GLOSSARY

The Beneficial Owner (BO) is the ‘real’ owner of a ship and the company that takes the commercial decision to sell a vessel for scrap. The Beneficial Owner is deemed to be the ultimate owning entity or representative thereof (either individual, company, group or organisation) and is the entity that benefits from the rent and/or the sale of the asset.

A cash buyer is a company specialised in the trade of end-of-life vessels to beaching yards. Cash buyers pay ship owners up-front before the ship reaches its final destination and is dismantled. Cash buyers sell ships to shipbreakers that can offer the highest price and are notorious for hiding business dealings and dodging waste export laws by re-registering vessels under flags of convenience and anonymous post box companies.

> Read more about cash buyers

The commercial operator is a third party managing the ship’s daily operations. These companies do not own the vessel and do not usually take decisions regarding the sale of a vessel.

Downstream waste management is a term used to describe the treatment of wastes once they leave the ship recycling facility and includes the final disposal of wastes. Ships contain many hazardous materials that need to be dealt with in an environmentally sound manner. At the beaching yards, hazardous wastes are managed in a cheap, but often inadequate and unlawful way, or are simply dumped. International waste laws, such as the Basel Convention, regulate hazardous waste treatment and disposal, and aims at prompting upstream waste reduction by internalising the cost of waste management with the polluter.

A ship that has reached the end of its operational life and is ready to be scrapped.

To reduce taxes, fees and avoid more stringent social and environmental requirements, the shipping industry has recourse to so-called “flags of convenience” – also commonly known as “flags of inconvenience”. These flags are known for their poor implementation of international maritime and labour laws and have outsourced the management of their registries to private companies. At end-of-life, FOCs such as Comoros, Palau and St. Kitts and Nevis are particularly popular.

> Read more about flags of convenience

The flag state of a vessel is the jurisdiction under whose laws the vessel is registered or licensed, and is deemed the nationality of the vessel. The flag state has the authority and responsibility to enforce regulations over vessels registered under its flag, including those relating to inspection, certification, and issuance of safety and pollution prevention documents. The flag state of a vessel is in most cases not identical to the state in which the ship’s Beneficial Owner is based.

The gravity method is used to illustrate the practice of dropping cut-off blocks by means of gravity, rather than lifting them with cranes. This practice is used at shipbreaking yards that operate on tidal beaches. 

Gross tonnage is a non-linear measure of a ship's overall internal volume.

The intertidal zone is the area that is above water at low tide and under water at high tide. In other words, it is the area between tide marks. Recently, beaching yards have attempted to rebrand themselves as “intertidal landing” sites. The term “intertidal landing” is an oxymoron, as the vessel is cut in the intertidal zone, and not on dry sections of the beach, when using the beaching method.

An Inventory of Hazardous Materials (IHM) is a document detailing the type, amount, and location of hazardous materials used in a vessel's construction and operations. Identification of hazardous materials is meant to allow for the protection of the health and safety of seafarers during the operational life of a vessel and to prevent exposure to toxics and environmental pollution during the recycling of the ship. The European Union requires that all vessels trading in EU waters have an IHM on-board, and has published guidelines for ship owners on how to compile an IHM.

Light displacement tonnage is defined as the weight of the ship with all its permanent equipment, excluding the weight of cargo, fuel, water, ballast, stores, passengers, crew, but usually including the weight of permanent ballast and water used to operate steam machinery. End-of-life ships are sold on the basis of USD per LDT as an indicator of the steel value.

The Registered Owner is the company or individual to whom the ship's legal title of ownership has been registered. This is where 'paper', ‘post-box’ or 'name-plate' companies are involved - ships are commonly registered under a one-ship company in a country whose tax on the profits of trading ships is low, even absent, and whose requirements concerning manning or maintenance are more relaxed. The registered owner is usually a subsidiary of the Beneficial Owner (BO).

Alongside is a recycling method mainly used in China, Europe and United States. The vessel is brought along a wharf or quay in a sheltered harbour or river, and dismantled by cranes from top to bottom. Cutting operations proceed until the lower part of the hull can be lifted out in one piece, pulled up a slipway for final cutting in a fully contained area.

Beaching is the process in which a ship is laid on a tidal mudflat. The vessel is grounded deliberately during high tide and breaking operations usually take place during low tide when the vessel is not submerged by the sea. 70% of ships are scrapped using the beaching method as practiced in South Asia. As cutting operations take place in the intertidal area, pollutants are inevitably discharged into the environment and washed away by the tide. There are no means of full containment or remediation. The beaching method is strongly criticised for its unsafe working conditions and the environmental harm it causes to fragile coastal ecosystems and surrounding communities.

Dry-docks are mainly used in Europe. The ship is driven to an enclosed, flooded dock, the water of which is subsequently pumped out. The ship is then dismantled piece by piece in a fully contained area, thereby minimizing the risk of environmental pollution and allowing for the use of cranes to lift heavy pieces off the ship. Most ships are built in dry-docks and international laws also require ship owners to regularly dry-dock their vessels for hull inspections.