October 30, 2014

The National Maritime Authority is a bad idea

Not many in commercial shipping thought too long or too hard about President Pranab Mukherjee’s statement when it was made in the Indian Parliament in early June, where he announced that the government would form a National Maritime Authority (NMA). This is because they thought this was to do with the country’s maritime security. He said as much. His exact words: “Recognising the importance of coastal security, my government will set up a National Maritime Authority.”

It appears now, from the buzz in media circles, that the NMA is going to be an overarching body that will oversee not just maritime security but all aspects of commercial shipping as well, including trade and commerce and the offshore industry. Interestingly, media reports suggest that the NMA will make redundant the Directorate General of Shipping, which, under the Ministry of Shipping, deals with all executive matters relating to merchant shipping. So far.

If so, I think the NMA concept is ill conceived, overly cumbersome and a grandiose idea that lacks the required attention to detail. Let me tell you why.

The idea of the NMA (actually, a National Maritime Commission) was pushed by the Institute of Defence Studies and Analyses (IDSA) in May. Now, the IDSA is a Ministry of Defence funded think tank that has little expertise in maritime commerce. It is therefore, in my opinion, not qualified to suggest any kind of changes in the regulation or conduct of commercial shipping. That is assuming it did so in the first place, and that the reported possible disbandment of the DGS is not the result of some bureaucratic fancy.

More importantly, making the NMA responsible for two huge and distinct maritime functions- security and commerce- is setting it up to fail. The DGS looks after just one of those today and is nevertheless overwhelmed by its mandate to perform Flag State, Port State and Coastal State duties, not to speak of specific environmental incidents and the overview of commercial maritime education in the country. The NMA will have its hands full with coastal security alone, a massive undertaking that has still- after so many years since the Mumbai attacks- to be brought under meaningful control. The NMA should therefore not be given any other brief- especially a completely discrete one from security- like handling commercial shipping.

I am told that the NMA is supposed to be constituted along the lines of the proposed Civil Aviation Authority (CAA) — which is a centralised agency that will have effective aviation safety and oversight control and will replace the present Directorate General of Civil Aviation. I will point out that, if such a body is given the additional responsibility of taking care of security in the skies, then the CAA idea is as equally fraught as the NMA proposal. Our legislators should avoid the same mistakes many laymen make- security, safety and the promotion of commerce are three entirely different beasts.
Many writing for mainstream newspapers disagree with me about the apparent need to do away with the DGS. To them, the NMA idea makes sense. They point to the need to follow and merge IMO regulations with national ones. They rehash the age old criticisms of the DGS- that it is an organisation always led by a non-maritime person (who is transferred as soon as he or she has settled down!) and one that fails to attract the required numbers of professionals with the required expertise. An organisation that is weak and clumsy, has legacy and governance issues and has outsourced some of its functions- for example, to do with oversight on maritime education- to third parties like the Indian Register of Shipping and the like. An organisation that is under-resourced and so not adequately equipped to carry out its duties. Therefore, in their opinion, the NMA is exactly what we need.    

I don’t think so. Because, for a start, there is every likelihood that the proposed NMA will face an identical situation with respect to lack of resources or professional expertise as the DGS suffers today. Also, I foresee that, if the NMA replaces the DGS, many existing DGS personnel will simply be transferred to the new NMA, which will otherwise be staffed (probably in Delhi) by ex Indian naval or armed forces officers and bureaucrats with little knowledge of commercial shipping. I predict that such a National Maritime Authority will suffer from all the ills of the DGS, and will, in addition, find itself burdened to the point of paralysis with maritime security issues that can be overwhelming all on their own. 

Instead of proposing a big bang change that sounds good on paper but is likely to ring hollow in the end, the Modi government needs to think this NMA business through. The solution, in my opinion, is not to have a single body doing everything, but to keep maritime security separate from safety and the promotion of maritime trade. To revamp and strengthen the DGS and make it accountable. And, as always- always- attract the right people to do what needs to be done.

The government should realise that generic weaknesses cannot be overcome by the pouring of old wine into a new bottle. A grand plan, if not backed by the ability to execute it, always results in equally grand- even spectacular- failure.  


October 23, 2014

Let the Seaman Guard Ohio people go

It is time that India set free and sent home the guards and crew of the MV ‘Seaman Guard Ohio’ instead of threatening them with the ordeal of another trial. They have suffered enough over the last year.

The 35 men on the AdvanFort ship in India- British, Estonian, Ukrainian and Indians- were detained in India last October after their anti-piracy support vessel was forced into Indian waters in a storm. The Ohio crew were accused of illegally possessing weapons and kept in a Chennai jail. Most were bailed by April, and weapons charges against them were dropped in July. However, their passports were not returned to them, and now Indian security agencies- some say the Q Branch- have appealed to the Supreme Court to have the charges reinstated. Which, if it happens, means another protracted trial at the highest court in the land.

As can be expected, the case is made more complex by the actors in it, the murky world of private security contractors (AdvanFort is particularly murky) included. Then, Captain Valentyn of the Ohio has claimed he was tricked into Indian waters- by Coast Guard officials who told him the ship was in the path of a cyclone- and his ship subsequently arrested. He still faces charges of illegal bunkering- which, after a year, should be dismissed out of hand.

Not so easily dismissed are India’s legitimate concerns about its maritime security, particularly after the Mumbai terrorist attacks, something that has undoubtedly resulted in it being particularly hard on the Ohio and its armed men.

As I wrote here in another piece in January this year (Guns and cavity searches), I do not really consider the men of the Ohio as seamen. I sympathise with them, though, because their breed have helped my breed protect our crews and our ships. But that is not why I want India to set them free.

I want that because there is nothing I have heard or read that indicates that the men on the Ohio were part of any conspiracy against India or a threat to it. The fact that the weapons charges were dropped by the Chennai High Court reinforces that belief. These men- lured into Indian waters or not- were simply in the wrong place at the wrong time. In that respect, at least, they are like most seamen who have been criminalised. 


October 16, 2014

Employee engagement

There is little attempt, in the vast majority of shipping, to engage in any serious way with officers and crew during their off periods. The stress on human capital, its retention and its engagement may be considered important by more than three quarters of the world’s business leaders, according to a Deloitte global survey, many of whom want to make HR and engagement a continuous and holistic part of their business strategy. Not shipping, though. It is still stuck in medieval times wherever HR is concerned.

Even though shipowners and shipmanagers seek out their seagoing contractual workers for euphemistically called seminars and such, this, in reality, is rarely a serious exercise to solicit seamen’s views or, indeed, to make them feel that they are a critical part of a broader industry that cares for them. That, in any case, is not seen by individual shipmanagers as part of their brief; they usually want loyalty, not professional opinion. That people’s attitude affects productivity and safety is well known in shipping; that people need to be engaged- and emotionally invested- to improve both is an alien concept.  

That we fail to harness positively the countless years of collective experience of those who sail is sad, as is the fact that we don’t see this as an exercise- a common practice almost everywhere else- as one that is essential to the industry. And, although much of the fault for this must fall on those ashore, seamen themselves are also to blame for this state of affairs.

At the end of a contract, crews that sign off from ships are usually mentally and physically fatigued and, after months of living on ships, do not want anything to do with shipping in the little time that they have at home. They often have pressing issues that are awaiting their arrival anyway; affairs have to be put in order, children have to be educated and family problems have to be defused. Besides, it is time to relax. I, for one, used to want to disengage with ships and shipping completely the minute I stepped off the gangway. Even a call to a company seminar was considered both an imposition on my time and a waste of it; I was wasting enough time anyway attending usually useless STCW and other courses anyway. If somebody had asked me to engage with the industry in some other way while I was sailing- even to give feedback or opinion- I would have laughed at them. I had neither the inclination nor the time to do so.

Many seamen today are not just fatigued. They are weary, and are even more disillusioned with the industry than I was; one has to just talk to them to see that. Many are only in it for the money, such as it is. Most seamen do not feel any particular need to make an effort to give anything back to shipping; they just want to take their money and run.
This ethos exists in some other industries too, so perhaps it is unfair to single out shipping here. I do believe, though, that shipping is unique in its working environment and that there is a higher challenge to be faced here than, for example, in a call centre or in an IT setup. There is therefore a greater need for professional seamen to share experiences, best practices and the like. There is greater need to have a far truer and much wider maritime community than what we see today.

There is also a great need to have seamen feel that they belong in this industry as equals, not as second class citizens. For them to feel that their experience is valuable and their professional opinion is valued. That is an important first step that, barring a few exceptions, has still to be taken. 



October 09, 2014

The matter of the hub

The maritime sector initiatives announced by the new Indian Government have everybody in a euphoric tizzy. Shipping and its allied sectors have been neglected for so long that the sudden focus on the industry appears to be much brighter than it otherwise would. Or even should, because many of these initiatives, for example those connected with waterways, will take years before they pay off- there is no low hanging fruit here. Some measure of optimism is warranted, sure, but this must remain guarded optimism for now.

In my view, the Modi government in general, and Shipping Minister Gadkari in particular, need to look seriously at a critical area of shipping that they have ignored so far- the manpower segment. This will not just involve the overhaul of the corrupt and decaying (decayed?) seafarer assembly line; it will also include attracting and setting up legal, financial, insurance and other such markets in India, with existing senior Indian maritime professionals as their backbone. Additionally, an appropriately developed educational and training environment would ensure a steady supply of expertise for the future as well.

The advantages are obvious. The advent of marine finance, law and insurance firms will go a long way towards developing India as a maritime hub. These do not require massive investment; these require people with expertise, of course, and this is why creating an appropriate maritime business climate is essential. We do not have this yet, but mind-sets can change and be changed very quickly.

The assembly line issue is actually easier to resolve, if only the blind men in the industry would stop looking at the elephant one appendage at a time, blaming each other’s spheres of influence as the reason for the mess. Since those blind men will not regain their sight anytime soon, this problem needs a holistic solution imposed from above. It needs policing to weed out corruption. We know what needs to be done here. We have done it before. Not all that long ago, Indian officers were considered amongst the best in the world. That should be the aim once again.

Indians tend to see things in a vacuum. We fool ourselves, thinking that the rest of the world has stopped and is waiting for us to catch up. That this mentality is laughable is obvious; in the last two weeks alone, Singapore- which wants to challenge London- has announced plans to boost its involvement in marine insurance and ship finance. Working groups have been established to, amongst other things, “develop Singapore as the premier ship finance centre in Asia.” And in Dubai, a new maritime arbitration centre has been set up, the first of its kind in the Middle East. The Emirates Maritime Arbitration Centre will address and resolve maritime disputes based on legal frameworks and set maritime regulatory guidelines and standards. This is part of the “Dubai Maritime Sector Strategy” which aims to “position the emirate as a world-class maritime hub.”

Any guesses as to how many Indians will be part of the maritime growth of these two countries? Judging by the numbers already there, hundreds, if not thousands. This is worse than brain drain or economic loss. It is a tragedy that a country with thousands of years of maritime history- and one that aspires to be an economic powerhouse- does not have the wherewithal to exploit the expertise of its own nationals.

Messrs Modi and Gadkari need to act today. The climate and the machinery to develop maritime expertise- out of the huge pool of seamen and ex-seamen already available to them- needs to be put in place quickly. People are key-always. Little progress will be made in the maritime sector, including in the parts of it that they themselves have put under the development spotlight today, without men and women who are qualified and efficient to run those sectors. Not to speak of the tertiary and spin-off benefits to India and Indians of following the course I recommend.

It is imperative that we make a start now. India cannot hope to replace London- or even Dubai or Singapore- as a maritime hub by tomorrow, but it can start on a measured path that can make it a worthy rival in relatively quick time and with relatively low investment.


October 02, 2014

Profiteering with shale

The recent criticism of oil companies and US regulators in Japan and elsewhere in connection with US shale oil exports is meaningless, in my opinion.  The big oil companies are being accused of shale-export profiteering, at the expense of one of their closest allies, Japan and to the detriment of the US population. A four decade old law that held them back which said that US oil could only be exported in the public interest has been conveniently modified for them.

I still say this objection is meaningless because the US has a long history of doing just what it is being accused of- military intervention and support for despots included. So what is new? Why criticise now for an accepted capitalist practice?

The story, briefly, is this: the shale oil revolution in the US has set it up to become the world’s largest oil producer by next year, according to the International Energy Agency. However, it will still remain a large net importer of oil, because the shale oil it produces is too good; it cannot be processed by its own refineries that are geared to handling crude oil from abroad.

Simple solution, build new or retrofit existing refineries in the US to handle shale, right?  

Not so simple. Because the price at which oil companies can sell shale oil in the US is about 20 dollars a barrel lower than what it can sell to Japan. So exports make sense- to the oil companies, that is.  Besides, handling shale oil domestically would mean spending money on refineries. It would also create a glut in shale domestically and bring prices down significantly. Good for the US consumer. Not good for the oil companies. 

So they got together to lobby US (why do we word the word lobby for the US and bribery for India?) politicians to modify a 1973 ban on oil exports that was meant to protect domestic consumers. Obama signed this into law in June, allowing shale oil export. The oil companies are now getting rid of their excess inventories by selling shale to Japan at about 3 dollars a barrel lower than what Japan would pay for crude. And they have China in their sights next.

The US will probably export a million barrels of shale oil a day by next year- a third of Japanese imports- and will produce 3 million barrels a day by 2017.  Unsurprisingly, many companies are lining in the US for export approvals, which, by the way, cost them about a hundred million dollars a pop in administration, engineering consultancy, legal and environmental fees. Amongst them is a company owned jointly by an oil major and Qatar- a country much in the news for being a leader in funding the Islamic State.

Qatar is a US ally that produces the cheapest gas in the world. Given that instability and war in the Middle East always raises oil and gas prices internationally, Qatar’s behaviour of running with the hares and hunting with the hounds is understandable, if smelly. But I am sure that the oil majors and their political backers will simply write this off as just a conflict of interest.