July 28, 2011

Suez: Between the devil and the deep Red Sea

Almost eighteen thousand ships transited the Suez Canal last year. The Suez- erstwhile 'Highway to India' during the British Raj but equally vital to East-West marine traffic today, cuts sailing time between Mumbai and Europe by almost four and a half thousand nautical miles- roughly two weeks. That is a lot of time and money, especially when one multiplies the numbers by eighteen thousand. Last year, 646,000 tonnes of cargo- including much oil- passed through the canal, and the Egyptians collected more than 4.7 billion dollars in tolls alone, ignoring significant other income from spin-off business that the canal generates.

Needless to say, any closure of the Canal, even temporarily, would be catastrophic for shipping. Which is why the recent resurgence of the revolution- the second revolution, as some say- in Egypt should worry the maritime world.

At the beginning of July, massive protests erupted once again in Cairo's Tahrir Square and in the city of Suez, besides in Luxor, Alexandria and other Egyptian locales. The "Friday of Final Warning” protests saw tens of thousands come out into the streets for a second week, demonstrating against the military-dominated government that is seen to be closely allied with ousted President Hosni Mubarak. The Supreme Council of the Armed Forces (SCAF) generals, headed by the de-facto President Field Marshal Hussein Tantawi, have done little to change things in Egypt, and people are getting hostile against their rulers again, saying that Mubarak's family, cronies and the security agencies responsible for the killing and torture of thousands are being protected by the SCAF. The protestors are also unhappy at the postponement of elections. Strikes have hit Egypt hard, including by workers at the Suez Canal Authority who have threatened to shut down the Suez Canal. Thousands of troops have been moved to Suez by the authorities to guard against this happening.

Curiously, the Muslim Brotherhood- the right wing Islamic Organisation banned and suppressed for years in Egypt and from where much of the ideology behind the Al Qaeda types has historically emanated- has taken a position contrary to what many would have thought; it is seeking an accommodation with the military forces and refusing to take part in demonstrations so far. This is doubly curious since it is believed that the SCAF is backed by the US; one wonders if the US is negotiating with the Brotherhood directly and secretly.

Shipping is always hostage to geopolitical events; the Egyptian unrests are no exception. The threats by the protestors to shut down the Suez are alarming, but it is hard to imagine that the world- addicted to oil as it is- will countenance any long-term closure of the canal. Nevertheless, the possibility does exist. Even a temporary shutdown, should the demonstrations get out of hand, will hit the industry very hard; imagine the impact on just the scores of ships that are heading for the canal- or awaiting transit at any point of time- that will have to be re-routed. Consider the cost of adding two weeks to a Europe- India passage. Moreover, remember that many Egyptian military units refused to fire on demonstrators earlier this year; some even sided with them. One cannot therefore count on the Egyptians being able or willing to keep the canal open. Will the international community step in militarily to do so in this eventuality? Egypt is not Libya; a foreign- especially Western- military action in Egypt will be messy and will almost certainly attract Islamist fighters from everywhere in the region, and beyond. The last thing shipping needs is military conflict or terrorism along the length of the Suez Canal.

But it is not just closure of the canal that shipping has to worry about. We must consider that the Egyptian revolt, like many other 'Arab Spring' uprisings, will take months, if not years, to play out. In addition, one size does not fit all; the Syrian revolt is markedly different from the one in Yemen, which is different from the one in Tunisia and Bahrain, and so on. Some western governments will be driven to meddle- as they usually are- in exchange for promises of oil or resources or trade- or political influence. The situation is likely to remain messy for a while; ships passing through the Suez will be less secure if Egypt turns more violent or insecure.

The economic and security implications of this uncertainty for shipping will likely be large and long-term; it will, for a start, require maritime companies to keep abreast of developments on a day-to-day basis. I can easily foresee a scenario where professional security companies will be contracted to provide intelligence to owners, or those that trade in unstable areas, or those whose ships pass through dangerous waters, or even those that are contemplating fixing a charter in the broader region. There may even be some 'security vetting' built into company systems before a route or charter is fixed. Whether armed guards are placed aboard or not will be - like in the case of piracy- a much more hairy and complicated exercise here.

Security related costs in shipping are set to rise, I think, and not just because of Somali pirates or Egypt and its Suez Canal, but because a large and commercially vital part of the world- a major oil producing area with connected maritime passages and choke points- is today unstable or dangerous, and is likely to remain so for a bit. There will be continued commercial uncertainty- even losses- as long as the Egyptian unrest continues. To cope with this, commercial shipping may well have to find- in the existing gloomy scenario of overtonnage, economic slowdown, rising fuel costs and falling freight rates- another rabbit to pull out of the same old hat.


July 21, 2011

An indecent proposal

Anecdotal evidence strongly suggests that the devaluation of Indian officers is already happening. Shipowners are becoming increasingly cagey about paying a premium for officers that have questionable calibre, lower academic ability or understanding, poor language or communication skills and thin commitment to both the job and the organisation. That this circumspection extends to trainees is obvious and well known, which is way the majority of navigation or engineering cadets graduating from maritime training institutes- both private and government- find it close to impossible to find training berths without paying off somebody or the other.

I am not talking about the many shipmanagement companies that have opened training establishments here. Those will hopefully whet their intakes, train in line with their clients' requirements and absorb all graduates. If not cradle to grave, these companies will be looking to retain these trainees for the first six or seven years of their careers at least, or close to it; I am sure some spreadsheets have been made that tell us exactly under what conditions the exercise becomes worthwhile.

However, the trainees that graduate out of other training institutes face heavy odds stacked against them. They struggle to get 'placed' on board, often having to pay up to 2 lakhs - including in some well known shipmanagement or ownership companies to corrupt employees- for the privilege of getting their year or two of sea time. Many are sent on substandard vessels where they are at greater risk of injury or worse. Many of these substandard ships have substandard officers or crews, who are incapable, unwilling or too overworked to teach cadets anything worthwhile. These trainees will rarely make good officers. This vicious cycle will continue unless broken.

Nothing is being done to stem this rot, even though everybody knows the system sucks big time. Meanwhile, bureaucrats and ministers plan to increase global Indian officer market share by fifty percent or so in the next few years: unfortunately for them and for the rest of the industry, officer numbers cannot be increased by commissioned reports or by edict alone. They will have to do something substantial to maintain just the present market share. They will have to fight pressures from within their own organisations that have allowed many training setups to get away with murder ever since the STCW95 circus put up its tents.

What needs to be done is mainly commonsense, and should be well known to all the smart folk in the industry. Here, then, is my take:

Strategically, look after quality of product. Forget the numbers. If we can produce once again, like we did thirty and more years ago, good officers that meet- even exceed- industry requirements, then the numbers will automatically follow. Seafaring- Safe Manning Certificates notwithstanding- is not a numbers game. This is a no-brainer: most shipowners have always paid a premium for higher quality seafarers. Most have not hesitated to employ from countries that have demonstrated that they can produce quality. India was one of these countries for many years; it is my contention that it has now slipped to a point where it has started to be shunned today. The only way to reverse this trend is to, once gain, make quality the differentiating factor between Indian officers and the competition.

But strategy is easy; we need to have people with vision to execute tactically. Tactics- and the will to do what is needed to be done- is key. Unfortunately, what needs to be done will be very unpopular in many quarters. So be it.

Here, in my considered opinion, is what we need to do.

1. 'Placement fee'- or any money paid to any individual or organisation for training berths- to be made illegal. This should be rigorously enforced.

2. Whether for Indian or Foreign certification programmes being run in India, only cadets who are sponsored by approved (DGS to draw up a list) ship manning or shipowner firms to be eligible for Pre-Sea training. Training institutes to be barred from taking cadets without written sponsorship. Sponsorship does not mean, here, that the company should pay for cadet training, although it may choose to do so; sponsorship to mean a written commitment that the cadet, on satisfactory graduation, will be placed on one of the sponsor's ships.

3. Institutes to be penalised, including by withdrawal of DGS approval, if found using or promoting touts or using corrupt or unfair practices.

4. Foreign and domestic firms to be pressured- on threat of withdrawal of DGS approvals or others-to give a specified number of cadets training berths on their ships. Existing regulations to be enforced. These firms to be barred from outsourcing the placement to any third party. Problems with this, e.g. lack of on-board accommodation, to be a matter between the shipmanagement and the shipowner. Maybe the management companies can persuade other owners in their fleet, who do not have these problems, from providing berths.

5. No remission of sea time for Distance Learning Programmes, because they do little to improve practical knowledge and contribute instead to a drop in quality of product. Instead, the cadet could, in the final year, be granted a stipend/wage equivalent to what the lowest rating on board draws. Indian flag ships to be allowed to employ one such cadet in lieu of a crewmember. Other Flag States to be persuaded, with or without the IMO.

6. The Indian certificate of competency should not be devalued by making examinations any simpler or easier.

7. Ways to be found- without degrading the examinations- to make it easier for Indian Ratings to appear for competency examinations in India. It is a disgrace that they have to go to other countries to appear for such examinations today.

8. Responsibility of the DGS should be changed. Course syllabus, logistics and equipment requirements for cadet courses to become a matter between training institutes and companies that send sponsored cadets to them- obviously no company will send their cadets to any institute that does not provide proper infrastructure. Instead, the DGS to monitor broad parameters with regard to cadet training: Only sponsored trainees. Also to ensure no touts. No placement fee. No institute lying in advertisements, promising '100% placement'. In short, the DGS should engage more in ensuring that that the strategy is being executed while leaving the relatively minor tactics to the marketplace.

9. Finally, while the DGS is at it, useless STCW add-on courses should be discarded, if possible, or drastically improved, if not.

I am sure that one lobby that will vehemently object to my proposal will be the training lobby. I do realise that they have a point: they have spent a lot of money setting up institutes and buying equipment, and here I am proposing to curb their intake. How, they will ask, will they survive?

The answers are not easy, but this is what I would say to them. Folks, I would say, the industry does not want- or need- to take in cadets on the back of lies, deceit, fraud or subterfuge anymore. It does not want often substandard Pre-Sea training that ends up in no jobs- or, worse, third rate or unsafe ones. It does not need, as will happen sooner or later, hundreds of unemployed and untrained cadets going to the media claiming fraud, because then the axe will surely fall on you, laying all your investments to waste anyway. The game will be over.

Folks, the writing is on the wall. How long do you think the present circus- or gravy train- will go on anyway? Until a time when not a single cadet enrols at your institute? Or when the axe suddenly falls? Or until a couple of major ship manning companies shut shop and walk away from India because of poor quality of officers? You will have no choice then, anyway.

My proposed way is better, for it gives you the opportunity to engage with the regulators and the industry today and make the transition relatively painless. You have the time to explain to the regulators and the industry what they already know: that you are in business to make a reasonable profit. Maybe they will be inclined to ease things for you wherever possible today. If you ignore this course and the axe falls in future, no such dialogue will be possible.

You have also the opportunity to cast aside old habits of greed and modify strategies that assumed endless cadet intakes- that will not happen for long anyway. You have the opportunity to negotiate with the regulators and the industry on almost everything except, if I have my say, the broad strategy, although I am sure many of you will suggest better, more workable, tactics.

The pain can be managed and reduced after negotiation. The only thing non-negotiable, in all this, should be the pursuit of excellence in training, whether it is ashore or afloat.


July 14, 2011

Somalia plus Yemen equals AfPak plus piracy

Shipping often complains that the world is seablind, referring in exasperation to the public's poor comprehension of all things maritime, especially to the criticality of seaborne trade to their lives and economies. Judging by the same yardstick, shipping is no better, except that it is 'shoreblind' instead. For it largely ignores, or underplays, events around the world that forebode sledgehammer blows to its future.

For more than two and a half years now, I have repeatedly warned of developments on the ground in Yemen and Somalia that would have a huge negative impact on maritime security in general and maritime piracy and terrorism in particular. One would have thought that the hundreds of people in shipping smarter than I am would have come to the same conclusions and drawn up a plan to counter this rising red tide. Alas, our contingency planning seems to be confined to doubtful checklists on far less important matters.

In a banging-head-against-brick-wall mode, let me try once again.

Aden is by far the most important port in Yemen and a major container transhipment hub. It is today surrounded by roving gangs of Islamist militia fighters, many linked to Al Qaeda, who have already captured two other major towns, looted armouries, robbed banks, attacked prisons and stolen arms and military equipment. Parts of the army and police have simply run away. One who hasn't, at least at the time of writing this piece, is General Muhammad al-Somli, who says that he cannot rule out the possibility that Islamists will take over Aden. There are reports that Zinjibar, east of Aden and the capital of neighbouring Abyan Province, captured by the Islamists a month ago, is being slowly turned into “another Taliban state like Afghanistan,” according to one senior Yemeni official. South Yemen, for the time being at least, has been handed over to the Islamists, assorted fighters- and the AQAP.

The US has stepped up drone attacks in Yemen- and has extended them across the now infamous Gulf of Aden to neighbouring Somalia. Why? Because, say US officials, American military and intelligence officials view Qaeda affiliates in Yemen and Somalia as a greater threat to the United States than the group of operatives in Pakistan who have been targeted with hundreds of drone strikes directed by the CIA in recent years. Somalia is a major training ground for the Al Qaeda, they say, expressing alarm because many Europeans and American citizens are being trained there. The Al Shabaab- another Al Qaeda affiliate- is a more potent enemy than it was last year.

Other developments in Somalia- the terrible drought and consequent famine that- combined with the two decade long collapse of the State- has displaced a quarter of its population (the UN says); the resignation of its President and escalated fighting in Mogadishu and surroundings between Shabaab and US backed African Union soldiers included- all point to even more anarchy in that country in the coming months. Anarchy is often touted as the main reason for the proliferation of piracy, so it follows that greater anarchy will equal greater piracy. Piracy linked with terrorism, by the way. All linked to the AQAP- the most dangerous Al Qaeda franchise on earth today, the Americans tell us. With Al Shabaab reportedly taking a cut of pirate ransoms. With the island of Socotra being used by pirates to refuel and rearm-obviously with Yemeni complicity; it is their island, after all. With AQAP having often declared its intention of disrupting shipping by choking the Gulf of Aden at the Bab-El-Mandab straits- and presumably the Straits of Hormuz, where the tanker MStar's terrorist bombing has been swept under the carpet by shipping.

Even a first grader should be able to connect the dots. So why don't we?

The IMO is probably fatigued after electing a new head. A good man, many say. Maybe so, but we do not need a good man. We need an efficient organisation that is honest, knows what it is doing and acts in time. We need an IMO that is proactive and ahead of the curve when it comes to piracy issues, not one that just amends its Best Management Practices after every changed pirate tactic. (On another issue, environmentalists allege that the organisation is too 'closely aligned with vested interests to ensure effective implementation of emissions reduction measures'; small wonder that the EU is taking unilateral steps here.)

Also, there is no real industry effort to pressurise governments to act to protect shipping against piracy. Armed guards, long overdue and -even now- niggardly sanctioned, are a stopgap measure, at best. Longer term, any industry cannot protect itself against terrorism without active support from governments; we fail to generate that support. Worse, we do not even really try.

Generalising, I know, but shipping can be safely written off as effete when it comes to taking any worthwhile initiative against piracy or maritime terrorism. It is a reactive setup; it shows no initiative. It does not manage or pre-empt threats, it administers them instead. It- like its seafarers- is often hostage to many. To the multibillion dollar insurance and security industry that it has indirectly spawned. To its western and commercial bias. To its own blinkered concentration on short-term gains. To the absence of a long-term strategy. To its managers' deliberate ostrich-like behaviour. To its inertia and lack of imagination. To its subtle racisms that disregard the torture of it's mainly- if I can be politically incorrect- Third World employees. In addition, to its shoreblindness, that refuses to connect the dots of geopolitical events and threats even when they are the writing on the wall.

I want this time to be different. I want the industry to first recognise the greatly increased menace from Somalia and Yemen today. I want it to then unleash whatever clout it has, nationally and internationally, to pressurise the international community- including another iffy organisation, the UN- to act concertedly against these threats in Yemen and Somalia.

Because, for our own sakes, we have to do more about piracy than just compile statistics on it.


July 07, 2011

The second Suez crisis.

(Or, a welcome slap in the face)

The saga of the MV Suez has ended with a slap in the face of Indian civil society in general and the Indian Government in particular. What should have been an opportunity for India to display robust and emphatic action to support its hostage mariners degenerated instead into a game of brinkmanship with the Pakistanis on the high seas in which Indians have come off second best. 

The entire country has- rightly- heard the Indian sailors of the Suez thanking the Pakistanis publicly after their release from captivity. Unfortunately, the fact that they and their families spoke plainly when they said that the Indian authorities - in contrast- did not do anything to secure the release of the Suez is a public relations disaster for the UPA government. It is interesting that- even after the event- the Indian authorities seemed more concerned about blaming the Pakistani navy for the damage to the Indian Navy's 'Godavari' than the plight of the hostages aboard the Suez; they exhibited, amply, where their warped priorities actually lay.

I agree with those media reports that say that the Indian government blew it on all fronts- and in style. But another truth remains unsaid: that the successful efforts to secure the release of the Suez- with more Indians than Pakistanis among its crew, by the way- were, in the end, to the credit of Pakistani activist Ansar Burney. In contrast, Indian civil society, like its government, was found wanting once again when the chips were down.

It may be argued that negotiations for hostage release are complicated (made more so by our industry, many of whose components want these made complex to mint millions off the business of piracy and ransoms). Public perception, however, does not see this. All it sees is a country that does not care about its sailors. The consequences for the industry- especially its recruitment arm- will be slowly near catastrophic. Quotes by released hostages, as from the Suez, saying in interviews that they will not sail again after their ordeal will be the final nail in the coffin of the public's perception of the profession as a career of choice.

I agree with this public perception, for it is the truth. And you know what else? I welcome the Suez media coverage even if it makes more people shy away from the profession. I think- unlike many of my contemporaries- that the truth must be widely acknowledged for us to progress, because this industry is capable of taking action only when it is forced to. Sweeping the crap under the carpet is not working anymore anyway, thankfully, so I expect that more in the maritime world will be forced to recognise the truth publicly. Some may even do something about it; this can only be good for shipping in the long term. In a way, the slap on the face post the Suez crisis may turn out to do some good after all; a welcome slap, I think, if it succeeds in shaking people out of hubris and lethargy.

I have to say that I am less sanguine about changes in the stance of either the Indian government or its society. It is easy to ignore sailors and the profession of seafaring. We are not sizeable enough to count at election time for politicians to be bothered about us- and, in any case, we are scattered across the country and the world. As for the public, it will probably continue to react in the same way as it forever has: showing distaste for shipping, shunning the profession and simultaneously exhibiting absolute ignorance of how dependent the country is on the movement of goods by sea.

Governments across the world, together with the industry, need to hammer home to their constituents the indispensability of shipping, without which the costs of most goods they consume-especially, in the Indian context, oil- would skyrocket. But the initiative to manage the shocks and aftershocks of piracy- including public perceptions based on grim realities- need to go much further. These initiatives must be well thought out, by both governments and the industry. This management will be different in labour supplying countries like India that want to increase their seafarer market share considerably when compared to the Western world, but the present state of affairs cannot be allowed to go on. Although far from the only reason, piracy is contributing heavily to the blackballing of the profession in India. Besides, Indian shipping- particularly State owned SCI- is on an expansion spree. Where will they get the people to run their ships?

Of course, we could manage the piracy fallout best by actually solving the problem of piracy, but that is another story for another time. At the moment, we are jumping around like a cat on a hot tin roof. We continue to cede the initiative to Somali pirates, and, until we stop doing so, all we can do is fight a losing battle against massive negative publicity. All we can do, when we get egg on our faces after a Suez-like crisis, is to try like hell to spin an omelette.