July 31, 2014

Acche Din coming for Indian shipping?

A couple of months ago, Prime Minister Narendra Modi rode in to a historic electoral win in India with the slogan ‘acche din aane wale hain’ (the good days are coming). A flurry of recent announcements on coastal shipping, inland waterways, domestic tonnage licencing- and even amphibious buses- have made many believe that the good days for shipping may be already here. My optimism is tempered a bit, though, because, for one, the devil will be in the details that will follow. Also because I believe much more needs to be done, and I trust Modi- coming from a maritime State like Gujarat- knows this better than most. I will reserve judgement for now, though; it is early days for the new government yet.

Nonetheless, the signs don’t look too bad. More importantly, somebody in the government seems to be listening to at least part of the industry, for once. The period of terrible neglect that Indian shipping and the country’s waterways have suffered over the last few decades may be finally coming to an end, and that can only be a good thing.

Here I will only mention a couple of the bigger announcements amongst the many smaller ones made so far:

A new category of ships- “Indian controlled tonnage”-will get preference in carrying coastal cargo over ships owned by foreign lines (but after preference is given to Indian flagged tonnage) - they will have right of first refusal. This new regime seeks also to allow Indian shipowners to register new tonnage abroad, and to therefore seek cheaper credit outside India to do so.  An additional caveat that is actually a good thing- at least half the crew must be Indian, and the ship should undertake training of cadets as per the tonnage tax regime.

What this means is that Indian shipping companies- who can only charter or operate foreign flag ships today- will soon be able to own and operate foreign flag vessels instead of buying them through a subsidiary as they currently do- a needless circuitous  exercise that puts them at disadvantage. Another plus- these ships will not be subject to more restrictive Indian flag rules. Even though no existing Indian tonnage can be flagged out to take advantage of this new provision, domestic shipowners will now be able to register their vessels in tax friendly countries and operate them from India. This should boost the numbers for Indian controlled tonnage somewhat, and end up with more Indian cargo carried on Indian bottoms.

Another welcome change: Lifetime licences will be issued to domestic shipping instead of the ridiculous annual renewals that are required today. This licence will be co-terminus with the Certificate of Registry of the Ship. All this should stop the perpetual run around of shipowners to the MMD and beyond. The process has been decentralised and liberalised. Good.

For me, however, the most exciting announcement has to do with the promotion of Indian waterways. A new, Rs 2000 crore two-phase project is slated to commence soon, and will develop more than 300 km of waterways. The "Inland Waterways Authority of India (IWAI) has signed a pact with the government of Odisha, Paradip and Dhamra Ports for the development and maintenance of viable stretches of National Waterways-5," an official is quoted as saying in a business newspaper. This would be completed by 2017. The proposed waterway will help the Kalinganagar and Vyas Nagar Industrial hub and be a boost for coal, iron ore and other movement.  

The Shipping Ministry is rumoured to have also proposed to Mr Modi the creation of a major waterway project to develop a staggering 16,000 km of inland waterways. This includes, I think, the plan to develop the Allahabad-Haldia waterway, something that can give a huge boost to the economy in general and to domestic shipping in particular. 

Other proposed projects involving seaplane services and amphibious buses in Mumbai seem to be more feel-good than long-term beneficial. On the other hand, this is the first time in many years that I have heard any government talking seriously about passenger ships on river-ways, or passenger terminals ‘like airports’. 

Meanwhile, while all this is going on, the Maritime Association of Shipowners, Shipmanagers and Agents has urged the government to ratify the MLC 2006 that comes into force next month (The thing has been lying in the Parliament since last year). MASSA claims that it is doing so because jobs of a hundred thousand Indian seafarers, that it says contribute $2 billion annually to the national exchequer, would be at stake. In reality, MASSA is probably more worried about the impact of non-ratification on Indian registered tonnage or Indian manning agencies, and is using the seafarers human face (recognised, for once) to try to push things along.

Anyway, I don’t think we need to be overly concerned about the MLC; India can’t stay away from ratifying it; not for long, anyway. Besides, it is here to stay, ratified in India or not. Although I doubt very much that the MLC will bring the much touted (by the MLC brigade, not Modi) ‘achhe din’ for any seafarer, Indian or not.


July 24, 2014

Basic instinct

That the Indian education racket is not limited to maritime training is hardly unknown. Maritime education and training institutes are not the only ones that delight in churning out graduates lured in by miss-selling and seduction. Besides, students elsewhere are also poorly educated, are often not fit for purpose, and are under-employable (or downright unemployable) when they graduate. Add to this the fact that the youngster’s choice of profession has often been made without much thought to anything else except hyped pay packages- the process resembles an abattoir assembly line more than anything else- and you have a recipe for disaster.
Take Business schools, for instance, the much preferred destination for tens- if not hundreds- of thousands of students. The fact is that, in India, many of these have been operating at a reduced capacity for a couple of years or more. Employment rates are falling (down to 18% this year, according to the Associated Chambers of Commerce and Industry). Thousands of MBA grads are unemployed. The elite schools do not have this problem, of course- they rarely do in any industry.  But, “More than 220 B-Schools have already closed down in 2013," says Secretary General of Assocham DS Rawat. More than 160 management schools have shut down in India in the past two academic years; 94 more want to shut down today.

Take another popular career choice- engineering. Post the software boom two decades or so ago, software engineering colleges mushroomed like fungus. Never mind that four out of five all their graduates were unemployable. Never mind that the software industry was spending a billion dollars a year in making these graduates useful after they employed them. I was looking after a software company during some of this period; the percentage of engineers with poor English, academic, professional and soft skills was- akin to the story seen in maritime training today- appalling. The situation is no different today, and, by all accounts, cuts across engineering disciplines. 
Unsurprisingly then, many engineering colleges have shut down and many more are up for sale today- especially in the South, which saw huge growth not so long ago.
So what has all this got to do with maritime education and training?
I will answer this question with another- Why is the MET space so sanguine about its long-term viability? What makes them think that maritime colleges are insulated from closure even if demand vanishes?
In my opinion and keeping the experience of the business and engineering schools in mind, the maritime education and training space needs to remember or recognise a few things:
Most importantly, that educational institutes do close down when the bubble of market oversupply bursts, or when enough students realise that the emperor has no clothes.
Another, that political or bureaucratic patronage and corruption- that may have got you the required approvals in the first place- are eventually no protection. You can still be forced to shut down if you cannot make money.  Remember that many of the engineering and business schools have surfaced in identical murky circumstances of patronage.
Three, oversupply in MET shows up more easily than elsewhere, because a typical maritime institute graduate is not really educated or trained to be anything else except a seaman, and does not get decent employment anywhere else.
Four, it may be wise, given the state of affairs in the MET space in India, for institutes to have an exit strategy if the bubble bursts. (Can’t resist a tongue in cheek comment- will they open an engineering college instead? Or a poultry farm?)
But before they realise all this, MET institutes - and not just the private ones; look at the mess within the Indian Maritime University- need to realise this first: The best protection for your business is excellence in training and education. It will not bother you too much if other colleges are collapsing if you are not. And that will happen only if your graduates are preferred by employers.
Therefore, the stress should not be on marketing, sales or misplaced seduction; the stress should be in delivery. In ensuring that the calibre of your graduates is recognised.
As happens often in life, the basics often deepen the moat around you.


July 20, 2014

Communication gap

Any seaman will tell you that the single biggest factor that makes his life at sea easier is cheap and easy communication with his family. Shipowners and shipmanagers know this. Yet communication and internet access remains a big issue at sea, although many positive changes have occurred in the last few years. So many shipowners still persist with their old niggardly ways, denying to their seagoing staff reasonable internet access at a reasonable cost that the much hyped MLC2006 is supposed to ensure. 

A new crew survey of 3000 crew from 30 countries by Futurenautics- in collaboration with BIMCO, InterManager and other organisations-  throws up some interesting statistics, the first of which is that a quarter of the crews surveyed did not even have access to a telephone at sea. Crew are spending, on communication, an average of $134 at sea and similar amount ashore every month, making the combined shore based and sea based crew communication market worth $2.6 billion per annum. More than half of all crews report that they have no access to the internet- although a third of crews have some measure of access on board. And internet or communication availability is a much bigger issue on container, bulk cargo or general cargo ships, crews report.

I don’t know if the hackneyed saying about statistics and bikinis being similar (what they both reveal is suggestive, but what they conceal is vital) applies to this survey. I do know, however, that shipmanagers need to remind themselves of a few facts if they want crews to prefer working for them. Because increasingly, cheap or free internet access at sea is the single biggest issue, probably after wages, which influences seamen about where they want to sail. 

Which is not to say that there has been no improvement in communication costs; many of the better setups today provide free email access, even access to social media websites and VOIP. Unfortunately, when it comes to crews and their ‘welfare’- a term I incidentally dislike- the percentage of the better setups is too often on the lower side. 

Shipowners must not ignore the fact that it is not just communication cost that matters to a seaman. Even without a couple of drinks in the good old days, I used to call my wife on the satellite phone at 8 USD. After a couple of drinks it was a much longer call. 

Shipmanagers must remember that sometimes crews just need to have their families tell them that everything is ok at home. They must realise the pressure that a sailor is under if this option does not properly exist, or if there is a problem at home. That is why a smart Master’s first question to a crewmember that is suddenly underperforming is usually, ‘Everything ok at home?’

They must not ignore the fact that many crews don’t have the time -or often the clearance - to step ashore today. That shore leave is also an issue. That they sometimes pay exorbitant sums to a shore ‘phone guy’ who brings a mobile phone in port for crew call business. That crews on fixed runs use their own mobile phones if possible. And that, at that moment, that call- sometimes made at the cost of work, sometimes, even at increased risk of operational safety, but made anyway, because it is now or never- is more important to them than anything else. And it is being made at the wrong time, workwise, simply because there will be no reasonable or cheap access to communication later. 

I have made many such calls. I have taken ships closer to the coast to get better mobile phone signals for me and my crews. I have even announced ‘good signal’ on the intercom, after which everybody finds some space on deck to whisper sweet nothings on the phone. 

Shipowners need to think why I feel I have to do this.

Above all, shoreside managers must remember that seamen are human beings with human needs, and that many are irritated by the fact that high speed internet and cheap phone communication that all of us- including them- are used to ashore is such a big deal on ships. And that the shore-ship gap is widening.

Imagine what would happen if a shipowner or manager told the crew that their monthly communication costs at sea of up to a hundred and thirty four dollars per head (if you trust the survey) would be paid for. 

Roughly twenty crew, so total monthly expense two and a half thousand. That is the total expense. However, the benefit to the shipowner- in crew goodwill, increased motivation, better performance, lower downtime and maintenance costs, happier crew, better calibre of crew wanting to join, etcetera, etcetera and etcetera – is priceless.


July 10, 2014

Slow march to extinction

The manning setups in India who cater to foreign flags seem to have accepted the fact that many of those who go out to sea today have little interest in sailing for more than a decade or so. They understand this because they see the fallout every day- not just with people wanting to leave, but in terms of lower commitment and other disadvantages that a disinterested or poorly motivated employee always brings to the table.

Acceptance is one thing; managing this change is much harder, especially as most shipmanning outfits are hardwired to focus completely on costs and treat everything else as low priority. The psyche of folk only interested in their clients’ perceptions about their own efficiencies does not have room for any long term planning of their critical human resources. 

That there are many issues connected with the fact that Indian seamen do not see themselves as ‘lifers’ any more is obvious. Where will experienced Indian senior officers come from when so many are quitting, or plan to quit, the moment they get what in India is called the chhapa- the ‘stamp’ of a Master or Chief Engineer- on their CDC’s? Are standards falling because fewer people are interested in doing their jobs- that they see as temporary- well at sea?  And connected: does our corrupt and corrupted on-board training regime need a total overhaul to ensure that people are fit for purpose? Should we be planning a shore based career path to those quitting sailing in order to retain them in the maritime industry? Are we at all concerned that Indian seafaring skills- also valued ashore- may be on a slow march to extinction?

As if often the case, shipping knows what needs to be done but will not do it because its culture does not promote a long term view of anything to do with seamen. The body-shoppers will tell you, if they are honest, that they don’t really care about the future of Indian seamen and that they see more Indian crews being replaced by those from other countries in future. The Filipinos, for example, have a long history of being ‘lifers.’ 

Most importantly, desired change will not happen because the bodyshoppers, the administrators and the wider industry are all usually interested only in the short-term. Long term interests of the Indian maritime industry or its seamen- a legacy going back thousands of years- are simply not on anybody’s agenda. 

This problem will not go away, you know. It will only multiply with time, because the existing stifling regime of international maritime overregulation will continue to feed shipmanagement companies and distance shipowners- who will eventually face the problem of a shortage in quality seagoing personnel, and who are usually more interested in human resources at sea- further from seamen.  

We all see the problem and we all know the possible solutions. We can even think up new ones- we aren’t that dumb. But, nonetheless, the solutions will not be found, I am afraid, much less implemented. Not without some drastic and collective brain surgery, they won’t.