The result: A commercial US ship owner can easily reflag a vessel to get the top price for its steel hull from overseas scrap yards – while skirting US environmental laws that might otherwise restrict a US-flag vessel from being disposed of there, experts say. With steel scrap prices at record levels, some ships today may bring $700 a ton in Bangladesh. That's around $20 million for a typical retired tanker.
"This is something people have been exploiting for years, and MARAD has codified this practice into a regulation that makes it legal," says John Graykowski, a former acting administrator of MARAD under President Clinton who now works with US-based ship-recycling companies. "It's high time the agency took a hard look at this issue in light of the global reforms going on in the ship-scrapping industry."
Thousands of tons of toxins
The Oceanic is not thought to have been reflagged to be scrapped just yet, environmentalists say. But the fact that it soon could be underscores an emerging global threat in the next few years: A tidal wave of hundreds of old ships carrying PCBs and asbestos expected to be cut up and their contents spilled onto beaches in developing nations.
Polychlorinated biphenyls are a mixture of chlorinated compounds, often an oily liquid or solid. Because they don't burn easily and are good insulators, PCBs are often used in electrical equipment in wiring and transformers.
But while PCBs and asbestos were phased out of US shipbuilding in the 1980s, many ships like the Oceanic that are more than 25 years old often contain hundreds of tons of asbestos and PCBs. Now these ships are coming up for scrapping, experts say.