A United Nations maritime organization is adopting standards for dismantling and recycling the old ships. Delegates met this week in Hong Kong to draft the plan, which aims to address environmental and safety concerns.
The least expensive way to dismantle a ship can also be the most costly to the environment and human lives.
It is called "beaching" and is common in South Asia, where ships are run aground and then dismantled, their steel and other materials sold as scrap.
Rizwana Hasan is an attorney and advocate for the Bangladesh Environmental Lawyers Association. She says beaching soils shorelines with asbestos and toxic waste. Workers are sometimes injured or killed. Hasan calls the practice is a "crisis of mismanagement".
"It was a crisis of ship owners that continued to allow such reprehensible practices to take place, all in the name of profits," said Hasan.
In response to the concerns, delegates from 63 countries on Friday passed international rules governing the ship recycling industry.
The Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships, will control ship construction, limiting the amount of hazardous materials used. It requires ships to maintain logs of hazardous materials used for maintenance. And it sets standards for dismantling vessels, such as requiring old ships be broken down in yards that meet certain environmental standards.
The agreement calls for ship recycling workers to wear protective gear and for recycling centers to properly dispose of hazardous waste and prepare emergency response plans.
Jim Puckett is executive director of the Basel Action Network in Seattle, in the U.S. state of Washington. He calls the agreement a failure. It neither requires workers to be specially trained to remove hazardous waste nor prohibits beaching.
Puckett says environmental groups now will focus on their "Off the Beach" campaign.
"We're going to pressure the shipping companies, themselves, but moreover their customers so the major Fortune 500 companies that are using big shipping, we're going to be sure that the ships they use are not going to hit the beach," said Puckett.
Ship breaking now is mainly done in India, Bangladesh, Pakistan, and to a lesser extent in China and Turkey. The industry estimates up to 1,000 ships are broken down each year.
With the downturn in the economy, industry officials say even more ships are being decommissioned, because there is less cargo to haul.
Captain Mohammed Anam Chowdhury is a consultant for the ship recycling industry in Bangladesh. He says the industry provides thousands of jobs.
"It's a major industry for the country," said Chowdhury. "When it's in full swing it employs almost 150,000 directly and you have almost two and a half million making their living out of this industry, with the back-water industries and other industries involved."
The agreement takes effect in two years, once at least 15 countries ratify it and meet tonnage and recycling standards.