December 02, 2010

Last minute blues again

Some of those in shipping that are seeing the light at the end of the tunnel have resumed their hand wringing in earnest. We did not do enough to attract or train mariners in the last couple of years, they say. We lost another opportunity. What will we do now with the accursed seafarer shortage?

This behaviour is typical and does not surprise me in the least. It appears to me that at least some shipmanagers are akin to King Sisyphus, doomed for eternity to rolling a boulder up a steep hill only to see it roll down again. Their stump speeches add to this unique aura of helplessness that permeates throughout the business- pleas for loyalty, pronouncements of seafarers being best assets, declaration of being a peoples company and all that clich├ęd claptrap included.

Meanwhile, managers toil with unfailing resolve doing the same things day after day, mistaking tactics for strategy and hoping like hell that they will have a different result this time around. Nowhere is this more obvious than in the recruitment and retention tactics commonly seen. That boulder rolls down the hill once more; our efforts fail again. Yet we labour on resolutely, hopefully- and seemingly helplessly, as if oxen yoked to a plough.

Now the good news, which is that all is not lost just yet. I believe that there is still time to set this right, because I believe that the shipping industry is not out of the woods yet. Maybe even not for quite awhile, given the huge tonnage overhang, creeping protectionist policies and new worries about the economies in Ireland, Portugal and Spain. I also believe that any recovery will be gradual even if the global economy has bottomed out already. There are unlikely to be huge spikes upwards in freight demand and therefore tonnage is not going to take off and hit the roof day after tomorrow. Which means that there is still time to begin to address the seafarer shortage problem.

I must say again that I continue to believe that the shortage numbers are grossly exaggerated for obvious reasons to do with the industry wanting to flood the market and keep wages low. Besides, to me the issue is not just the numbers involved but the quality of crews trained. At a time when ships, systems and legal requirements are getting more complicated, we are failing to produce men and women who will meet the demands of tomorrow. Forget professional competence; we have an increasing problem with mariners who do not even have the basic language or academic skills needed to understand the manuals that explain our systems, requirements or machineries. Clearly, there is no safety in numbers even if we do manage to attract the young somehow; training has to be much better than it is at present.

That said, I have some hope, based on anecdotal evidence alone, that the ‘cradle to grave’ strategies that a few shipmanagement companies have started employing may produce some good results. The fly in the ointment here continues to be continuing hackneyed retention policies, but the better companies are managing that thorny issue reasonably well. Under present circumstances, of course; what happens when laid up ships are re-commissioned or when new tonnage hits the market remains to be seen. As an example, Indian companies, particularly SCI, have huge expansion plans. Can they get appropriately qualified and experienced bodies to staff these ships?

I hope officers don’t start jumping companies for just a few dollars more again, but they well might; not all much has changed in the last two years that would make them act otherwise. Nonetheless, there is a lot going for the ‘cradle to grave’ strategies, not least the fact that these require minimum government involvement- for waiting for the general state of affairs to improve in the MET space is a lot like waiting for Godot. The industry and its regulators remain committed to much rhetoric and not enough action.

In the Indian context again, the new Direct Tax code that will come into effect two years later appears to have a clause that may become greatly problematic, and, unless amended or clarified, may make incomes of thousands of Indian mariners sailing with foreign companies income taxable. Although some experts are saying that nothing has really changed here, there needs to be a categorical clause in the DTC that addresses seafarers. Why cannot there be absolute clarity from the Ministry of Finance on this once and for all?

As things stand, the DTC is worth keeping an eye on, and even lobbying against if required. The potential negative impact on Indian mariners can be huge: roughly, a quarter to a third of all their salaries is at risk of being gobbled up by the taxman. (Aside, an example of how income tax rules can have major consequences: reports suggest that the Norwegian Seatrans group will flag its ships out of Norway, since Polish seafarers working under the Norwegian flag will now have to pay Norwegian tax.)

Besides the many actions that need to be taken to address the numbers and calibre of future mariners worldwide, I believe that there is one small step that should be taken immediately: increasing the remuneration of on board cadets and trainees by around a quarter. The increased outlay will not be a large number for any shipowner. I am confident, though, that this single step will give him a big bang for the smallish buck. I say this knowing full well that a cadet gets a stipend and not a salary, and that us old (ok, older) timers were paid hardly 20 dollars a month (and 3 dollars a month, at today’s rates!) as first year trainees.

I do believe, however, that a Cadet should not be used as cheap labour, and a stipend should be such that a trainee can save enough money, during the apprenticeship period, to pay fully for any college, certificate of competency and STCW courses when she or he gets down for the junior officer’s certification. This single step will have a substantial impact; right now, a cadet often needs additional money for his COC time, especially if he appears for exams in other countries. Added to loans often taken for Pre Sea training, (including to fund my pet peeve, ‘placement’ or tout fees), this is an additional prickly burden.

I think we would attract a better quality of youngsters if we could sell to them the fact that they would be able to completely support themselves from the day they first stepped on board as cadets.
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