May 30, 2013

Paper chase

The International Maritime Organisation is seeking public input on ways to ease the administrative burden across the industry. IMO Secretary-General Koji Sekimizu calls this ‘wasted paperwork;’ I call it bullcrap in spades. During the next six months, the IMO will seek inputs from all stakeholders- including through their website, after which ‘a steering group established by the IMO Council will analyse the responses to identify those administrative requirements that are perceived as burdens, and will make recommendations to the Council as to how any such burdens should be addressed’, the organisation says.

It is not just Masters and crews that are affected by all this, the IMO is quick to point out, but also owners, governments, administrations, port authorities and a wide spectrum of interested parties.

Apart from snidely wondering how much wasted paperwork the IMO’s exercise to reduce paperwork will generate, I feel that the move, long overdue as it is, is being made by the wrong organisation. The IMO legislates, and, although it can perhaps reduce the nitty-gritty paper requirements of its legislations a fair bit (or do what I would like to see- throw out useless legislation altogether, perhaps starting with the ISPS code), the real problem here lies in shipowners’ and shipmanagers’ offices. It will take more than the IMO to address that.

I am not too concerned with reduction of paperwork in shore offices of any kind; they can and do hire more people and they never suffer the kind of fatigue seamen do at sea as a direct result of paperwork overload. I therefore will only look at shipboard paperwork here.

A driving force in the shipmanagement business is the manager’s need to have his backside covered at all times and preferably in triplicate. To do this successfully, the shipmanager demands from the ship reams of checklists, reports, emails, letters, photographs and declarations that all is hunky dory, or, if it is not, ‘appropriate’ action is being taken. Appropriate implies, here, that the managers do not end up with egg on their faces; solving the problem is secondary. The IMO can do very little unless this mindset changes. Incidentally, Indian managers are amongst the worst offenders here- whoever said that the British invented bureaucracy but the Indians perfected it was spot on.

There needs to be one manager level person- preferably a Superintendent- tasked in all shipowning or shipmanagement companies, whose responsibility it should be to examine management and safety systems and reduce, mercilessly, unnecessary or duplicated paperwork. He or she should, amongst other things:

  •  First of all, realise that the organisation’s love for paper is putting ships at risk because it is the last nail in the coffin for fatigued and overworked crews.
  •  Secondly, realise that the main purpose of the organisation is not its administration.
  •  Dispense with all those monthly, quarterly, half yearly and yearly reports that managers are so fond of- and, as one admitted candidly to me, never actually read.
  •  Payroll should be moved ashore, where it belongs. All that should come from the ship monthly are the deductions to be made to a seaman’s salary- cash taken, bond and communication costs etc. A simple spread sheet once a month. That is all. Stop using Masters as data entry operators; employ a couple of those ashore instead.
  • Planned Maintenance Systems should be streamlined to effectively become the one stop combined source for inventories and requisitions. Many are capable of being just that, but are rarely used as such. An exported file should be all that is required to be emailed to the office. The utilisation of PMS software is a joke aboard most ships (I often joke that PMS is not just restricted to women; sailors know the acronym- and the stress- differently, is all). Realise that office insistence on following older systems in parallel on ships increases workload without advantage.
  •  Simplify ISM manuals. Very few of the crew understand them to begin with, and then manuals are usually unwieldy, often incoherent or incomplete and so unsurprisingly not followed.
  •  Put enough computers aboard. Give other crew – cooks, bosuns, junior engineers et al- the responsibility to keep their equipment and inventories updated. Something is wrong if a Chief Engineer is spending four hours almost every day on the computer updating PMS or other systems, or a Master is spending similar time doing essentially worthless work that is detracting from his main job.
  •  Put aboard an additional ‘administrative officer’ or seaman/clerk. To those already doing so, take a bow.
  • Reduce the number of people in shipmanagement offices authorised to send emails to Masters. (And demanding immediate responses or clarifications to usually useless queries, many of which have already been addressed). Stop demanding repeat information just because your office filing or email systems are disorganised, or because there is incomplete communication between departments ashore, or because you are too lazy to look it up.
  •  Reduce the number of checklists. Curb shore enthusiasm in creating checklists for ships even when not mandated. (If you must create them, then fill them yourselves, please).

I am sure sailing seamen would have an almost endless supply of practical suggestions, and I know many who surface these to managers ashore. The problem in third party managerial offices- especially the big ones- is one of organisational inertia. Change seems impossible, especially when nobody wants to stick their necks out for fear of being beheaded.

The IMO may simplify regulations and compliance associated with them. It may even help with certain kinds of paperwork directly- related to port formalities and such, for example. (I know standard forms exist, but every country seems to want its own format anyway). The IMO can even try to streamline the Port State Control system- the present one is odd, and consists of PSC inspectors having the ability to board a ship at any time and occupy the entire crew for hours on end at a time when urgent operations are happening at multiple locations aboard. In doing so, they compromise safety and add to fatigue.

The IMO- or any one body- cannot change the mindset that prevails in shipping and administrative offices around the world. That mindset uses seamen as cheap labour, dumping increasing administrative workloads on them without thought and without sufficient additional compensation. That mindset dumps paper aboard that belongs ashore, simply because it is expedient to do so.

Ultimately, and besides anything else, that mindset is directly responsible for fatigue and its proven impact on safety. When will all the smart men and women in the industry begin to understand that?


May 23, 2013

Interesting times

Reports from the sale and purchase market for newbuilds often resemble, these days, the confusing and contradictory reports we are used to seeing emanating out of places like the stock market. This probably has a lot to do with the fact that confusion has increased as some people sense a bottom may have been reached last year in new asset prices, and that this is a good time to buy ships. But this is a simplistic approach, and, given the big ticket items that ships inevitably are- recession or not- this can be a dangerous approach too, especially at a time when speculation is driving asset prices.

Shipping does not like to advertise that, as billionaire Wilbur Ross says, “You make your big money based on your entry point in the market and the exit point”. Like the stockmarket, you buy low and you sell high with a trader’s outlook, not an investors; you don’t worry too much about the intrinsic worth of the asset, its revenue or profit generating potential.  

Anyway, this is what all I have heard and read over the last month. The Greeks are buying- more correctly, ordering newbuilds- in large numbers because of fears of a domestic levy on bank deposits similar to the one proposed in Cyprus. Other European countries may soon follow suit, somebody says. No, no, says another report, the Greeks are buying because they have an instinct for these things; prices have bottomed out, freight rates will triple this year and the Greeks have a nose for the opportunity that is there for the taking. They don’t control 16 per cent of the global fleet for nothing.

Then, one report says that the Chinese are ordering big containerships of the Maersk Triple E Class type- 18000 TEU behemoths. Actually the Chinese seem to be buying- or building- everything; the country is responsible for 40% of all deliveries made in the last three years, and the 11,000 vessels China has built so far constitute a fifth of the global fleet. Besides, the country still holds 40% of the global orderbook. A significant proportion of this tonnage is Chinese owned, by the way; the country is only behind Japan and Greece as a shipowning nation. 

Some analysts on the other side of the fence say that Chinese shipping growth is not based on market principles but on strategy, and imply that it would be unwise for individual shipowners to take their cue from there. 

Many people seem to be ignoring, for the time being, the restructuring (read survival attempt) that Nobu Su’s TMT is undergoing today. It was not long ago that Su could do no wrong. Like John Fredriksen of Frontline, another company that went through ‘restructuring’ a while ago, he was the golden boy. (That Wilbus Ross quote above goes on to refer to Fredriksen as being ‘brilliant at both’ buying and selling). With Taiwanese Su, it seems that his last wager went belly up. In stock market lingo, his last trade tanked.

It seems clear that speculation is driving the purchase of ships today. People with access to funds, sensing that prices cannot go much lower, are snapping ships up like they would a blue chip stock that has crashed 30 percent for no good reason. Like in the stockmarket, many of the purchasers are not long term investors. They will buy low now, putting pressure on struggling shipyards to get rock bottom prices. Including in Japan, where shipyards are being encouraged by government policies and sweet deals to push for orders to gain marketshare. 

And these speculators will sell when asset prices rise a year or two or ten down the line. Just like the stockmarket; the only difference is the longer time horizon speculators in shipping have to live with. Just like in the eighties, when older ships were snapped up by punters only to be laid up, then reactivated when prices started rising. And sold. The only difference today is that the gamble is being made with newbuilds.

Long term traditional shipowners will be at a huge disadvantage in this atmosphere- any attempt by them to manage today’s overtonnaged reality (some shipowners in Europe are even contemplating collective lay-ups) will come to nought in this environment of stockmarket-like speculation that is close to gambling. Because, although the newbuilds being ordered today will come online a year or two down the line, the psychological impact of this additional tonnage at a time like this may well be crippling for freight rates, which are at unsustainable levels even today.

This is not a good time to be a traditional shipowner. You could easily lose your shirt being prudent and wise and following sound economic principles. You may not lose your shirt because your rationale is faulty; you can lose it because you are in the wrong place at the wrong time and because, to put it bluntly, you insist, still, on playing a game whose rules were changed long ago.


May 19, 2013

Air SCI?

The same red flag has been raised again, but by an Indian Parliamentary Committee this time; A Parliamentary Standing Committee on Transport, Tourism and Culture has warned that the ‘Navratna’ Public Sector owned (which means taxpayer owned, we must try to remember) Shipping Corporation of India may be going the Air India way- bankrupt, with liabilities set to exceed assets ‘in a short span of time’. 

“The Committee fears that SCI may go the Air India way in case of financial (mis)management,” it said, adding that SCI should urgently review its already placed fleet acquisition orders- about 15 ordered vessels are yet to be delivered. The comparison with Air India is apt; the government owned airline’s troubles magnified after it decided to acquire more than a hundred aircraft in a move the Comptroller and Auditor General lambasted at the time as ‘a recipe for disaster’, and one it said should have had alarm bells ringing in the government. 

Bells often ring in the corridors of power. It is just that it suits people not to hear them.

This is not the first time that SCI’s financial health is being questioned; its liabilities- including interest and loan repayments- have been shooting up over the last few years after a spate of newbuilds were ordered in the boom years. Approximately two years ago, the Shipping Ministry has cautioned the Company in very similar language to the Committee’s, saying that SCI could face ‘an Air India-like situation’ as it could lose around $200 million from the proposed purchases because- with asset prices falling- the market value of the ordered ships was much lower than the contracted value. CAG reports at the time had underlined this fear. An internal document from the Ministry was widely quoted in the media; that document said that SCI was “on the brink of financial collapse" and its plans to acquire 33 vessels would lead into a "debt-trap, almost on the lines of Air India." SCI’s Board of Directors had supposedly recommended a complete ban on fresh acquisitions at the time, media reports said. 

Question, so why was nothing done for two years? 

Best answer: For the usual mix of reasons that plague government enterprises. Very low levels of accountability. Sluggishness. A professional ethos that feels- like Air India probably did- that one can operate a public sector loss making concern ad infinitum since it is owned by the taxpayer, and that money will continue to be available to the enterprise no matter how much it bleeds. A system hounded by patronage; automatically unprofessional and subject to Ministry interference. The financial (mis)management that the Standing Committee report hints at is not unique to SCI, to be sure, but that hardly solves the problem. 

The paradox is, of course, that- especially in these brutal times- some Government support for SCI would be welcomed by many. But this support cannot be of the type the Indian Government has extended to Air India for so long- trying, one way or another, to prop up a sinking enterprise with public money. Trying- as will be done with SCI too, I am sure- to solve the problem of a leaking bucket by pouring in more and more water into it. 

SCI holds a third of all Indian tonnage. As we all know well, this tonnage is almost inconsequential as a percentage of the global fleet. But it is important- even critical, to a country that is growing and has regional and geopolitical ambitions, however exaggerated those may appear to the cynic. SCI is critical to Indian trade simply because of its size, government backing and because it holds a third of the Indian merchant naval fleet. And, in the hopeful future when Indian inland waterways are organised and become a viable alternative to road and rail for the internal movement of goods, SCI may well have a major role to play. 

For these reasons- and, perhaps, for other jingoistic ones that I don’t really subscribe to- SCI should not be allowed to die. It needs government support, sure, but not of the usual kind. Not the water-in-a-leaking-bucket kind of support- that, as the Air India experience has reconfirmed, is unsustainable and eventually counter-productive. SCI needs support of a different kind. It needs to be restructured and made into a leaner, cleaner, nimbler and more professional organisation that is answerable to the taxpayer through its balance sheet, and not to some babu or politician sitting in New Delhi. The appointments of senior personnel should be transparent and made by a professional board of Directors. Meritocracy and the bottom line should be what counts, nothing else- the way it is supposed to be.

I hesitate to say privatise SCI, because I do not believe that will automatically dig it out of its present quagmire and make it prosper, or, indeed, help the Indian tonnage cause. Perhaps it may be a good idea at a later date, when the company is profitable once again and valued better- who knows?

But for now, I am reasonably convinced that SCI needs support of the kind I speak of. Restructuring may cost some money that the firm does not really have, but I think the taxpayer- the ultimate shareholder- will be better served by going down that route. I, for one, will be happier if my tax rupee is used this way, rather than being poured down the bottomless pit of mismanagement, lethargy, poor decision making and worse.


May 09, 2013

Parallel lines.

I have drawn parallels, more than once, between shipping and the information technology industries in India. I have some experience of both of these, and the commonalities that clearly exist- the bodyshopping ethos, a young workforce, retention issues and non-permanent employment included- are striking. The treatment of the two industries to the humans who work in them has been poles apart, however: IT has usually been proactive and mature in dealing with its employees’ needs, going out of its way to allocate resources to demonstrate that it values its employees. Shipping, on the other hand, seems to follow the ‘take it or leave it’ approach whenever it deals with its employees afloat. It allocates nothing to them, not even compassion.

So it is with some interest that I watch the current happenings in IT- a sector that seems to have hit a wall after years of being regarded as the golden industry for with fat salaries and spiking increments. This year, Indian IT will employ 50,000 fewer people than it did last year. Business models are being changed to reflect today’s reality of - and that reality will mean fewer jobs are available out there. Annual salary hikes, if they exist at all, are very modest. Cost cutting and a focus on performance is putting additional pressure on IT employees, both job-security related and financial; after all, a chunk of their compensation has come traditionally from bonuses and performance related payouts. 

One fallout of all this is being felt in the mental health of India’s 3 million strong IT workforce , which is showing clear signs of ‘acute depression, insecurity, low confidence, dejection, aversion to social life and panic’, according to NIMHANS, Bangalore’s psychiatric and counselling centre. IT techies are walking in to NIMHANS in increasing numbers, and will soon constitute half its patients, it says; the figure was a third two years ago. Similar numbers are coming out of Delhi.

Every merchant mariner out of India has put up, for his entire working life, with conditions far worse than those that are driving those techies to counselling. Job security has always been non-existent; foreign firms never had any, and the myth that Indian companies offered job security was well and truly busted in the recession in the eighties. What’s more, employers of the Indian sailor, unlike those of the Indian techie, do not even need a reason to sack him; he is simply ‘not recalled’ after a contract. No severance pay even. What this model has done to the mental health of the tens of thousands of Indian seafarers who have gone through the system- me included- has never been examined. And probably never will be.

Then, there are those unique pressures on a sailor and his mental health. A hostile environment. No family or friend support. Little human touch, leading to a feeling of dislocation. The impossibility of discussing work or related problems at home between contracts- because nobody ashore can really understand. The pretence so many sailors perpetuate that there is some fantastic life out there at sea, and that it is there to be taken with no personal cost payable. The shortage of meaningful relationships when ashore- a world where, to the sailor, there seems to be no relationship without selfish interest. The sneaking feeling that there is little life outside the job.

What all this does to a sailor’s mental health is something we have never bothered to find out. We have never bothered to examine whether we need to support him as an industry- or give him avenues where he can help himself if he feels he needs help. Heck, we scapegoat, criminalise, traumatise and discard him with impunity to cover our own faults. We throw him in the bin if he is traumatised in any way- work related, pirate hit, medically or otherwise- at sea. What makes me think we want to spend a dime on the sailor doing anything for his well-being?

No Economic Times articles on the sailor’s mental health, then; he is not a techie. He does not count. Who cares if the industry is the problem? Who cares if the sailor suffers, like the techie, from acute depression, insecurity, low confidence, dejection, aversion to social life and panic? 

Who should care?