May 31, 2012

The great Kiss-Off

The air strike on Somali soil last month by EU forces - a first- has been hailed as some kind of strategic breakthrough against piracy across the world. Helicopter gunships struck pirate locations in the district of Harardhere from the air, destroying a few speedboats and  stepladders, and, say one or two reports, some fuel stockpiles. EU NAVFOR was quick to point out there were no casualties on the ground. Somali pirates were equally quick to threaten, angrily and within days of the strike, that they would execute crew they were holding hostage (that total about three hundred and twenty, mainly Asian, according to probably underplayed official numbers) if they are attacked again. The Western attack received rave reviews from around the world; the pirate threats against crews- fully foreseen by EUNAVFOR, I will wager- went largely ignored. 

The discovery of huge gas reserves off East Africa has, as I pointed out in 'The Mozambique mystique' published here two months ago, added a new element to the' fight against piracy.'  Navies, protecting commercial shipping in transit, are changing tactics as they begin to protect commercial but stationary gas fields.  The UN resolution that formed the basis for this month's land attacks on Somalia has to be seen in that context. 

There is another pattern here for anybody who cares to see it. For roughly two years now, countries across the world, whether oriental or occidental, have collectively decided that the safety of crews- hostages or not- is secondary. With contempt for crews' lives, navies have often strafed and shelled mother ships or sometimes launched commando style operations where crew have been killed or injured in the crossfire. I submit that nobody in EUNAVFOR is surprised at the threats to hostages that they would have been daft not to have anticipated, and I will wager, once again, that nobody in EUNAVFOR or NATO will be surprised if some hostages are executed if these strikes continue. Piracy allows Western navies to expand presence in the region- their strategic goal. And- even though these were EU strikes - President Obama loves drone attacks and so much of Europe will have to fall in line with US diktat. This was not a drone attack but that is the general way things will go, especially if President Dronobama wins a second term in office.

In any case, the 'catch and release' policy of the past will give way to a much more aggressive stance against piracy in future. We will see fewer incidents like that involving a British frigate last year that captured a group of pirates and later let them go after feeding them halal food, providing them cigarettes and nicotine patches and checking if the pirates were medically all right. (Contrast this with the treatment many crew are given even after years of captivity. In many cases, even their wages are not paid.) Wemay well see lethal attacks on pirates on land; hang the threats of execution of hostage crews. We will see, as we always have, robust protection of commercial interests and a simultaneous near total apathy when it comes to protection of the lives of commercial ships' crews.

If that is what is happening, and if we are to disregard crew security, a better alternative to drip-drip small airstrikes would be the following strategy- to be implemented asap: 

a)      Rescind the ISPS Code
b)      Make armed guards mandatory on all ships passing through piracy regions.
c)       Launch simultaneous attacks on all ships held for ransom and all known locations where crew hostages are being held on land. Objective: free the crews or let them die in the crossfire, once and for all. One way or another. All or nothing.
d)      Attack all pirate controlled vessels or mother ships at sea. Let hostage crews either die or be rescued.
e)      After all this, go hell for leather after pirates wherever they are, including in Somalia. Do not forget the financiers and others living abroad, including in the West. Do not ignore banking and non-banking routes that money-launder for them, including in the financial capitals of the world.
f)       If the pirates hide amongst villagers on the Somali coast, as I expect that they will, kill everybody there. Like in AfPak. Like with hostage sailors.

There will be no big outcry about the slaughter of seamen if my tongue-in-cheek recommendations are followed, if that is the fear.The ruckus will die away quickly, because as we know, seamen do not count and dead seamen count least of all. As for those innocent Somali villagers, occidental forces can do the AfPak type spin doctoring to manage fallout. War against terra and all that. They have had a lot of practice.

Many have fawned over the 'firm resolve' displayed by the EU; one or two commentators have even called the airstrikes a 'game changer.' I don't know about that, but I do know that it is seamen who are usually the game in this kind of game. 

EUNAVFOR, NATO and other military forces around the world may think, as they sit protected in their destroyers and frigates with arsenals at their disposal, that they are putting an end to piracy. That the war will be won with this new UN resolution. That everybody will live happily ever after. 

Almost everybody will, I guess. But hardly forever, because military forces will have to do the same thing in the Niger delta and at other, yet unknown parts of the world in future. They will do this at the expense of - and with a contemptuous disregard for-seafarer lives. At least acknowledge that, EUNAVFOR. Acknowledge that you have thought the escalation through.

Because I am quite sure that before you meet prince charming, you will have to kiss- and kill in the crossfire- a lot of us toads. That may well be the better alternative for you. Imagine what will happen to the 'career of choice'- and world trade- if Somali clips of crew torture start appearing on YouTube.


May 24, 2012

Faking it

Eighty four year old Jazz vibraphonist, piano man and charter boat captain Teddy Charles died recently. The man- who played with legends like Miles Davis- gave it all up in the 60s to sail in the Caribbean, returning to music and captaining charter boats in New York twenty years later. Drawing a parallel between music and the sea, Teddy said once, "You work with the sea, or you lose. It’s the same in art, not just jazz. There’s no way you can fake it.” 

I am afraid that is precisely what is happening at sea today; we are faking it. Inevitably then, we are losing.

It has been a slowly eroding loss, not a cataclysmic upheaval even though the results have been nonetheless disastrous. The largest fallout of the drip-drip changes has been that our seamen are not working with the sea anymore; they are working with paper. Gone are the days when we joined a ship for the first time with just a couple of certificates; today we need a handful before we even step aboard, which increases to a small suitcase full in a few years. Certificates of competency were succinct and clear earlier- 2nd Mate, Foreign Going. None of the 'management level' verbose claptrap we are issued with today, which promotes the foolhardy fallacy that a mariner is an administrator first and a seaman a distant second. 

We may think that the word 'management' thrown in here and there (our Masters are CEOs, say some managers, a statement I think actively degrades the Master's actual role) makes for making the profession more attractive or makes outdated and out of touch shoreside regulators and administrators feel they are making a difference, but it does not. We are faking it.

There was a time when we used to be tired, at the end of a long day, by doing what seamen are supposed to do at sea. I remember that as a good feeling, because a seaman is rarely stressed out by seamanship. Today, our crews are fatigued by paperwork instead, and this-for the many that regulate and promulgate but never actually do what they preach- let me tell you, this is mind-numbing fatigue. This is exaggerated by the exasperated knowledge that most of the paperwork is unnecessary, duplicated, duplicitous or useless and we are doing it at the expense of our real jobs; seamen are stressed out today because they are faking it.

Faking it would pass uncommented or even unnoticed if everything was otherwise hunky dory with our men and women at sea or if we did not struggle to get suitable talent in the industry or to retain it. That is not the reality, as we all know. And, while we may like to pretend that the steps being taken- the Maritime Labour Convention, new STCW regulations and all the rest of the rhetoric- are actually going to solve the problem, we all know, deep down where we can't fake it,  that they won't, because we are throwing paper at a problem instead of solving it.

We in shipping fake it elsewhere too. When we spew out knee-jerk regulations after an incident. When we claim our ships are becoming safer even after the knowledge that mariner competence levels are dropping. When we fill up checklists and working hour sheets at sea. When we claim we are concerned about our seamen. When we say we are tackling piracy. In a million ways, we propagate the untruth that we are doing everything we can to make shipping and ships safer and greener, when what we are actually doing is running in place trying to pinch a dollar or two or manage the fallout of bad PR that this industry is plagued with. 

Letting seamen do what they should be employed to do should be a simple matter in the internet age, when almost every administrative function can be done ashore, if only we had the common sense to do this. The other problem is that faking it is lucrative for many. From maritime education institutes- factories, really- to regulators to managers to insurance companies to unions, faking it rings cash registers and pays fat salaries and bonuses. There is no incentive not to fake it; there is little reward for professionalism at sea; the reward lies only when one fakes it, preferably along with the boss.

My deep fear is that shipping will soon be unable to differentiate between what is unreal and what is real, because faking it has gone on for so long already that it is in our genes. We will start believing- without even a twinge of doubt- our own lies eventually, I fear. We will continue to put administration above seamanship. Inevitably, therefore, small or large implosions will continue to occur whenever the fake and the real collide. 

We will be puzzled at these, because we actually believe that the mask is the face. By then, we will have sacrificed whatever professional competence we had- at sea or ashore- at the impostor's altar. We will not realise this though, because the imposter has become our reality. We will be akin to the sterile john in the cheap motel who believes -just because the lady said so- that his virility is singular.
Delusional behaviour is a sure-fire way to run an industry as real- and vital- as shipping into the ground. Teddy was right. You work with the sea, or you lose. There’s no way you can fake it. 

We should stop.


May 17, 2012

Beggaring belief

Scarcely a day goes by when ships or seamen are not in the news these days- as usual, for the wrong reasons.  For example, in the last week or so alone, I have been told many things by the press. That pirate attacks have become more brutal. And that so and so ship with x number of crew has been held for y number of years. In Pakistan, family members of mariner hostages have stood like beggars outside a mosque on a Friday, pleading with presumably religious passersby to drop a few rupees into their donation boxes, to be used towards ransoming their loved ones. Families of seamen in India have gone record once again berating the government for continuing to do nothing to help while they run around trying to find out if their sons were dead or alive in Somalia. (I ran into a senior Master who does not sail anymore. He asked me, referring to piracy, "We stopped sailing at the right time, didn't we?")

Elsewhere, I met a youngster who had completed his pre sea GP Rating course three years ago and was still looking for his first job on a ship. Like many, his lower middle class family had taken a loan to send him to an approved institute back when they still hoped he would make a career at sea. The rating told me he was done begging at shipping companies and was looking at other options to pay back the loan, at least. (I idly wondered if a life of crime was a workable option.) The man seemed to be spending a lot of time standing outside the many maritime training institutes in his city, dissuading ratings  from enrolling there or joining the career.  

Seems to me that we in shipping are training our young men to end up as beggars. And, since shipping has always had a bottom up approach to everything- or should it be bottoms up approach? - we have now graduated to even training mariners' families to beg for the lives of their sons and brothers. 

The economic upheaval that shipping will go through in the next few years will make things worse for seamen. The bite is already being felt up and down organisations, especially with ship owners and managers downsizing and laying off people. Thing is, most employees ashore have some protection, from voluntary retirement schemes to golden handshakes to some kind of half decent severance pay. Hardly any seaman from this part of the world enjoys any of those benefits. Best-case scenario for him is that he is not recalled for another contract. Worst-case scenario is that the managers or owners do not even pay him his earned wages. We all know that the worst scenario applies more often than we care to admit. Seamen are rarely laid off anyway; one has to be paid round the year for that to happen.

Those cursed with long memories should be puzzled by the fact that paying  for a job or a training berth was almost unheard of a generation ago. Things were not always this way; the rot has been a gift of the STCW 95 convention and has deepened with every STCW amendment. Of course, I am even more puzzled by the fact that nothing is done to tackle the rampant problem of youngsters paying for training berths or their first jobs, because this kind of corruption is so easy to reverse. Then I remember that it is the Indian shipping industry, its regulators and the Indian Government that we are talking about here, and I stop being puzzled.

The outcome of making beggars out of our seamen- not just with jobs or ransoms but in so many little ways that all of us recognise, from asking for 'leave' to treatment while joining-is inevitable.  The industry's inability to attract decent calibre is linked directly to that propensity of ours, seen from the time a seaman is ready to join to the time he asks for 'leave' and even later. The degradation of Indian maritime certification and competence is but a logical consequence of this industry attitude, and that is something which will automatically result in an incrementally shrinking Indian maritime pool. It is a vicious circle; it is a "chakravyuh"-the near impenetrable military formation in the Indian epic Mahabharat-that our industry luminaries revel in not breaching.

All this is why the canard that sophisticate industry insiders spread at every chance - that seafaring is a profession of choice even today and that Indian seafarers are (almost automatically, it would seem) some kind of chosen people within the profession- is so difficult to digest. In fact, it beggars belief.


May 10, 2012

Singapore Sling. Or catapult.

Comparisons between Singapore and India are odious; the former is a tiny city State whose entire population, at five million, is roughly two-thirds the number of people (7 million) that travel every day in the suburban railway system of just one Indian city- Mumbai. The politics is different too. Let us just say that Singapore's politics is differently manipulative than that in India and leave it at that.

Now that that is all over and done with:

If you are an Indian in shipping, read former Singaporean Primer Minister Goh Chok Tong's speech at Bimco's recent Annual General Meeting and weep at a future that will see India becoming incrementally less important to the industry. Weep again, because it is not difficult to reverse this slow slide to oblivion; it is just that we in India will not do anything to do so.

Singapore, already a bigger maritime hub than Hong Kong, is well on its way to taking centre stage in a future that will see, thanks to China, maritime economic power shifting to the East. The country wants to become a leading international maritime centre. To do this, says Goh, "First, we invest in maritime R&D infrastructure; second, we formulate pro-innovation policies to meet changing business needs; and third, we develop maritime talent to drive innovation across industry".

Goh called the development of the third- development of local maritime talent- as "our most important prong." India, weep again.

Amongst the slew of measures Singapore has already taken- collaboration between the Maritime and Port Authority of Singapore (MPA) and some excellent local universities to build up R&D infrastructure- the results are available and are being used by local industry; the setting up of the Singapore Maritime Institute on the back of a S$ 250 million fund (another S$ 150 million standing by); a S$100 million Maritime Innovation and Technology Fund (MINT Fund) to provide "co-funding support for R&D projects and test-bedding activities", and another S$100 million Maritime Singapore Green Initiative to encourage greater innovation in clean and green shipping- with concessions granted in port dues to ships that exceed IMO's EEDI requirements.

The Indian maritime world is, in contrast, still in the Stone Age. Development means just announcing the construction of new ports here, hang the environment, demand forecasts, archaic tariff structures or service innovation (which could start with coming down on rampant corruption in everything, including the constructions and operations of Indian ports, by the way). There is no R&D in India and there is no useful collaboration between industry and the Government. Nobody is looking at the future of shipping seriously. Nobody is funding it.

And developing maritime talent? What the bleep is that?
 Since India does not recognise that attracting top-notch youngsters to the industry is important, we fail the future before we have even begun to look at it. We do not recognise the need for those already in shipping to enhance skills because we treat them as casual labour on daily wages and nothing more. We set up a maritime university that is mired in corruption and mediocrity even before it is launched. Unsurprising, therefore, that we are a country that now produces- even compared to our own standards of twenty five years ago- seafarers whose competence is considered increasingly suspect internationally, many who have reached their level of incompetence and who are ill equipped- academically or otherwise- to learn anything new or more advanced.

Our organisations and people ashore, whether in government or industry, are not any better- given what is required of them, they do not have to be. They are happy in their wells, sourcing certified warm bodies and periodically declaring that the job those bodies do is not rocket science. (Neither is arranging documents, tickets, medicals and feel good seminars, actually, but let us leave that aside for now.)  This is why technical, environmental or operational innovation coming out of India is zilch. This is why we have hardly any competitive or sizeable chartering, insurance, shipbuilding, repair or reinsurance organisations to speak of. The main reason why our standards are falling across the board and why shipping is going backwards is that nobody is doing anything that will change it. Nobody is tasked- whether in the public or private sector- to produce talent that will dominate the industry in future. There is no attempt to be competitive. Nobody is funding institutions that will research, innovate or pursue the development of future maritime talent.

Singapore is doing all that and more. And that is why that tiny city State- that relied, in 1969, on the Indian origin Captain Sayeed to form NOL, its first shipping setup - will catapult itself even further beyond Indian reach. Singapore is planning to compete with London; India, in contrast, is unable to compete with even Sri Lanka, as we have seen in connection with a port or two in Kerala.

The same ex PM Goh, who worked under Captain Sayeed at NOL long ago, said later, "None of us had ever run a shipping line and Captain Sayeed was patient in teaching us the ropes". The same Goh has today outlined a vision for Singapore's maritime domination; is India capable of meeting the challenge? Are we capable of doing anything else except basking in historical- and tinted glassed- glory?

Even though we are a nation of a billion plus versus Singapore's 5 million (one and a half million of whom are foreigners), I suspect not. I suspect the fight is over before it has begun, and I suspect that the old adage has been proved once again- that sometimes, it is not the size of the dog in the fight but the size of the fight in the dog that counts.

May 03, 2012

Marine insurance or economic warfare?

Emerging and developed economies in Asia had both better watch out, because the West has discovered, almost by accident, that its stranglehold on the marine reinsurance market gives it the power to arm-twist Asia and get the Orientals to toe the grimy line.

The European Union oil embargo on Iran- OPEC's second largest producer- will come into effect on July 1. A new tactic will be employed amidst the slew of sanctions that have attempted to push Iran into a smaller and smaller corner over its so called 'nuclear programme' for years: in short, insurers in the EU will be barred from underwriting Iranian oil exports after July. Period.  Which means that the billion-dollar coverage against pollution or personal injury claims that a typical supertanker enjoys today will disappear, unless alternatives are quickly found.  As things stand, only five percent of the tankers in the market will be able to carry Iranian oil after July 1, reports say.

The problem is not just that ninety percent of the insurance market- or pool, considering that high-ticket tanker insurance invariably uses some form of reinsurance- is located in and controlled by the West, largely through London. The greater issue is this: the biggest markets for the daily Iranian production of roughly two million barrels of oil lie in the East- in China, India, South Korea and Japan. The EU and the US seem to be using the ban on Iranian oil, over which they are far less dependant, as a weapon in their arsenal to teach Iran a lesson and, at the same time, pressurise Asia- and Russia too, which is in the same boat- into rethinking relationships with Iran.

The pressure on Iran is the prime reason that oil prices have shot up over the last six months. Thing is, this has inflated, enormously, the fuel bills of countries like India that are heavily dependant on the import of fuel. If Iranian oil is denied to these countries by the EU embargo, the impact on their economies will be severe. I could therefore easily call the EU action a form of economic warfare.

Asian countries seem to have woken up to this problem late. In the last few weeks, however, alarm bells seem to have finally sounded as the industry struggles- last minute, as usual- to try to segue around the brick wall of sanctions. Some countries- India is not one of them- do have some insurers and P & I clubs on their shores, but these will prove woefully insufficient to deal with the scale of the requirement- they simply do not have deep enough pockets and they do not have enough of them. Hence one Japanese buyer's unequivocal comment to Bloomberg: "The bottleneck is insurance. If that is not settled, we will no longer be able to transport oil." 

Comments from shipowners, including in India, have been almost identical, although some bravado is displayed from time to time, as when Indian shipowners say they will carry Iranian oil regardless of sanctions, because the Indian Flag's safety record in the region has been excellent and so the chances of a heavy claim are low. If only it were that simple. 

Two of the old boys- Japan and Korea- are said to be trying to get the EU to change its mind, or at least push the July ban date further away, but my sense is that the West has smelled blood with these sanctions, which seem to be hitting Iran- and, almost concomitantly, India and China- hard. My bet is that the EU will push hard for a complete ban in July; I guarantee that the US will be looking over the EU's shoulder while it does so.

Some countries are also considering sovereign guarantees, where the State will pay for any clean up of oil or other damages in the event on an incident. Given that the public sector SCI is likely to be the hardest hit, India too is looking at this option (besides asking Brussels to be exempted from sanctions), and so are Japan and China. India is also pushing its State owned insurance companies to cover up to 50 million dollars worth of potential claims, but this figure is peanuts. Exxon Valdez cost $7 billion to clean up and settle, and that was thirteen years ago. 

Of course, the Americans- old enemies or old friends of Iran, depending how far back you want to go- have been ratcheting up the pressure for a long time. The ban on doing business in the United States for any entity that buys Iranian oil- a US concoction- is being sought to be creatively circumvented by Asian countries. China wants to buy Iranian oil and pay in gold. India wants to barter consumables or pay using the Rupee. The US actions and the present situation- what a US Congressman derisively calls an Iranian "junk-for-oil program”- smacks of economic warfare against Asia too, just like the EU one, though I am sure they will all pretend this is collateral damage.

The war is well and truly on. Under American pressure, Lloyd's Register, for example, has joined a plethora of industries that have stopped- or are stopping- operations in Iran. "The Americans came to us and said that if we continued to work for the Iranians we would be blacklisted in America," Lloyd's CEO told reporters in Singapore last week. 

The bottom line is that the US and the EU have discovered that marine insurance is a potent weapon in their armoury. Having chanced upon this, they will use it repeatedly. Thirsty-for- oil countries like India and China are at particular risk. Given that the conflicts that the West chooses to involve itself in usually have oil at the top of the agenda, it can be safely assumed this risk will not disappear even if the Iranian imbroglio does.

Countries in Asia therefore have no option but to develop- and reasonably quickly- reinsurance capabilities of their own. I am far from an expert on this, but I do not see why we cannot have insurance markets in Singapore, Hong Kong or even (dare I say it) Mumbai that match those in London. Makes economic sense too. 

This strategy will ensure that Asian core interests are not held hostage to the idiosyncrasies of a bunch of Western politicians belonging to States whose antecedents do not inspire confidence at all. Quite the contrary, given the warmongering and illegal invasions-for-private-gain that many of their leaders have inflicted the world with.