April 30, 2009

When Differentship MET Common Sense, Part One.

(The first of a two article series on the major problems, and some possible solutions, to the present poor quality of Maritime Education and Training- MET- in India)

pic courtesy commonsensedogtraining.com

What are the reasons why watch keeping standards are falling at sea?
It is easy to answer the question instinctively, rattle off the usual reasons, and be close to the truth. Also far enough from it.

Short manned ships leading to overworked and fatigued officers. An explosion of administrative and statutory paperwork. Lower academic competence compared to trainees twenty or thirty years ago. Lower levels of commitment all round. Fallout of fewer entrants seeing shipping as a career and not a stopgap arrangement. Poor training and poorer planning. Truncated pre sea training. Poor on board training. Impractical distance learning programmes. One could go on, and one would be essentially correct. One would be almost right.

Almost, but not quite.

Recent opportunity to look at the training world at closer quarters than I am used to, however, threw up some interesting realities. Meshing this with what I have seen in practice aboard modern ships with multinational crews has made me understand a little better the drivers behind each component in the puzzle. I will begin with Pre Sea training. Even ignoring the much maligned IGNOU course in India, the usual alternative: three months Pre Sea, a year and a half or so at sea plus six months of college before appearing for examinations cannot work well, I feel. It is lopsided and weighted against practical learning and we are promoting feel good degrees at the expense of operational safety and professional efficiency.

I will give my opinion, as usual, on what could be better options to the present quagmire next week; meanwhile, here are the most significant reasons why I think the present system is not producing excellence:

The explosion of unethical training institutes: : Barring notable exceptions, many MET institutes run on the poor business model of profits above all else. And so they make elaborate and unrealistic promises to raw recruits. They degrade their own brand by not investing enough in the future and by employing ad hoc (and quite poorly paid) faculty without much examination of the faculty’s knowledge or ability to deliver quality education. This malaise extends to both pre sea and post sea training courses, as any of us who have suffered the revalidation and upgradation process will testify. I call this a poor business model because excellence is far removed from the reality here, and so is customer (trainee and ship owner) satisfaction. Poor facilities and faculty do not make for good education, whatever tie ups one orchestrates with institutions in India or abroad for marketing purposes.

Poor Shipmanagement company practices: Somewhat akin to shady MET institutes, many shipmanagement companies use training as a cash cow while flushing quality down the drain. Billing shipowners exorbitantly for ‘company sponsored courses’ may be fine. Conducting those courses poorly, cheaply, with poor faculty and in a hurried and ill conceived fashion (often clubbing them with joining ship formalities to the detriment of training) is not. The clear message sent out to everybody is that this is not a serious exercise. It is just another brick in the wall.

Lack of long term commitment from the trainees: Recently, a straw poll I took of a fresh faced pre sea class suggested that a third of them were planning to quit sailing within a decade: this when they had not even stepped on board a ship yet! In addition, less than a third saw themselves sailing for most of their professional lives. Where, then, is the motivation? Where do you think these recruits will spend energy in the near future: in increasing professional competence or in dreaming about how to find a way out of what is an occupation but not a profession?

Lack of committed trainers ashore:After navigating at sea for a few decades, I find that, as an educator, I have to spend considerable time preparing to take basic navigation classes. Simply put, some of my principles are rusty. An easy way out would be to stick to the course material; the problem with that, of course, is that teaching poorly or in a blinkered fashion results in students being, well, poorly trained. Another challenge is that the navigational syllabus for a three month pre sea navigational course (remember that this is just one subject amongst many that trainees are taught) has to be particularly well compiled and executed. Basic mathematical concepts and navigational skills cannot be compressed or taught willy nilly. I have to spend quite some time figuring out what sequence of topics would work best, keeping in mind that some trainees are not quite up there with mathematical or language understanding skills. One has to take care not to do a slipshod job of it. I can well imagine a scenario when an educator just phones his classes in, so to speak, after a few months or so. We have all seen that happen too often.

Inappropriate Distance Learning Programmes (DLP) at sea: Considering that the trainees will spend approximately half the time on a ship as compared to their seniors a generation ago, and considering that shipboard watchkeeping procedures, equipment, regulations and operations are now infinitely more complex (and shortmanned), a trainee concentrating on his DLP schedule on board instead of practical stuff is clearly being poorly trained. At sea, I have barred cadets’ DLP study on the bridge (a common practice) on many a ship and stressed practical watchkeeping instead. I feel quite strongly that Masters must ensure that cadets use the truncated time they have on board today to learn the practices of seamanship rather than the theory that a DLP tends to stress. There is enough time for academics in the months that they are slated to spend in college Post Sea. Unfortunately, unless the so called DLP training programmes are revised, this problem cannot be completely addressed; in any event, one cannot learn navigation or ROR through a correspondence course! Present DLP schedules require too much time to be spent on books and notes in air conditioned accommodation and not nearly enough time out in the salt air.

Poor onboard training: This, in my view, is a biggie, and I have been as guilty as anybody else while at sea here. Firstly, what senior officers often fail to appreciate is that general academic competence of trainees is often lower than they were, say, twenty years ago, simply because the people who do better academically do not come out to see anymore. Additionally, the trainee has been sent on board with just a smattering of knowledge after three months of a Pre Sea mish mash. He is just a shade better equipped than the fresh ‘direct entry cadet’ of yesterday, while shipboard systems have become infinitely more complex. Another huge drawback in the system of training on board is this: almost all of it is devoid of any explanation or teaching. Result? We are not passing on the core concepts of seamanship to the next generation on ships anymore.

The ‘do this’, ‘take a compass error’ and ‘what is that ship doing?’ style of training was perhaps more appropriate for a time when crews were homogenous, when senior cadets taught juniors the ropes or when officers had the tradition (and time too, but is that just an excuse today?) of passing on knowledge to the young. Alas, not anymore. Multinational officers and single cadet ships have ensured that the trainee is on his own at a stage of his career when he needs mentorship the most.

Poor officer motivation on board: Another biggie. For example, is an Indian officer motivated enough to teach a Filipino cadet? Will the Master or Chief Engineer take some time to devise an appropriate practical programme for a trainee? Will he identify officers competent and willing to teach these youngsters? Will training be conducted as part of a routine and a job that must be done well or will it inevitably fall by the wayside on the hectic ships of today? These critical questions must be answered, because they go right to the bone of the problem.

Fortunately, as I will detail in an article next week, there are solutions. All that is required is the usual (and rare) common sense and commitment. We at Differentship Management have devised an operational business model that is workable, sustainable and promotes excellence in MET. We will roll it out next week for your scrutiny.

Meanwhile, I request you all to desist from calling what generally passes for marine education and training as quality education. That rose should be called by another name: one that does not smell as sweet.



In the wake of the Maersk Alabama, worrying signs

Is it time to link Somalia to the wider war on terrorism?

In the recent past, this magazine has published a fair bit on the links between Somali pirates and Al Qaeda. Events in the last few days have reinforced these concerns. Now that the drama surrounding the Maersk Alabama hijacking and Capt. Richard Phillips rescue is over, one question that begs to be asked is, ‘What does the shooting down of the three pirates and the statements coming out of Washington and Somalia mean for piracy in the region? Has the game changed?’

Some of it undoubtedly has. Even as the Alabama saga was playing out its final act, a US Congressman on a visit to Somalia escaped a mortar attack on his aircraft as it was preparing to take off from Mogadishu. Although diplomats maintain that there is no connection between the two incidents, others are not so sanguine. Another less publicised recent event has added to the uncertainty: a new maritime boundary agreement between Somalia and Kenya, one that has been severely criticised in Somalia with many saying that the government has signed away Somali territorial waters to Kenya, a Western ally. As we know, given the exploitation and degradation of the Somali coastline mainly by Western countries, this is a sensitive issue.

In Washington, President Obama said, after the Alabama incident, that he is determined to stop piracy off Somalia. "We are going to have to continue to work with our partners to prevent future attacks. We have to continue to be prepared to confront them when they arise. And we have to ensure that those who commit acts of piracy are held accountable for their crimes," he said, without giving any details as to how he intends to do so.

Meanwhile, in Somalia, some pirates claim that they will seek revenge for the pirate killings in the Alabama incident. Should we be more concerned about the safety of the 250 odd hostage seafarers of many nationalities who remain captive there? I hope not: although we all know that ransoms are actually paid for ships and cargoes and not really for the crews, killing hostages would, from the point of view of the pirates, generate too much heat and threaten to kill the golden goose.

Other reports from Mogadishu say that militant Islamists, many of whom hitherto said they would stop piracy, are now calling the pirates ‘national heroes’ after the shooting down of three pirates by US snipers during Capt. Phillip’s rescue. Hassan Turki calls them ‘helpers’ in the Islamist’s war against the West. Turki, who is the leader of the Islamist ‘Ras Kamboni Brigade’, has recently joined other hardline groups to form the Hisbul Islam (Party of Islam) in Somalia. Referring to the long standing Somali complaint that Western countries have exploited Somali fishing grounds and dumped nuclear waste off the Somali coastline, Turki called the pirates ‘religious fighters’ because they are fighting these Christian countries, and said that Somali piracy had its roots in the movement against this exploitation.

True, the Hisbul does not speak with one voice; a part of the organisation is pro government. However, the other faction is hardline and is linked to Al Shabaab, Somalia’s most powerful Islamist group. This faction blames the Somali government for being a puppet of Western powers, and is accused by many of having links with Al Qaeda. Many also point out to the fact of terrorist training camps within Somalia and past statements made by Al Qaeda supporting piracy as extremely dangerous portents for shipping in the region: an area through which much of the world’s oil passes.

Meanwhile, insurance companies, who thought ships were quite safe if they stayed far away from the Somali coast, are revisiting this assumption as the pirates’ strike range increases dramatically, thanks to the use of ‘mother ships’, either their own or hijacked ones. Shipping companies, already hard hit by the ongoing financial meltdown, find themselves in a difficult situation. Some had decided to avoid the Gulf of Aden and the Suez Canal and go around the Cape of Good Hope instead, but with Somali pirates hitting ships hundreds of miles to the South and East of Somalia, this option seems meaningless. Besides costs connected with days and weeks of extra steaming, insurance premia are rising substantially for this region too.

I believe that the international community will be forced to link the piracy issue with the war on terror sooner rather than later. Understandably, the US, mired in conflicts in Iraq and AfPak and hamstrung by the financial crisis, is perhaps not too keen to declare this openly. I also believe that there is a clear terrorist strategy to widen the conflict by threatening to choke global shipping and trade. The war zone already extends from Afghanistan across Pakistan, Iraq and all the way to the Turkish border, with Iran an explicit player in Iraq. This war zone is now being extended by the pirates/terrorists Southwards past Yemen and the Horn of Africa and into the millions of miles of the Indian Ocean.

It therefore suits the terrorist strategists to have an unstable Somalia locked in conflict. The rest of the world will have to redefine the Somali piracy issue and call it by its true name sooner rather than later.



April 23, 2009

Peripheral Vision: The Somali sideshow

The Bollywood ‘item girl’, so called because she appears titillatingly clad in a song and dance number and thereafter disappears from the movie forever, has some things in common with the maritime industry. Both hit the headlines sporadically, and both hit them for the wrong reasons. Or so I thought until recently.

I now think that there may actually be some advantages to the shipping industry from the headlines generated by Somali piracy. Granted that the recent coverage of the Somali crisis in the Western media (including the conservative Economist) is precipitated by (gasp) American ships and nationals having being held hostage. Regardless, it is not often that you hear, within the span of a week, the US President talking about a resolve to end piracy and the US Secretary of State bringing out a four point programme to fight it.

The disadvantages of the media coverage of issues like piracy (or criminalisation or oil spills, for that matter) are well known; the reputation of the industry as a dirty and shady one obviously gets exaggerated by the fact that it never gets any positive publicity, and, indeed, does not even seriously attempt to promote it. However, the main advantage of all the media spotlight on piracy is this: the average Joe on the street may now understand much better why shipping is such a critical industry to global trade and how ships and seafarers are almost indispensible to his daily life. Because, if the security of shipping lanes is not critical, why is the Somali issue now being described as a ‘global crisis’? Why are the navies of the most powerful countries in the world out there? And why is the President of the most powerful country in the world personally involved?

If Joe finally realises this criticality of the maritime industry, it can only be a good thing. Much like the starlet in the movie, bad publicity may turn out to be better for us than no publicity at all.

Meanwhile, in the Philippines and in a heartening sign far away from all the drama in the Indian Ocean where their compatriots form the largest number of hostages held by pirates, there is no let up in Filipino sailors wanting to go out to sea. The country claims to supply a third of the world’s seafarers; recruiters in Manila say that, with higher pay on offer, there is no shortage of mariner availability even for Somali waters. Economics and human resilience prevails once again. The desire to provide for one’s family overcomes all else.
Anybody who has been fortunate enough to visit a Filipino seafarer’s rural home, as I have once, knows how much respect a seafarer gets in those closely knit communities. This respect even extends to a large city like Manila, where it is not uncommon for an earning seafarer to look after entire families of distant relatives who are earning low local wages or are unemployed.

One result of all the positive attention seafaring gets out there is this: at the end of 2008, the Trade Union Congress of the Philippines revealed that Filipino sailors had sent home a record 2.393 billion dollars home in the first nine months of 2008: a whopping 43 percent increase over the previous year. Staggering figures, indeed.

It is symptomatic of the low importance given to seafaring in India that we cannot produce similar (or even remotely reliable) statistics: we do not even have a reliable mechanism to compute the number of serving Indian seafarers in the global fleet. Seafaring as a profession is ignored by the public in India and is far from a profession of choice for most of the young. I will agree that even rudimentary proficiency in the English language can be a minus in India for somebody who wants to go out to sea from within a rural setting, but the argument that this is the main reason for officer shortage (or the decreasing global market share of Indian ratings) is disingenuous. The fact is that with minimal government and private involvement towards attracting youngsters into the industry and a lack of willingness on the part of seafarer employees to go the extra mile during their contracts, India is losing out big time. If we do not address this quickly, the results will be ominous and obvious. Ships will continue to sail; they will just do so with fewer Indians on board.

Far away from the Philippines, two news items from the US caught my eye recently. In the first, the New York Times reported, in a small two line aside in an article on piracy, that Filipino sailors on one ship had thrown tomatoes at pirate skiffs in a failed attempt to repel them. In the second, the Massachusetts Maritime Academy in the US says it will now train its cadets in small arms and handguns because many merchant ships may carry arms against pirates in the future.

I think that one fallout of Somali piracy will probably be, in the near future, that any small group of criminals (and larger groups of terrorists) anywhere in the world will realise that it does not take much to hijack merchant ships for staggering ransoms. A boat, a couple of grenades, an assault rifle or two and perhaps an RPG thrown in is enough to walk away with a couple of million dollars in tax free cash. An excellent return on investment, as the good folk in Puntland will verify.

The industry will, in response, have to revisit the debate on the possibility of arming crews before this threat widens. Although I do not know which way the debate will go, I do know this: Much like a country that cannot or will not defend itself, a ship which will not do so is nothing.

I have, suddenly, another awkward thought as I write this piece. Whatever happened to the ISPS code in the midst of all this Somali mayhem? Are we still peddling it, and if so, why? Kindly be patient while I summarise events for clarity: Today, millions of square miles of the ocean are threatened by armed criminals with known (and stated) links to terrorists. Tens of ships, boats and yachts are hijacked for months on end with a couple of hundred sailors held hostage at any given moment. This is the kind of stuff the ISPS code was supposed to address, one would have thought. It has, obviously and somewhat spectacularly, failed to do so. Even if the ISPS was not really supposed to address this, as many will claim, the fact is that piracy is a huge security threat to global shipping, more so if I throw terrorism in the mix. It is just a matter of time before, as an example, somebody decides to blow up a VLCC or ram it into a breakwater somewhere; it seems so simple to do so. Why, then, is nobody doing something about modifying or repealing the useless ISPS code? Is it because admitting to impotence is too embarrassing?

I suggest that we should at least add a line or two to the Code. Something like, “The ISPS code will obviously cease to be in effect once the vessel is hijacked. It will resume being in force after the ransom has been paid, or as soon as is practicable thereafter.”

“And it shall apply only to the survivors of the hijack, if any.”


April 16, 2009

The Numbers Game

The IMO Secretary General is pushing the ‘Go to Sea’ campaign once again, talking about the continuing shortage of seafarers, the industry’s poor public relations profile and the ongoing need to train professionals for the industry. Industry think tanks have more or less echoed the IMO’s statistics, bolstering opinions with alarming sounding numbers of officer shortage projections, which, according to them, will continue unfettered despite the equally alarming projections of global scrapping of ships, cancellations of new builds and layups. If one can believe these figures, the pictured shortage of seagoing officers remains in the tens of thousands over the next few years. Not just that, but these experts say that present shortages will continue despite shrinking fleets.

With all due respect, I would like to know the basis on which these figures are calculated. We are talking about huge numbers, and something doesn’t tally here. For example, if I were to assume that there an ongoing shortage today, then I must logically assume this too: that last year, when the boom was still apparently on and the bubble had not yet burst, a significant number of the many more ships in service then were unable to sail because they did not have qualified personnel on board.

We know that did not happen. Industry projections today, therefore, smell a little bit to me. I suspect that at least some have been pulled out of a hat, thence my request: can we define the hat with more transparency and clarity, please?

If I were charitable, I would think, perhaps, that the industry’s stress on training and continuing, even increasing, the intake of young blood into shipping in today’s turbulence is a realisation of what we did wrong in the eighties. I may think that ship management mandarins have now realised that the decimation of training and fresh induction in the last bust resulted in terrible shortages of skilled and educated officers later. I may agree that these folk are determined not to repeat their blunders this time around; thus these numbers.

If I continued to be charitable, I would assume that the IMO, other international bodies and think tanks, private and public satraps and the miscellaneous people who influence shipping policy have no vested interests or hidden agendas, and that their only imperatives are altruistic and for the well being of the industry as a whole. Maybe I would even accept, in a moment of weakness, that they have the projection of maritime manpower requirements down to a finely honed art, and that their figures have thus great sanctity, integrity and purpose.

Unfortunately, based on the last couple of decades of experience, I do not think so. Even worse, I suspect the motives of more than a few participants in the officer statistics being hung out to dry by everybody today.

A simple question: What figures of shortages would we get if shipowners were forced to offer permanent employment to all the officers that they henceforth employed? Would they want to induct the numbers of officers now stated as ‘short’ if they had to pay those wages throughout the year? If they had to promote mainly from within? Pay statutory employee provident funds and add on benefits like insurances and others that, in some form or another, are applicable in most countries in the world to permanent employees? Would we, in that eventuality, get similar officer shortage figures from the industry worldwide, or would there be a marked decrease there?

I suspect I know the answer to that. The fact is that shipping operates on the paradigm that its seagoing employees are daily wage earners. By extension, it wants the cheapest labour that it can hire and fire at any point of time; it always has, and there is nothing too much wrong with it. The industry is hardly unique, in this imperfect world, in wanting to do so.

The problem becomes when, as has happened in India in the past at least once, attempts are made to flood the market with labour without thought for the future, or with the main intention of lowering wages by oversupply. The fact is that a contractual system means that unused labour does not cost the industry anything. Additionally, the long term employability of labour inducted has always been the least of the industry’s concerns, as is illustrated by the plight of a batch mate I ran into in South Bombay in the eighties: working for the largest shipowner in India, this Second Mate had been asked to ‘come back after six years’. The six years would be unpaid, of course.

What the industry needs is not statistics per se, but figures that have some quality and sanctity. It needs statistics that are transparent and do not give the impression of being conjured out of thin air or for the wrong reasons. In any case, where did these international figures come from when we do not even have, in the absence of national bodies in major officer supplying countries like India, reliable national databases of active incountry seafarers?

In the absence of such core tools, all we have is a pendulum loaded with numbers swinging from one extreme to the other. It is not surprising, therefore, that we oscillate (and vacillate) between oversupply and shortage. This may not seem such a big deal to those of us ashore; it does not affect us personally. We also assume that supply will come from somewhere this time around too, including Africa and China, which seem to be flavours of the future judging from recent reports.

The reality is that it is, actually, a big deal. We may not care for our officers long term; hell, some of us may not even care much for the industry long term (provided, obviously, that it does not implode before we retire). Nevertheless, for those of us who do care, please consider this: Even after getting it wrong in the eighties, we continued to attract youngsters into what was, then, a much more preferred profession. That paradigm does not apply today as we struggle with profile issues and are unable to attract suitable talent in the numbers required. Therefore, if we get it wrong now, and if we attract youngsters with misleading figures or under false pretences, then we risk swinging the pendulum so far out that it may not swing back. If our officers face huge unemployment a few years down the road because we pushed oversupply trying to get cheaper labour that then became unemployed and destitute, we may become the pariahs of the employment market for a generation or two.

Layoffs occur across the world in all industries from time to time. However, there is a price to be paid in most businesses. Sometimes the price is financial, with severance salaries and such costs. Sometimes the price is even higher, in the loss of goodwill and in upheaval within businesses. However, we in shipping disregard all this, because laying off daily wage earners does not seem to cause much upheaval. Who really cares if a seafarer is not recalled after a contract? This false sense of security also causes the industry to sometimes publish loose figures of staffing needs, in my view. There is an underlying ethos that it does not matter if we get these statistics wrong, even hugely wrong. There are no comebacks. There is no downside. There is no price to be paid by any of us.

Except, plainly, by the seafarers.



April 10, 2009

Risque Assessment

It is obviously impossible to expect a revival of the shipping industry without a simultaneous recovery in the global economy. We in shipping may well be bellwethers of the state of the world’s economy; however, at times like this we are also the first victims of it. The sheep that leads the others wearing a bell is likely to be the first one that falls off a cliff.

Thankfully, I am not an economist, but I have many questions about the worldwide response to the present worldwide crisis. The main one is that much of the West seems to be throwing good money after bad. The think is clearly, as in the case of the now infamous financial institutions with their managers parasitically bloated with the blood of us plebeian grunts, that their survival is critical, they are too big to fail, and that the financial macrocosm will collapse if we do not feed these devils. One question in all this: what if some of them collapse anyway next year? Many now openly acknowledge that the present system of unregulated crony capitalism is not a free market; it is a roulette wheel loaded in favour of the insiders. And we are playing Russian Roulette with it.

Of course, like many I remain bewildered by the fact that the applied solutions to clawing back off the cliff edge are what caused the disaster in the first place: the availability of massive amounts of unregulated money. But this has all been said before. It is enough to say, now, that we have chosen to remake our bed this way, and now we must lie in it. We must lie down with dogs and get up with fleas.

The maritime industries across the world and the economy in general may be surprised, though. Mr. Obama may appear like a deer caught in a car’s headlights at times, handling two major crises, both of which can end the world as we know it. The two large threats of the economy and AfPak are also huge risks to global trade in general and to the Indian economy and shipping in particular.

The fact is also that President Obama has, for the first time by a world leader and certainly a first for a US President, put Global Warming on his country’s political agenda. He has announced calibrated plans to reduce fossil fuel dependency; that fact alone would normally have sent shudders down the tanker industry’s spine had there not been enough shuddering going on there already because of the condition of the markets. The US has been the driver of the global economy for decades. As said, we seem to be looking at a revival of the same economic system, collapsed or not, to get us out of the present mess. It then seems to me that, unless the US gets back to consuming like an intestine with tapeworm, there is little hope of a global recovery anytime soon.

Wait a minute. What if, given the clear unsustainability of the present economic system, the US citizen chooses not to go down the consumption driven intestinal route from now on? What if this, coupled with Obama’s stated agenda on climate change, finally convinces the Americans that this hell for leather consumption course is unsustainable in every way? What if (gasp) they switch to smaller or fewer cars and televisions and actually switch off the lights as they leave the room? What if they consciously reduce conspicuous consumption in a million other ways, killing the consumption frenzy that America has become famous for? In addition, what if this ethos spreads across the world, with the billions of us finally realising, individually and collectively, that present lifestyles are economically and ecologically unsustainable? What if India and China realise the full import of the much quoted maxim: If we want to consume as the Americans do, we will need two more planets for resources in addition to this one.

As the actress said to the Bishop, then the whole thing will go down my tube top.

This risk, as I see it, is the largest one the shipping industry faces. That the industry, in this eventuality, will be part of a revamped economic order will then be no consolation at all. In this alarming but common sense scenario, the bellwether may well toll the signal for greatly constricted shipping demand as trade shrinks across the board.

There are other big risks too. The Chinese Premier and the head of their Central bank have in recent times, put out strongly worded statements against the US financial culture, even warning, paraphrased, that ‘the US cannot expect China to subsidise its spending’. A clear indication, to me, that China will, at an appropriate time during a hopeful global recovery, flex its economic and political muscle to the detriment of the US (and quite possibly India). Equally alarmingly, China has been joined by some Western countries in calling for a revamp of the IMF and a movement away from the US dollar as the global currency. This thought is nothing new, and has been expressed by Russia and Iran, amongst others, in the past. China is different, though; it owns massive amounts of US debt. Although this move is very unlikely to happen anytime soon, given that a huge part of the world’s reserves are still held in US dollars and that China would be cutting off its nose to spite its face, the first graffiti is appearing on the wall, and is a harbinger of things to come.

We in the shipping industry will then have to manage another risk well: the exchange rate risk. Move to SDR’s? Euros?

One suggestion, though. Let us not start speculating in currencies now or later, in this eventuality; that is not our core competence and is a high risk exercise. Hedging is prudent. Speculation, as the recent victims of FFA speculative trades will tell you, is likely to get you rogered.

The Indian economy, and by extension the Indian shipping industry, faces a few other large and particular risks: one of them, Pakistan, is a clear and present danger. Consider this. All it will take to set the cat amongst the pigeons is one newspaper headline somewhere down the line: ‘Pakistan falls to the Taliban. Can the US afford another major war?’

In one fell swoop, Indian ratings will go down the same actresses tube top and India will be starved of investment faster than an anorexic teenager is starved of calories.

Other risks are internal. The slow and continuing degrading and subversion of our institutions and the institutionalisation of corruption being just two. Another is the fact that the millions of Indians living in poverty will be joined now by the new jobless to increase resentment and discontent levels substantially. If we are lucky, this problem will be solved politically, at the ballot box, with politicians like Mayawati becoming more powerful.

If we are unlucky, this problem will be solved on the streets of our cities.

If one must be logical, an overwhelming thought is this: The shipping industry, like the rest of the global financial community, needs a paradigm shift in its thinking if it wants to remain sustainable. We must collectively come up with new ways of operating our ships in an economically and ecologically sustainable manner. This will require intensive brainstorming by all stakeholders in the industry including its consumers. Not an easy ask for a cyclical and capital intensive industry strapped of resources and struggling with manpower. Even more difficult in the present economic climate with everybody struggling to keep the wolf from the door.

I am slowly getting convinced, however, that if we continue down the present unsustainable route, we will be setting ourselves up for the next big crash. If we are lucky, that may not happen for years. I am sure, though, that it will happen sometime, especially given that the present system has been proven unworkable. I am not confident of increased regulation and a ‘new’ international system being able to do the trick. This is a sustainability issue, one that will not be solved by putting new lipstick on an old streetwalker. We have no option but to come up with something different, and something that works long term.

Actually, we do have one more option. Not to sound too risqué about it, but we can choose to go the way of the testosterone pumped man drooling over a topless calendar.

We can choose to go from bust to bust.

Author’s footnote: Any risk management must take into account worst case scenarios, and so by definition seem alarmist. Maybe I have overstated some risks; at least some of you will agree, however, that none of my scenarios is too far fetched at all.


April 03, 2009

Mixed nuts

Almost thirty years ago, the last recession was just about to begin. Fresh after my Second Mate’s ticket, I got a job in a foreign company completely by accident. The ship was in Houston, the Chief Officer had to sign off, the Second Mate broke his leg and I was in Mumbai, ready and willing though hardly competent. Anyway, they flew me First Class to Zurich (boy, had this Cadet from a straight laced Indian company finally arrived, I mistakenly thought). It was only on the second leg to Houston, squashed between two large Americans, that I realised I would be flying cattle class for the rest of my life, unless somebody broke a leg and Economy was full from Bombay to Zurich again.

It was an odd ship, as you will see. A European Master, and officers and crew from more than a dozen countries, and then some. A little apprehensive (since all foreigners, to me, were crazy), we sailed for Durban with the Captain and me keeping six hourly watches. I did quite well, though I was flummoxed at the beginning by the Captain drawing a course seemingly at random but long enough for the next few hours, asking me to ‘stay on the line’, and going away (He did this all the way to Durban). There was no attempt to tell me what all the ships and oil platforms in the Gulf of Mexico were doing whilst handing over watch. Perhaps this was because I displayed remarkable competence, but I doubt it, since I had called him up on my second independent watch at sea puzzled by the clouds showing up on the radar screen. I thought they were uncharted land and that we had discovered some new country, like Columbus. I did notice, at the time, that he did not share my enthusiasm at this discovery at around three in the morning.

Anyway, we made it to Durban in one piece, although two days before arrival, I went up at midnight to relieve him and found him sleeping in a chair near the radar.

This was tricky. Life was more formal then: one did not simply tap a watchkeeping Captain on the shoulder to wake him up in those days. It was clear to me that some greater officer like subtlety was required. Therefore, I rattled the coffee cups loudly as I made my Turkish brew. That did not work, and neither did whistling loudly almost in his ear. Perhaps the beer cans in the bin next to him had something to do with it.

He did wake up an hour later, harrumphed, went to the chartroom and drew his customary line in the sand. He then wrote something in the logbook and went away. Later, I read what he had entered in the logbook. It was this:

“Captain sleeping on watch. Fined one case beer.”

There is a small postscript to this story. Soon after we berthed at Durban, this same gentleman called me to his cabin. In front of him were two piles of around two thousand dollars each and a telex from the company. He told me, in his usual guttural voice, “This is telex. This is shorthand. And this (pushing one pile forward) is for you. Same same for me.”

I went to my cabin and counted the money. My last wages before this ship, a stipend really, were two hundred rupees a month. This was a rags to riches story! So I lit a cigarette with a one dollar note and a shaky hand.

Those crazy foreigners had got to me in the end.

About three years later, I was a Second Mate on a bulk carrier with an Indian Master who seemed to have a running feud going on with the Third Mate. To be fair, things were going swimmingly until the Captain insisted that he be called ‘Sir’, and so the Third asked him, “Why? Have you been knighted?” Things went downhill pretty quickly from there.

Three months later, the Captain’s wife and six year old daughter had joined the ship, and we were approaching Gujarat. The Captain had a habit of leaving his daughter on the bridge, who was fond of going for a walkabout everywhere on the wheelhouse and twirling, turning, pulling and pushing any knobs or levers that she found en route. This had been going on for more than a month.

Whilst on watch, we got used to keeping an eagle eye out for unplanned alterations of course which the little angel instigated. She had a good ROR sense though; she always made broad alterations of course which were clearly visible to other ships in the vicinity, even though it must have scared the bejeesus out of some of them. Funny things happened on our wheelhouse, though. Wipers came on, the Christmas tree was lit up with puzzling lights being randomly switched on, radars were sometimes found switched on or off and so on. Hinting to the Captain that this was a little untoward proved useless; he simply ignored us.

The engine room also got used to sudden engine commands in the middle of nowhere as the telegraph was repeatedly rung. Fortunately for all, it was not a bridge controlled main engine. I suspect, though, that the sudden and rapid blowing of the foghorn at all hours of the day or night on that ship is probably the cause of all my blood pressure problems even today.

The Third Mate finally lost it when the little lady altered course twenty degrees to port with a ship a mile away. When I took over watch from him, he told me that the courses we were steering were unknown to him. He had also logged down appropriately in the deck logbook: ‘Courses to Master’s daughter’s orders’.

She was never brought up on the bridge again. The course recorder must have heaved a sigh of relief.

Then there was, much more recently, the Second Mate I sailed with who I nicknamed Lord Emsworth, because, like the P.G. Wodehouse character, he was besotted with all his pigs back in the Philippines.

Wodehouse couldn’t have done justice to my Lord E, though. Until I put a stop to it with a heavy heart, the Second Mate would whip out a bunch of photographs of his pigs at every opportunity and show them to anybody who happened to be in the wheelhouse during his watch. I admit his commercial piggery back home was top class, but one doesn’t want an officer of the watch telling one how beautiful so and so pig is when one goes up to have a dekko at the chart and the traffic, or to have a cuppa.

The other officers did not seem to mind, although I saw the Chief Officer giving the Second Mate funny looks from time to time. The Chief told me later, “Cap, the Second not married. No good.”

Along with Lord Emsworth and the pictures of his Empresses of Blanding, we had an Indian Jain as a Fourth Engineer aboard that same ship. Very strict vegetarian and a pretty militant one to boot. The Filipino cook used to be reduced to jelly whenever the Fourth’s name came up in Mess Committee meetings; obviously a crazy foreigner cannot be expected to understand what a strict Jain will eat and what not, and which ladle is not supposed to be used to stir which curry, and complicated things like that.

So, anyway, I go ashore in Philadelphia and I see, through a restaurant plate glass, our Fourth Engineer sitting at a table. He is digging into a huge beef burger.

Alarmed that he did not realise what he was eating, I entered the den of iniquity and went up to him. “Fourth, do you know that you are eating beef??!!”

“Yes, I know”, he says, smacking his lips. “But it is not an Indian cow.”