December 23, 2010

Chicken Licken mathematics

Like ants and scandals, numbers continue to crawl out of the woodwork in the last few weeks. And, like discreetly plunging necklines, what they accidentally reveal is riveting.

The ‘BIMCO/ISF 2010 ‘Update on the Worldwide Demand Supply of and Demand for Seafarers’ says that there is no shortage of ratings today. That is right; we do not need any more ratings right now: the supply and demand situation is balanced at about 747,000. The study, done in partnership with Dalian University in China says that there is a ‘notable improvement’ in the supply of officers and ratings since 2005, when the last report was published. The increase in numbers is said to be due to fresh seafarer meat coming in from China, India, the Philippines and also from ‘several OECD countries’.

The same study also says that 637,000 officers are required in the global merchant fleet today, but only 624,000 are available. The industry needs another 13,000 officers- just two percent more than it has at present.

Let me get this straight. There are about 1.4 million seafarers in the world today. This number- or whatever it actually is, because other reports quote anywhere between one and one point five million- is more or less ‘balanced’- we certainly don’t need a massive infusion of ratings. And, a two percent shortfall in officer numbers is hardly huge- look at the manpower figures for other industries and you will understand what I am talking about. Hell, some IT companies may even have that many –permanent employees, I may pointedly add- sitting on the bench or being trained.

However, it looks like the shipping industry’s loud conspiracy of alarmist doomsday scenarios based on fudged officer shortfall numbers has been successful in the last couple of years. The ‘supply side’- youngsters lured by these sly Cassandras – seems to have much improved. Not that the prophecies have become any less shrill today: we continue to hear of misrepresented numbers of officers that will be required once ‘shipping recovers’. These projections are nothing new- the last few years before the bust saw similar numbers bandied about by many. Like the stock market indices peaks that were extrapolated by ‘experts’ to infinity and were equally dishonest, the officer shortfall alarm has just one objective: get more people into the workforce and so reduce wages. Mariners are largely contractual workers. Oversupply costs us nothing.

Meanwhile, to accomplish this, we must run around like headless Chicken Lickens, screaming that the sky is falling and the only thing that will stop catastrophe is the intake of a zillion new seafarers before next Monday. We must continue the controlled, cynical and hysterical farce- what is called the ‘tamasha’ in India.

Meanwhile, the country graduates about 4500 new Ratings annually from government approved institutes (and Ganesha only knows how many from others), many of whom struggle to find jobs and many of whom pay touts to join substandard ships owned by third-rate shipping companies. Our cadets fare no better- our Chicken Lickens have no training berths for them. A group of cadets from one of the largest government training setups in Mumbai has written an open letter bemoaning their fate. (It is not just in India that mariners are angry- the seafarers of a global shipping giant - along with Nautilus in the UK- recently had a public and well publicised email spat with the owners in a ‘let them eat cake’ incident).

Meanwhile, all- without exception- all the half dozen or so thirty something old Masters I have met in the last month want to quit sailing immediately. Many have already finalised alternatives. Without getting into the reasons why they are quitting- none of which will be news to anybody out here- I made a back of the envelope calculation to determine how long they have actually worked at sea:

Average time these Masters have been at sea: 14 years= 168 months.
Time off ships for three certificates of competency: 28 months
Remaining time available 168-28= 140 months (11.6 years)
Time between contracts/unpaid leave= 58 months (average 5 months a year for 11.6 years)
So, time spent working on ships= 82 months (140-58) or 6.8 years
Assuming 6 months contract, 82 months translates into 13.6 contracts.
And, 6.8 years out of the total 14 is 48.5%

That’s how long the industry actually has these sailors for, from the time they joined as cadets right up to the time they quit. Less than 14 contracts. In a couple of cases where longer unpaid leaves were taken, considerably less than that, even. And, if one considers that the present lot want to quit sailing in seven or ten years maximum..... Well, you can redo those numbers and halve the outcomes.

What I am trying to get at- admittedly in a convoluted manner- is that attrition of officers has to be seen in this context- that the effective value of an officer to the industry is less than half of the total time he spends at sea. Experienced officers are not falling from trees, but we continue to look at fresh entrants as a panacea while doing nothing to address the critical issue of attrition.

I invite the Chicken Lickens in India to look around them to see what other industries are doing to retain performers. Even with consumer durables under pressure, Samsung India and LG paid a 200% bonus (of monthly salary) to employees last year- and plan to do so again this year. Haier will pay 130 percent. Hyundai will pay more than a month’s salary. Companies across the board are gifting holidays abroad and in India (some are even flying back overseas employees so that they can spend time with family), laptops, mobile phones et al in a bid to retain workers- amidst a downturn they think is ending, same as we in shipping do. They are not doing this out of love, by the way. They are doing this to retain good people that they feel will contribute to their businesses.

Maybe I shouldn’t embarrass the Chicken Lickens by asking what they are doing.

Nobody can predict the future and perhaps nobody should even try, least of all people with dodgy agendas. Projecting thousands of officers short assuming a perpetual shipping boom from now on in is an old ploy.
Shipping may recover from the downturn slowly or quickly- the tonnage overhang will get absorbed eventually, I guess. Many western countries may well produce, with their backs to the economic wall, more seafarers that find the career preferable to no jobs at home. If that happens, many Western owners will prefer them to Indians (unless that much maligned fairness cream so popular in India actually works).

Whatever happens, the bottom line is that any shortfall in required future seafarer numbers will not be due to reasons that our Chicken Lickens regurgitate, but for the widespread lack of preference for seafaring. In any case, if they honestly feel that the sky is falling, they should do something useful about it- and with integrity, for once, instead of shouting untruths and bloated numbers from rooftops.


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