chain to drive transparency and improve ship recycling policy, practice and performance.

Today, 31 companies are signatories, and 14 shipowners across various vessel types and geographies share information on their ship recycling policies and practices, allowing lenders, investors, cargo owners, and others to make informed decisions and reward good practices. In 2022, the Sustainable Shipping Initiative decided to withdraw from hosting the SRTI, whereas Smart Freight Centre has agreed to host from January 2023. We remain steering group members of SRTI and have assisted in ensuring a smooth transition.

How ship recycling can support the decarbonisation of steel

End consumers

Vessel owners

Shipyards Steel producers

Steel is the world’s most widely used material, from buildings and infrastructure to transportation and household goods. It is, however, a hard-to-abate industry that accounts for around 7% of global annual greenhouse gas emissions. Recycled steel has potential to become a valued raw material for steel consumers with net zero emissions targets, such as automobile and wind turbine manufacturers. In 2022, Maersk engaged with stakeholder groups to better understand the global steel value chain and our potential role in supporting circularity as a steel purchaser and supplier via recycled vessels. We also joined the Climate Group’s SteelZero, a global initiative that brings together leading organisations to accelerate the transition to a net zero steel industry.

12 https://www.maersk.com/~/media_sc9/maersk/corporate/sustainability/files/our-approach/policies-and-positions/responsible-ship-recycling-position-paper.pdf