December 29, 2011

Indian Ratings: Common Entrance Test travails

As I write this around Christmas, a Common Entrance Examination for Indian Ratings for the batch scheduled to start just a week later- on January 2, 2012- has just been held. Or should I say has been held yet again, for this is the third CET that the Board of Examination For Seafarers Trust (BES) has conducted since September for the same batch. (One could quote Goldfinger from Ian Fleming and say, "Once is happenstance. Twice is coincidence. The third time its enemy action," but that may be somewhat uncharitable). Whatever, the confusion, fear and suspicion the first ever series of CETs have created in the maritime training establishment in the country have, so far, nullified any advantages that the new system was supposed to usher in.

The reason for all these CETs is simple: shortage of applicants and a misreading of the effort required to promote the course. (I also wonder, given the sample question papers put up on the BES website, how many applicants were actually successful. I can tell you from experience that many typical entrants would not have been able to answer many of the science- and even English language- questions asked.) And, although the post examination system- especially the allotment of entrants to different institutes- has not been transparent, my rough calculations assume that there was a countrywide shortfall of anything between 5-700 candidates after the second CET was held in November, if all the seats in the country's Directorate General of Shipping approved institutes were to be filled. That is something like a 20% to 30% shortfall; not a small number.

Predictably, many institutes are very worried. Some- where the shortfall is 50% of their capacity or even more, based on the November CET- are obviously more worried than others are. They claim that demand surely exists, as they have been filling up seats in previous batches before the CET. Then there have been whispered stories about some of the candidates who have passed the CET being unable to even fill up a form when they land up at the institutes- their English is insufficient. Allegations, also, of 'union approved' candidates passing the CET. Confusion since some cleared candidates failed their medical tests at the institutes subsequently, or held dubious academic record documents. Confusion with candidates who had opted for certain institutes being allotted others instead. Quiet questions as to how certain institutes have had all their seats filled up while others have had just a few candidates show up. Declarations by the odd institute that they would fill up their seats under a 'management quota' system, since they stand to lose a fortune if they run the course with just a few CET approved candidates. Rumours that the DGS is using the CET to reduce overall intake of Ratings, given the terrible record of post-training sea berth 'placements' in the industry. Protests that the institutes alone can do little to address this problem on their own- it is shipowners that can provide sea berths, not MET institutes, they point out.

All the confusion and suspicion has vitiated the atmosphere somewhat, in my opinion- something that can hardly be good for training. To be fair, while there have been problems with the conduct of the CET- admit card delays and other teething issues, for a start- these issues can be easily improved in time with a little experience. In addition, making the process transparent in future will go a long way towards addressing most of the other concerns to do with the conduct of the CET and the allocation of successful candidates to institutes.

Many grievances of the MET establishments are not without merit. However, they conveniently ignore some of their own shortcomings and malpractices. For example, question on the ethics of using middlemen to fill up seats in previous batches remain unmentioned when they talk of the 'demand' having been hitherto sufficient to fill up all their seats. So, too, with the widespread practice of false-selling courses by painting a rosy picture of the industry and employment opportunities post training when the truth is quite the opposite. Some training institutes misdeclare the fees they actually charge to the DGS, indirectly misleading students who are disseminated this information at the CET; others cut corners and nickel-and-dime trainees at every opportunity post admission. And, while I agree that the placement of GP Rating graduates should not be the responsibility of MET institutes, they should not be allowed to claim, to the Ratings, fictitious records of past placements either, or use meaningless phrases like '100 percent placement assistance' in their advertising. Or indeed, allowed to be conduits for placements made conditional to a Rating paying a hefty bribe to a third party.

In the end, however, this leaf storm of shortcomings- whether of the CET or the institutes- will settle sooner rather than later, if only because maritime institutes are in no position to antagonise the DGS beyond a point. And, while I agree that the targeting of institutes for the shortcomings of the industry seems unfair, all this is finally a sideshow.

For there is an elephant in the room nobody has yet deemed fit to ask this two-part question: Given the fact that hardly any rating can get a sea berth without bribery or connections today, and given that there is an extremely low demand for Indian ratings anyway, is the Directorate General of Shipping obliged to guarantee to any maritime training institute that even a single seat of their DG approved Pre-Sea Ratings course will be filled in future? Is the first responsibility of the DG to the MET institutes or to the hapless Ratings who are trained- and cannot be 'placed'?

The answer to that question will tell us a lot about the future of MET in this country, our plans to increase seafarer market share- and, indeed, the viability of training in India. Because I cannot see people investing money in institutes in future- in an era of market or regulator driven uncertainty- if some of the present ones shut down for lack of demand, or for any other reason. And I cannot see demand for Indian seamen rising- not for the next few years, at least.


December 22, 2011

A maritime Christmas carol: "Something must be done"

They have taken another ship hostage in the Gulf of Aden,
(Industry chorus: Something must be done, something must be done),
But hey, we make more from piracy than those Somali highwaymen,
This wonderful show must go on.

They are torturing our crews for months on end!
(Industry chorus: Something must be done, something must be done),
Fortunately they are all Third World Seamen,
This is how the West was won.

We will take five years to orchestrate a response since
(Industry chorus: Something must be done, something must be done),
And when the music becomes noise, we will not wince
Do we have anything personally at stake? Anyone?

What about the insurance costs, my friend?
(Industry chorus: Something must be done, something must be done),
Hell, the consumer will pay in the end,
with all due surcharges under the sun

The crew have been working for days without a break,
(Industry chorus: Something must be done, something must be done),
Meanwhile, tell them to change their rest periods to fake
those time sheets, I want them redone!

Another accident because of fatigue, it is said,
(Industry chorus: Something must be done, something must be done),
This Registry's manning certificate doesn't deserve to be read!
Psst- switch our ships to this Flag anon.

They have arrested the Captain for no reason again,
(Industry chorus: Something must be done, something must be done),
Stop paying his wages and if he complains
Tell him his contract is undone.

That Class surveyor is saying that this ship is unsafe!
(Industry chorus: Something must be done, something must be done),
Get an interim cert and get out of this place,
The next port is less bothersome.

The ITF crew-wage raid is all over the place!
(Industry chorus: Something must be done, something must be done),
Pay the cash, sail the ship and manage the disgrace
then get the money back from the seamen- or blacklist those sons.

The crew with no shore leave for weeks are half dead
(Industry chorus: Something must be done, something must be done),
Tell them to cooperate and bend till they break,
P& I will pay for that one.

Our ship's been detained with an old magic pipe!
(Industry chorus: Something must be done, something must be done),
But why are your pants on fire tonight?
Claim 'error of servant' - the Chief's the felon

Clerical work is out of control across the fleet,
(Industry chorus: Something must be done, something must be done),
But these new checklists must be filled in all neat
Remember, they apply- in triplicate-  to everyone.

The crew are demanding their wages, what cheek!
(Industry chorus: Something must be done, something must be done),
Pay them a quarter and let them temporarily hold their peace,
With a hundred ships, we sit on millions every month.

The oily water seperator is again on the blink,
(Industry chorus: Something must be done, something must be done),
Sail out quietly and report it later, methinks
Pretend it went kaput on the run

That Captain will not sail with a hole below the waterline ,
(Industry chorus: Something must be done, something must be done),
The man is really a big pain in the behind
Look for a reliever at once!

Ashore we have got fat year end  bonuses again but
on our ships (something must be done, something must be done)
Let them eat cake and send them an email saying,
"Merry Christmas, everyone!!!"

December 15, 2011

Coming up: shipping's hunt for green crews

The last thirty years have seen a revolution in the wheelhouse. The next thirty, I suspect, will change our engine rooms forever. However, this change will be more complicated, I think, and will require a lot more preparedness and considerably better management of resources than shipping seems to be capable of. I also suspect that the calibre, certification and training of our engineers will be called into question when this revolution takes place- as happened in the wheelhouse revolution, with question marks raised about the competence of deck officers.

Before the eighties, wheelhouse equipment was basic and often unreliable. A weak radar, a stuttering 2182 receiver, often manual steering, an inaccurate DF and a cranky VHF just about covered everything at a watch keeper's disposal. A ship with Loran was considered advanced. The introduction of new navigational equipment- advanced Radars, ARPA- even reliable VHFs- was followed by the SatNav first and then the GPS. Later we saw GMDSS systems and satellite linked computer terminals.

Each of these developments- as with the AIS later, and now, ECDIS- was accompanied by training that was usually poorly thought out, improperly planned and implemented- and, in the end, substandard. Even so, training needed to cover only the regulatory and operational aspects of bridge equipment- repair or maintenance was largely beyond a ship's scope. Even today, repair of bridge equipment is usually a replacement of PCBs - or that of the entire unit. 

The results of the bridge revolution have been pretty bleak as far as competence goes: two decades or so after ARPA was first introduced, large numbers of our certified officers are still unable to properly interpret ARPA findings, understand the system's limitations or even operate a radar optimally or properly. Large numbers of our officers, used to plotting GPS positions mechanically, seem unaware of the basic corrections that need to be applied before plotting a GPS readout on a Mercator chart. All have done GMDSS courses, but many- even most- are effectively GMDSS illiterate. Shipping has not shown itself to be very good at managing competency during technological change, I am afraid.

I am not trying to say that engine rooms of merchant ships have not seen technological advancement; of course they have. Much new equipment has been added. Advanced control and automation systems, shaft generators, bow thrusters, new MARPOL related OWS equipment, fresh water generators and incinerators are just a few examples. Efficiencies of marine engines, control systems and auxillary machinery have undergone much innovation. Nonetheless- and this is what I am saying- the basic means of propulsion has remained the conventional main engine, and advancements here have been innovative, not revolutionary. That revolution will come soon, I believe. I believe that we are at the cusp of a revolution in marine propulsion today.

The process may have already begun and will only accelerate exponentially with time. Concerns for the environment and regulatory changes may have started the movement away from fossil fuels, but more and more shipowners will realise that the cost savings of alternate energy- wind, solar or whatever else- are enormous, and will make the difference between profitability and bankruptcy. Natural gas is being touted as the next big thing, but I think that- longer term- the use of LNG for propulsion will be intermediary or supplementary at best. In any case, we are going to see, in the near future, more and more ships with dual fuel engines, skysails, solar cells and massive power UPS banks. Or technologies we have not even thought of yet.

There is no if here; it is just a question of when. I for one think that this will happen sooner rather than later, with environmental and cost advantages driving the revolution. I also think that shipowners who do not change to cleaner and cheaper technologies will be found out in the market, unable to compete with those who do.

All of which brings me to the million dollar questions: from where will we get the seamen and officers to operate and maintain this new equipment? How and when will changes to competency syllabi be introduced? Who will train crews in new- maybe even one off- technology? Where is the thought process to do so? Where are the resources?

The propulsion revolution will be more complicated for the main reason that- unlike the wheelhouse revolution that we managed badly anyway- it will not be enough for crews to know how to operate the machinery; they should be able to repair it on the run too, or at least until they make it to the next port. The thing is that these new systems will be, well, new. They will also be more complex and automated. Operating them properly will require greater thinking and lesser hammer and spanner banging. Repairing these new systems will require an even greater understanding. 

We do not have these crews to do this today, so- at some stage- shipping will have to start producing them. The first problem, when we start to do so, will be an old one- the often substandard calibre of fresh intake. As an example, it is hard to imagine that our officers can master new technology easily when their basic arithmetic and science skills are highly suspect. 

The second problem is proper training. Examination issues aside (competency paperwork will follow the market, I think), the second problem is easier, in a way, because it is a simple question of resources. As the deluge of maritime educational institutes shows, resources are not the problem. This time around, however, the industry has to find a way to make training effective and pertinent; our failures during the wheelhouse revolution should help us identify what all we did wrong. 

We need to start thinking out how to do this soon, I think; we probably have a couple of years to walk through the process and get things moving. Don't take too long, though; I am willing to wager that countries that first get their ducks in a row here- and execute new-technology training professionally- will steal a near unassailable lead over those that dither. The thing to remember is that everybody is starting from scratch here. Traditional supply countries like India and the Philippines can hardly afford to take things for granted, especially since their MET systems are in a bit of a mess anyway.  

In any case, both these countries have no research and development capabilities in green technologies to speak of; they remain, at best, body-shopping geographies for conventional shipping. Europe does have those capabilities, so imagine what will happen if a significantly greater number of Europeans come out to sea- a real possibility in these tough economic times. Imagine what will happen if China decides to put a billion dollars- in its usually single minded way- behind a research project into green maritime technologies that will also train a new breed of officers and crews for the future. 

These threats are real, and so are the opportunities. There is still time, but the planning has to start soon and execution must follow. Countries that continue with a business as usual philosophy will fall by the wayside in the race for green crews, because the future will be here sooner than they think.

December 08, 2011

Blood on the sea: the impending shakeout in shipping.

Those in the container trade are calling it a consolidation; looks more like a shakeout to me. 

Soon after industry leader A.P. Moeller-Maersk merged some of its Asia to Europe services saying that it was prepared to outlast the competition in difficult times, news came in last week that the second and third largest container companies in the world- Mediterranean Shipping Co. and CMA CGM- have entered into a vessel-sharing agreement that will cover routes from Asia to Europe, Africa and South America. CMA CGM and MSC obviously feel that this is the best way to fight Maersk in the marketplace.

The hope, in the beginning of 2011, that the box trade would stage a recovery by winter or even by early next year has evaporated completely today. Instead, freight rates for the China-Europe box trade - by value, the biggest route- have fallen by almost 40 percent in the last three and a half months. The reasons for the crisis are well known- years of overcapacity ending in falling markets amidst a global economic collapse can only result in disaster. What is lesser appreciated is the fact that even today, when shipowners are trying every trick in the book to survive, too many container newbuilding orders are- inexplicably, seemingly suicidally- being executed. 

An estimated 2.5 million TEU of capacity may be added to the box fleet in the next couple of years, including a large proportion of around-8,000TEU tonnage. These orders were placed starting the summer of 2010. Amongst others, Maersk (20 18,000-TEU ships), NOL (10  14,000-TEU) and OOIL (10 13,000-TEU) are contributing to this glut of deliveries that will hit the market around 2013, give or take. Singapore based Island Shipbrokers says that the demand growth in the container trade is around 5% while fleet growth could reach 8-9%,  resulting in an additional capacity-demand mismatch. Container tonnage is not reducing; it is increasing, that too at a time when freight rates are slated to be under continued pressure for the next year or more.

Something has to give.

Some things already have. Last week, Malaysia's largest shipowner MISC pulled out all 16 of its container ships from what it said was a bleak market- after three consecutive years of losses totalling US$789 million. The sudden exit will cost the company another $400 million, MISC says, pointing out that market conditions are "challenging the validity of today’s operating models".

The strategy of the big boys in the container industry seems to be to shift to bigger and bigger ships to take advantages of economies of scale and also- in the case of newbuilds- greater fuel efficiency. Merge routes (maybe even merge companies later?) and services. Increase or maintain market share at almost any cost. Use your size and cutthroat pricing to dominate. Hold back supply cuts. Squeeze weaker players. Be the last man standing. Above all, outlast. Outlast. 

There are obviously no guarantees that this strategy will work- sometimes, as shipping as seen before, there is a thin line between the philosophy of 'too big to fail' and 'the bigger they are, the harder they fall.' Regardless, the outlast strategy will guarantee one thing for sure- the shakeout of smaller players from the market. This is inevitable. MISC could take a billion dollar hit and survive; many others will simply fold with much lower stakes, especially at a time when sources of capital are drying up for the industry.

Incidentally, the CMA CGM collaboration with MSC may be the beginning of such relationships in other sectors too. John Plumbe, the CEO of London based shipbrokers ACM Shipping said last week that owners of at least a hundred of the world’s largest oil tankers must form a combined fleet and sell their services jointly to raise depressed freight rates. Plumbe, a 37-year tanker-broker veteran, said, “There are some advantages for owners to consolidate for a short period of time. In order to have any real effect on freight rates in the VLCC market, you need a pool of a minimum of 100 ships, as there is a fleet of 600 trading.”

Seen in the backdrop of recent troubles in tanker businesses- General Maritime's bankruptcy, news reports of Frontline possibly running out of cash to pay its debts and Torm talking to creditors to restructure its own debt of around 1.8 billion dollars, this course of action may make sense. I wonder, though, whether the pockets of even the biggest in the industry- whether container or tanker or whatever operators - are deep enough to wage what appears to be a very expensive war of attrition, even if there appears to be little other choice. 

With enough resources, one can win the game of outlast, I guess. Alternatively, one can end up just cutting off one's nose to spite one's face.  

December 01, 2011

Inside Indian shipping: A few good men

Some of the sound bites coming from India's maritime regulator in connection with marine education and training are interesting; I particularly liked the comment made some time ago by the Director General of Shipping that maritime training institutes should make a profit and not look to profiteering. Absolutely correct. The recent Directorate General of Shipping (DG) decision to issue a Continuous Discharge Certificate with a reduced two year validity to graduates of some maritime programmes suggests that there are teeth behind the bite too; with this step, the DGS wants to track better the 'placement record' of institutes, or more accurately, the lack thereof. We all know that placement is a flourishing racket in shipping.

Maritime training institutes will quite correctly point out that it is only ship owners that can provide training slots, not the institutes, and that the regulations and incentives rolled out by the DGS for Indian ship owners have failed in what they set out to do: create training slots for future officers and crews. I agree with these institutes, because things have reached such a sorry state that even officials in well known shipping companies- not just touts and middlemen- are taking bribes to 'place' youngsters, most of whom will never get a training berth aboard a ship without paying a fair amount of money to somebody or the other. The racket is an epidemic; most everybody is involved.

It is very possible that Dr. Agnihotri- the present DG- has plans that include a holistic addressing of the problems that plague the training business, and that the Directorate has just started- not ended- its cleanup move. Cynics will say that some of the DGS' initiatives are prompted by the recent ESMA visit to Mumbai or the crackdown on the MET business in the Philippines; I say that is irrelevant to the fact that the Indian MET juggernaut is in a mess and needs to be fixed- in our own interests.

But it will not be. It won't be because- in addition to deep flaws in our training setup- there are also weaknesses connected to the structure and execution of shipping's administrative and regulatory systems. Those need to be fixed too, else any clean-up exercise will be eventually incomplete and so ineffective.

The biggest weakness is in the very nature of the Director General's appointment; in line with protocol, the DG is transferred every few years and a fresh appointment made. The problem is that any person at the top of any government setup in India can only start to do good within this time; to complete a change requires time that he or she usually does not have. Changes to regulations in shipping may be mandated and quicker, but changes to a system- including the internal systems at the DGS- will take much longer.  We have to give any person of integrity, intelligence and ability enough time to perform.  We do not, so we always produce a half baked dish.

In this connection, I have never been one of those that say that only a mariner should be at the helm of affairs at the DGS. I say that the best person for the job should be appointed and retained based on performance. There have been many mariners within the DGS and MMD; at least some of those have either not delivered or have been otherwise less than suitable. The Indian system, like the British one, assumes that a transfer every few years ensures a clean system. It does not; we know that. Only an honest person at the helm - given enough time- can do that.

Coming back to the MET issues that we started with, what is likely to happen is this: The unsavoury elements that the DGS is trying to eliminate from the training space will wait it out, knowing that the next routine change at the top at the DGS will mean that a new person comes in, takes time to settle and prioritise- and that the system will then start reinventing the wheel again, more or less from scratch. Meanwhile, these elements will continue to exploit the cracks. 

I am saddened by this, because I do believe that the DG - at least with regard to maritime education- is on the right track. I agree that the MET business needs a cleanup. I believe that the on board training arm of our MET is its weakest link and a travesty. I would like to see the net cast wider than on just the DNS programmes and their 'placements' done thus far, to include all programmes for cadets, ratings and even shorter STCW courses. I believe we should not be training anyone that we cannot guarantee an on-board training berth to. 

Many in the industry often say that no education in the world guarantees a job, so why should we in shipping want to do so? They conveniently forget the fact that a training berth on a ship is not a job; by definition, it is part of the training that the industry is supposed to provide.

To be fair, the problems at the DGS are not unique; government departments throughout the country have near identical issues. Ultimately, the basic problem everywhere- including at the DGS- may be that the system does not support progress. The bad people do a lot of long lasting harm in their allotted few years and go; the good people can only start to do good in that time, not complete it. The good guys' reward may lie in walking away with integrity and with their heads held high, but imagine the change we would see if the system could exploit the full potential of these few good men and women.

November 24, 2011

Inside shipping, the Philipp story: the seas are alive with the sound of robbery.

                                 Money being counted on the Philipp to pay the crew

Its founder, the made-famous Von Trapp and his wife Maria, were the inspiration behind 'The Sound of Music', but that halo has been decisively knocked askew today. The shenanigans of Hamburg based shipowners Vega read like the script out of a French- or should I say German- bedroom farce; the only difference is that it is the all-Filipino crew on one of their ships that has been rolled in the hay. Twice.

The story so far: The vessel Philipp (ex-Beluga Meditation) arrives in Sweden last year. There is no ITF approved agreement in place with respect to the crew's wages, so the Swedish unions insist that one be signed. A year later, ITF inspector Tommy Molloy boards the ship in Liverpool, UK, and finds that two books of accounts are being maintained with respect to crew wages– one in accordance with the Standard ITF Agreement and the other in accordance with the German VER-DI TCC Agreement. The crew, of course, are being paid much lower wages as per the latter. The ITF says that the difference payable to the crew totalled to USD 230,000. Owners agree to pay.

All par for the course so far; even if shipowners from the First World like to pretend they are all above board and terribly concerned about crew's rights, we know better. So Vega did what any self-respecting shipowner does when a part of his body is in a sling - it admitted to the Gibraltar Flag and the ITF that the Philipp accounts were 'wrong' and arranged to pay the quarter million or so to the crew in Liverpool on October 4 this year. It also flew in representatives from its Hamburg and Manila offices who surreptitiously boarded the vessel and waited until the money had been paid and the ITF and Port State Control officials had left. They then threatened the crew with legal action (and, I suspect, blacklisting and other threats too, as is usual) and had them return all the money to Vega.

The story did not end there; there is much more to come. For, in Tommy Molloy's words, "Within hours of the payout I returned to the vessel with port police officers and my suspicions that the money was to be taken off the crew were borne out. The crew had been sufficiently threatened by Vicente Fedelicio of Vega Crewing in the Philippines - who had travelled from Manila to Liverpool to be on board for the payment along with the German owner's representatives - to hand back the money, telling the police they had done so voluntarily because they did not want their wages."

Crew did not want their wages? Come on, Mr Fedelicio, that is not even specious. It is ridiculous. Couldn't you think of something better?

So Vega did, again, what any self-respecting shipowner does when - you know when. Two weeks later, on October 18, they paid the crew the quarter million once again. 

But wait. There is still more. Because seven crew signed off soon thereafter, in what was apparently a normal rotation. Vega's representatives called the crew at their hotel in the UK - to meet and probably threaten them again- but failed since Molloy was escorting them. (When confronted, they told Molloy that they were inviting the crew for dinner! Maybe it was to be the last supper). 

Anyway, the crew flew out from the UK the next morning, but, as you can gather by now, there is more. This is shipping; there is always more.

In Manila, Vega staffers- and hoodlums, judging from Philippines' news reports and ITF statements- waylaid six of the crew at the airport (they missed the seventh, who left from a different exit) when they returned.  According to two witnesses, says one Manila report, the crew were hijacked, put into vans along with their families who had come to receive them at the airport, taken to Vega's office, threatened- including, can you believe it, with legal action for theft- and forced to give back their wages. Again. The famous Fedelicio- the crewing Manager, it turns out- was reportedly again in attendance. As I write this, Vega is said to be trying to blacklist the seventh crewmember at the POEA, the country's overseas employment agency, since he still has his money.

I wish I could say that this story- that is still playing out- will have a happy ending, but it will not, because this is an old story we have heard many times before. The fact that a well-regarded European shipowner has conspired to first defraud, then extort, threaten and bully the crew to rob them is not new either. In many ways, this is the true face of shipping, and the ease with which shipowners shortchange crews is well known here. And although many shipowners do not go as far as Vega seems to have done, many would if they felt they could get away with it. Meanwhile, they defraud mariners of their legitimate wages and rights in a hundred different-smaller-ways. The difference is only in the degree to which they do so. 
Such is shipping, unfortunately, and, with the recession upon us, it will get sucher every day- just as it did in the eighties. I have faith in the industry.

I wish I could say that this story will end- like the Sound of Music- with the Von Trapps escaping the bad people over the hills and into the sunset. I wish I could say that the company and its people will be criminally prosecuted - either in Germany, Gibraltar or the Philippines- and made to pay for their crimes. I wish I could say that the crew will get their dues.  I wish I could say that justice will be done. 

But I can't say that all that will happen with even a hint of conviction, because this is not the Sound of Music. This is not a Hollywood story; it is a mariners' tale.

November 17, 2011

Command failure


When a forty-five year old Master- with eleven years of command experience under his belt- tells me that he has pretty severe family problems at home but is nonetheless compelled to rejoin his last company since they have 'given him a call', I know one thing for sure: he will not be doing his job properly on board, because he is typical of the Captain who will bow to pressure every time it is applied to him- or even when it is not.

To be fair, I have seen this trait- the desire to be ingratiating at whatever cost-  more amongst officers who work for ship management companies, even more so if they have been associated with a single firm for a large chunk of their careers. Ownership companies- if they manage their own ships directly- are generally more practical. They look at longer-term interests and associations; they understand that the relationship is symbiotic, and so do- mostly- the people who work for them. There is therefore more give and take on both sides. The idea is to work together; much better than the Big Daddy culture that permeates especially the larger shipmanning setups.

The problem is that a management setup is, despite claims to the contrary, usually just body shopping. A management firm is an intermediary that puts its own interests way ahead of the ship owner's- an idea that is directly at odds with any Captain's responsibility, where the interests of the crew, cargo and owner (not manager) must be protected first. It is not surprising, therefore, that many of these companies have more than their fair share of Masters who are either spineless or are unable to assert their authority, for strong self-assurance is not rewarded here. Gutless behaviour, on the other hand, will keep all those clerks happy in the office- that in turn will guarantee you a job, it is hoped.

How many times have I heard submissive senior officers say of a management company, "This company is good; they have 150 ships. Even if one ship owner does not like you, they will put you on another ship." This attitude spills over into all facets of work. These Masters and Chief Engineers keep a low profile, hesitating to make a call or postponing important decisions, hesitating to stick their neck out, expending huge effort in doing little except sitting out their contracts. Their lack of confidence is staggering- and, on a ship, dangerous.

I know why companies promote such shooting-yourself-in-the-foot kind of behaviour, but they can only be blamed for this wishy-washy culture up to a point; the truth is that many senior Masters and Chief Engineers will happily crawl when they are asked to kneel. I have come across these officers too often, showing a spineless eagerness to break the rules or compromise on safety for commercial advantage. I have seen them overloading ships, sailing without essential spares, compromising on the safety of navigation, pumping out oil, cheating on cargo and bunker figures, accepting substandard safety equipment, nickel and diming the crew with wages, working conditions or food and generally behaving like clerks in a government office rather than senior officers responsible for two dozen crew and a ship with its cargo. Even when nobody in the office hints that they push the safety envelope, they often do so anyway, perhaps to demonstrate their warped loyalty to the company. All of which comes under the heading of 'not doing your real job', in my book.

Ignoring all expletives (something I am finding very difficult to do here), I want to tell my friend-the one who is ready to rejoin- many things. I want to tell him that a self-effacing nature is good only if it is not the outcome of a lack of self-confidence. Rejoin if you must; that is less important than my belief that your attitude, continued on board, makes you unfit to be a Master. 

Remember your first loyalty is to the ship, its crew and cargo. This is not my opinion; this is the law. Remember the ship owner comes before the ship manager- you can figure out where loyalty to yourself fits into all this.

Remember that the crew, owner or ship manager do not have to like you. Much better if they respect your professional competence; that, after all, is what you are being paid for. So make decisions, even the tough ones; that is your prerogative, not that of some accountant in some office- or even the Superintendent's. Remember that an ingratiating person may be liked but he is usually never respected. Besides, somebody like me automatically questions the competence of a person who is always bending over backwards for nothing.

Remember that it is not enough to know your job; you have to execute it. Which means being tough but fair with everybody- crew and managers included. Which means being able to say no to the crew- or the head of your body shopping setup. Which means being assertive- sometimes aggressively so. This is called being in Command. A Master who is forever eager to jump through hoops and wag his tail in an attempt to ingratiate himself with an organisation with which he has a contractual relationship is not in Command.  

Realise that the safety of the ship is paramount, and you are required- by law and otherwise- to put your foot down whenever attempts are made to pressure you into taking short cuts. Remember that this often entails an aggressive stance that is completely at variance with an ingratiating attitude. The managers or owners who push you really have no option if you say no. They can replace you, sure, but that will come later. Until they do, however, they have to do what you say, Meanwhile- in Connery's words from the movie- they are stuck between a rock and a hard case.

I want to tell him that anybody who is unwilling to take responsibility for his job on a ship- or somebody who is happy to outsource his decision making to sometimes unqualified, often unaware and probably less experienced people sitting thousands of miles away- is not fit to be given the responsibility to begin with. 

I want to tell him that he has been a merchant ship Captain for more than a decade; it is time he started behaving like one.

November 10, 2011

Strategy for Shipping: survival, not growth

I hope shipping does not react the way stock markets across the world did last week in response to the latest Greek bailout; the euphoric unthinking rise in indices did not hide for long the deep structural problems that exist in many economies across the world. Two days later came ILO warnings of a likely dramatic drop in future global employment and the associated 'ignition' of civil unrest. More bad news surfaced, this time about Chinese manufacturing slowing down. And of course, the biggie- plans for a Greek referendum on the new bailout plan- a vote that could see Greece defaulting and exiting the EU in the worst-case scenario. Many Greeks prefer this; they want to be able to print Drachmas again.

The stock markets, true to form, promptly went down again after the referendum story broke.

There exists great risk that we are all in for a multi-year economic slowdown, and shipping would do well to be realistic- even circumspect- in these times. Which means hold on to those new building plans for a bit, please, for a start. 

The European Union- read Germany and France here- has written off half the Greek debt to try to keep that country afloat. The problem is that the Eurozone is reeling under sovereign debt even if one ignores Greece; numbers out of Italy, Spain and Portugal make the Greek figures look positively rosy in comparison. Just one of them- Italy, the world's eight largest economy, has $2.6 trillion in outstanding sovereign debt, the fourth largest in the world after the United States, Japan and Germany. French banks have the biggest exposure here- $500 billion- but banks across the world, especially in Europe and the US, have significant Italian risk- and will be tottering should Italy collapse Greek style. No wonder Standard and Poor downgraded Italy's debt ratings recently. 

The Greek bailout has to be seen in this context: Greece is the domino that cannot- in Brussels' eyes- be allowed to fall and take down everybody else with it. To me Greece is not the end; it is the beginning of a series of steps that will need to be taken to prop up many others in the Eurozone. The US may be even worse off, mired in debt as it is. However it can, in comparison to individual countries in Europe, print dollars to prolong, postpone (and deepen) its inevitable economic slide. European countries cannot print Euros; only the Union can. Which means that the entire European Union will continue to be economically hamstrung because of the follies (and fraudulent figures, as with Greece) of its weaker members, of which there are many.

With fifty percent of Greek debt written off, recapitalising banks and building the 'European Financial Stability Facility (EFSF)' - a bailout contingency fund- will require belt-tightening in Europe. Even if these plans go smoothly (Within days of the announcement, The Federal Constitutional Court in Germany issued an injunction against the committee on the EFSF and barred it from taking any decisions pending clearance about its constitutionality), money will be sucked in to service European debt at the cost of growth. Overall, not even the beginnings of a recipe for European economic recovery. For shipping, therefore, cause for grave concern. I will be keeping a sharp lookout for signs that the EFSF plan is unravelling.

News from the rest of the world is not much better. The Arab Spring- or parts of it- is slowly morphing into a war for resources. With President Obama announcing last month that he was sending US troops to Uganda to join the civil war there- and with US troops ready to go to Sudan, the Central African Republic and Congo on one excuse or the other, I can easily buy into John Pilger's assessment that rapidly growing Chinese involvement in African resources is driving Obama's actions. "With Libya secured, an American invasion of the African continent is under way," he says. This may not necessarily be bad news for shipping- except that instability and conflict in Africa will inevitably threaten trade, and may even increase piracy.

The Indian story, such as it is, has been hard hit with high inflation and a paralysis of Government. Some economists have already started talking about possible growth figures that are closer to 6 percent than the eight or nine that the Prime Minister wistfully tom-toms. A six percent figure may seem quite good, given the global economic scenario today, but the cumulative effect of a two percent differential in GDP growth over the next few years, if it happens, will be devastating for trade and investment- and shipping.

Then there is the biggie, China. An export economy that is starting to feel the pinch of weakening global demand. Consumers in the US and Europe are already rapidly scaling back consumption and repaying personal debts; this drop in demand of goods from China will probably stay weak for years. China may be rich- with reserves of $3.2 trillion, it certainly appears so- but it has its own problems. To begin with, it may have to start shutting down factories should its two biggest markets- Europe and the US- stagnate. In addition, Chinese banks are said to be riddled with bad debts- the country had to shore up some of them recently. 

It is easy to see that a prolonged Western slowdown will have a cascading effect on the rest of the world that will not go away in a hurry. Demand for raw material may drop significantly in China if it finds no markets for finished products. Additional risks to shipping include a commodity bubble that may burst and civil unrest like the Greek riots and the 'Occupy Wall Street' kind of protests that, amongst other things, shut down the port of Oakland in California recently. Things can get hairy in other parts of the world- rising disparity and the war over resources will together prompt yet unseen upheavals in populations.

One of the few bright spots for shipping may be a mini-collapse of bunker prices, should commodities crash; the industry may feel, additionally, that falling commodity prices will by themselves stimulate demand. That scenario is far from being an open and shut case, I think. Recessions are funny things. They tighten belts and encourage protectionist policies- both anathema to free trade. Remember that the world is in recession with some of the highest unemployment figures seen for many years- in the case of the US, since the 1930's.

I fear that the biggest risk to the global economic order is that the western model of the crony capitalist system followed almost worldwide - the only game in town since the collapse of the Soviet Union- is coming apart, and there is nothing on the horizon to replace it. Can anybody tell me why the rest of the world, following an identical model and heading down the same road, will not similarly collapse sooner or rather? We are all persisting with the same doctrine that has proven to have spectacularly failed.

So once again, my advice to shipping will be to be very careful. It is already plagued with huge overcapacity issues and rising environmental, insurance and operational costs. Problems in the US, Europe, China-and India- are fundamental; they will not be resolved next year. Things in India may worsen by 2013, as a paralysed and besieged government starts preparing for the next general elections- and ignores policy in favour of populism. The European and US crises will probably play out over a few years, and I doubt there will be many soft landings here. Or anywhere else. 

Shipping is already struggling to stay afloat. It will be wise for the industry to pause now, to circle its wagons and remain extremely defensive. It is time for the short timers to quit the industry; they will be the first victims of the consolidation that will surely happen. For the others, sitting on cash may be a good idea- although it is probably too late to start now. 

In the midst of all the mayhem, appreciate the irony, if you will, of Europe looking to China- where 200 million people live on around a dollar a day- to shell out money for the Eurozone bailout. China may well do this in the end, for reasons to do with its own strategic goals and its inevitable expansion at the centre of the global stage, but I can't see how China buying European bonds will do anything to bring economic growth back to the Eurozone- just as their buying US debt over the years has done nothing except keep the US afloat. But that is exactly the imperative today. 

So forget growth; survival is the recommended strategy here, for shipping and the global economy both.

November 03, 2011

Seafarer (in)competence and the fallout of the 'Race to the Bottom'

 Filipino mariners are under fire again. The flashpoint this time is the Rena grounding and oil spill in New Zealand- the country's largest environmental disaster. The Rena was manned completely by Philippine nationals, and questions are being asked about their competence.  The Green Party has called for an investigation on the adequacy of Filipino seafarer training; referring to the action taken in May by the Lisbon based European Maritime Safety Agency (EMSA) that threatened to ban Filipino seafarers from EU ships unless issues raised by the agency were not satisfactorily addressed. That Damocles' sword has still not been sheathed.

“Given the tragic consequences that can occur when things go wrong at sea, it is of the utmost importance that our Government ensures that all vessels entering New Zealand waters are crewed by well-trained individuals,” said Green Party Co-leader Dr Russel Norman. “Considering that the Rena was a flag of convenience ship, crewed by Filipinos – whose training is under question – I hope the Government will consider greater scrutiny and regulation of our coastal shipping vessels and crews," he added. 

Interestingly, even before the Rena grounded on Oct 5, the European wing of the  International Transport Workers’ Federation (ITF) had said at the end of September that Filipino crews "should be subjected to targeted inspections and unspecified control when calling in EU ports", according to a Lloyd's List report. Philippe Alfonso of the of the European Transport Worker's Federation had written to the European Commission, quoting earlier EMSA findings and expressing concern about the quality of training at some maritime academies in the Philippines.  “The ETF urges the commission and the member states to adopt the necessary measures to remedy the breach. These measures could include targeted inspections and controls for Filipino crews calling at EU ports until such moment when EMSA receives satisfactory reports of improvement of the present situation,” he had reportedly written.

Now EMSA is coming to audit India this month, the grapevine tells me. I am unsure exactly what they are coming to inspect, but it appears that the visit is official and the Directorate General of Shipping is preparing for the EU inspection. It is perfectly possible that India may be next in EMSA's firing line- keep in mind that EMSA derecognised Georgian certificates late last year because of competence and quality of training issues. India or the Philippines are not Georgia, sure, but these countries may find that their armour is not as thick as they once thought it was.

The Indian maritime education juggernaut should be worried at these developments, because some of the comments made by the Green Party in New Zealand, the ITF in Europe -and in the EMSA report on the Philippines- apply equally to this country:  Here are a few of those:

"Mr Alfonso (of the European Transport Worker's Federation) points out that concerns include the functioning of the maritime administration, insufficient quality procedures, insufficient monitoring of schools, inaccurate approval and review of courses, the level and quality of training, the poor quality of inspection of maritime training institutes and the allegedly insufficient qualifications of instructors and assessors"- David Osler, Lloyds List.

"The ETF believes that every seafarer in the world should comply with the same requirements and that it would be wrong for European seafarers effectively to be subjected to stricter training and regulation than third-country nationals".- Philippe Alfonso, ETF

"Unfortunately, Filipino seafarers have become fodder in the global race to the bottom to produce and transport goods as cheaply as possible, and could be missing out on the proper training they need and deserve"- Russel Norman, Green Party, New Zealand.

Anybody connected with maritime training in India will tell you that these people could very easily be talking about this country, not just the Philippines.

As expected, the threatened derecognition of Filipino STCW certificates by EMSA- and other ban calls- have raised hackles in the Asian shipping world. There has been much written about the criminalisation of the Master and some other crew on the Rena; there has been criticism too, of the seemingly arbitrary and high-handed approach of EMSA and others, with some saying that the derecognition of STCW certificates should not be a matter for local agencies, the ITF or political parties to either comment on or threaten mariners with. Many point out that the Flag-of-Convenience business model is what is to blame, as it is inherently flawed and cannot be allowed to continue if we desire safer seas or cleaner oceans.

Some say that EMSA- founded in the aftermath of the Erika and Prestige disasters- should be examining the deplorable behaviour of European nations, ship owners, managers and classification societies before it points fingers at the training systems of developing countries. Some are angry that the Indian authorities have even permitted an audit of their training infrastructure. One serving sea Captain says, "How will Europeans react if civil aviation authorities in India demanded that they be allowed to audit European flying schools or their country's aviation administrations, on the grounds that many European pilots are flying on Indian airlines?"
I take all these points; they all have some merit. I will even add one or two of my own- that EMSA or anybody else will find it much harder to browbeat the Chinese, either today or especially years later, when their nationals proliferate in commercial shipping, as I believe they will. Even if the Chinese training and certification systems are weaker than ours are- certainly the case today.

My main objection, however, is that EMSA and the others have once again chosen to target just seafarers rather than address other 'root causes' (that term should please the jargonists that overwhelm us) of poor competence on the ground- Flags of Convenience, short manning, fatigue, corrupt or inefficient international and national administration et al. Not to speak of other participants in the 'race to the bottom.'

In the end, I think that all these arguments- including mine- are valid but diversionary.  The fact is that the quality of seafarers in India is dropping to levels where we often attract the dregs of the available talent pool, such as it is. Additionally, our training apparatus leaves much to be desired and must be overhauled irrespective of what EMSA may say. The fact is, also, that ships are being built bigger, casualty statistics are rising- and will continue to do so, because the calibre of the modern seafarer and the calibre of the maritime educational and administrative system is suspect. Bigger ships will mean a bigger scale to everything, including accidents.

Western populations are becoming much more sensitive to ecological and environmental issues; the rest of the world will slowly follow. When all this is put together, there will be much greater public pressure to examine the professional credentials of the men and women who crew commercial vessels. Answers will be angrily demanded after every accident on every coast- they already are.

A good thing, overall, I think, if it improves safety and environmental protection. Sorely needed. In fact, let me go a step further, tongue in cheek, and say that I would like to see EMSA- or the Green Party, or the ITF- take this beyond issues of competence. I want to see them stopping ships sailing from their ports- or banning them altogether on their coasts- for other reasons besides the supposed incompetence of crews. I want them to ban ships also because, for example, the Flag of Convenience the ship is sailing under is a little too convenient. Or because the crew are too fatigued to operate the vessel safely. Or because the vessel is calling so many ports in such a short span of time that unfatigued safe operations are obviously physically impossible with the number of crew on board.

I bet the fur will really fly if we set all the cats amongst all the pigeons all at once.
(Between the writing and publication of this piece, PMI Colleges- the largest and oldest maritime college in the Philippines- has been forced by local authorities to close down its maritime education programmes for failing to comply with local and international standards. An estimated 10-13,000 students are affected). That news is here;  Philippine Government clamps down on oldest and largest maritime school )