No farewell to arms

The spate of pirate attacks on small tankers and other vessels in South East Asia over the last three months has followed a predictable pattern, and so has the industry response. The boarding of vessels by armed men who take control of the ship, destroy communications equipment, siphon off the liquid cargo to another small tanker or barge and disembark after stealing the crew’s valuables is followed, usually, by warnings broadcast to Captains of the increased threat and statements from countries around the kill zone (usually Singapore, Indonesia and Malaysia) promising to do more. The number of attacks has doubled in the last three years.

A third of global trade passes through these waters, but, as usual, we in shipping are reacting to threats rather than taking early and proven decisive action. Which is this- ships should be sailing with armed guards at the first sign of trouble.

In a rare success, coordination between Malaysia, Indonesia and Singapore did manage to foil an attack last month, the pirates fleeing the hijacked ship when they saw a patrol boat approach. But sailors like me, who have spent years on short runs in the South China Sea, the Singapore and Malacca Straits and in the rivers of Indonesia- and have been boarded by pirates once or twice- will tell you how quick and easy it is for a couple of boats to appear out of nowhere in those restricted waters dotted with hundreds of islands, and to disappear equally quickly after an attack. 

Piracy in these waters has been around forever, although thankfully in a more benign form than, for example, Somali piracy; I used to be more concerned about a collision or grounding with pirates aboard than being killed by them. But that is because ships cannot be hijacked for long here; there is no failed State around. 

The simple fact is that criminals around the world know for sure, thanks to the ease with which South East Asian, Somali and Nigerian piracy has flourished, how unprotected merchant ships really are. Terrorists know how vulnerable these ships are, especially when sailing in restricted waters like the Suez, in narrow straits, or close to the coast. Most of all, they know that the industry is impotent; it cannot- or will not- take quick action. 

This must change. The default setting must be that ships must be able to arm themselves. That the ability to fire a couple of warning shots in the air has deterred pirate attacks around the world is beyond dispute. No ship with armed guards has been taken so far. Even off Somalia. Patrols by the navies of the world are an inferior deterrent. Arming ships should be our first response, not our last; it works.

The UN, along with the IMO and the rest of the maritime industry, has no real option except to prepare the groundwork- and quickly, please- to make the option of armed guards a real (and real time) possibility. To enact legislation  and then persuade countries around the world that a few guns aboard a merchant vessel calling their ports do not constitute either gunrunning, a national security threat or anything else that is sinister. To put mechanisms in place that will give ship owners the option of arming their ships whenever the threat of piracy- or terrorism- is foreseen. 

Else we- and our crews- will forever remain hostage to anybody who can put a fast skiff in the water with a bunch of men armed with guns. Or worse, explosives. 

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Hashtag mess- the bane of the seafarer.

The IMO’s press release in the run up to the ‘Day of the Seafarer’ is an exercise in rambling self-indulgence and desperate hashtag activism. I also question the motives behind this annual attempt that asks- pleads with- society to value seamen; a plea should be directed at the shipping industry first anyway. 

“Every year, June 25th is celebrated globally as the Day of the Seafarer, an official United Nations observance day,” the IMO reminds us. “This year, once again, the IMO is asking people everywhere to show their appreciation, through social media, for seafarers and their contribution to global prosperity”.  The IMO then asks everyone to complete the sentence- “Seafarers brought me….” and post it on Twitter and Facebook, adding the hashtag “#thankyouseafarers”.  Probably to help the juvenile part of the audience that is buying this deceitful and trite campaign, the missing word in that sentence can be anything that came by sea. There is also an ‘exciting’ virtual wall somewhere on IMO’s website where people will write down the things that seafarers brought them and which they value the most. 

Most seamen will say that the IMO works first to further the cause of the shore based part of the shipping industry; seamen’s interests- even their basic rights- come a very poor second. To then use the seafarer to evoke sympathy for the industry- or empathy with it, which is what the IMO campaign is really about- is disingenuous, even specious. The fact is also that the industry does not have a human face that it can present to the world (mainly because it does not want to spend the money to do so); seamen are the industry’s face, or so it thinks. I find it offensive that my ‘face’ is being used- without my consent or approval- by a UN organisation in this cynical bait-and-switch way. 

I am not sure that it is the IMOs job to extort sympathy or empathy from the general public. Its job is mainly regulatory. If it is really concerned about seamen, a day or a week spent pulling them out of the woodwork and parading them on social media will not cut the mustard. By the way, do we have any numbers on how much is being spent every year on this ‘Day of the Seafarer’ exercise, and what, if anything is the pay off? 

 Perhaps the IMO should concentrate more on its day job, including the breaches of basic safety regulations that occur every day on many, many ships around the world-instead. Perhaps it should concentrate on ensuring that seamen’s basic rights- including those that are now claimed to be enshrined in the MLC- are actually delivered. Perhaps it should persuade shipping to value its seafarers before it asks the general public to do so.

The IMO’s use of the social media to create sympathy for- or awareness about- shipping reveals that the industry has run out of ideas. And, leaving my distaste for Twitter and Facebook aside, social media is hardly the place for in depth analysis of anything; it is a very hopeful quick fix. The problems of shipping- especially its seamen- cannot be solved in 140 characters or less. They cannot be solved by an annual feel-good event that nobody, within or without the industry, really cares about. Hoopla is no substitute for substance. 

Many of you will tell me, hey! The IMO is not looking to solve any problems with this campaign, so why are you making this fuss?  And what is the harm if they try to create awareness- or evoke empathy for the industry- even if it involves using seamen as bait?

No harm, I guess. If only I could get rid of the distasteful feeling I have in my mouth, I am sure everything would be just fine.

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Winning the battle but…

The boxship segment of shipping is at the cusp of a vicious churn. And overcapacity, low rates, alliances and continued newbuild orders will ensure that the shakeout will continue, probably for years. 

Since I have often said that a consolidation was inevitable, I kind of get where operators are going. What I do not get, however, is how the players who survive the bloodbath are going to get a decent and long term return on their investment. And I am still to understand how long- and to what extent- containership owners are going to continue to bleed before the mayhem stabilises. I suspect it will be a slow death for many.

Recent events do not hold out much hope; in fact, the battle promises to become even bloodier. Brokers are expecting a new wave of fresh ordering of 14000-19,000 TEU ships later this year, as the G6 alliance of operators beefs up capacity to respond to the P3 alliance in an era where economies of scale seem to be the only bow in the quiver. I guess these ships will be out in the next two or three years. What this will do to longer term overcapacity issues is anybody’s guess; many- including Maersk’s Nils Andersen- do not expect the excess tonnage problem to be resolved before 2017 anyway.

Even after the recent Chinese spanner that was thrown in the P3 works, I feel that alliances like the P3 and the G6 will be even more dominant forces in times to come. These folk are betting on big ships and cost efficiencies- Maersk alone hopes to cut its costs by around a billion dollars every year- but I suspect this is not going to be enough. Big ships need more slots to be filled on a round-trip basis. With demand fickle and weak, this is a particularly tough area to predict or exploit. A large boxship running below breakeven capacity does not give you any advantages of scale; quite the contrary.

I suspect that, if operators cannot increase rates in the next couple of years, then the only solution- alliances or not, large containerships or not- is going to involve scrapping of ships on a large scale. I say this because there is a limit to cost cutting and because I suspect that shipowners are already cutting close to the bone.

Scrapping of ships may be the solution long term, but the dismantling of large scale overcapacity is a hornet’s nest in any industry; with shipping, fragmented as it is, it is an especially messy proposition. Many shipowners are just not going to- at least not yet- dismantle ships that have not reached the age of retirement. Besides anything else, they will probably be booking huge losses if they do so.

Which brings me to another million dollar question: Given the state of the market, has the working life of containerships reduced dramatically? Imagine the massive, massive impact to the entire business model if it has. 

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Deja Boo.

It must be that that time of the decade once again; after approximately five years, stories about future officer shortages are starting to resurface once again. Coming up next, no doubt, will be masterfully written documents on what shipping must do to fill this presumed gap. These documents will, in the end, be useless, because shipping will only do again what it has always done- find the cheapest way to man its ships.

Drewry has recently published its “Manning 2014 Annual Report”, which says that the present assumed shortfall of 19,000 officers (where has the number come from? Are hundreds of ships laid up because they can’t meet minimum manning requirements??) will rise to almost 22,000 in three years. Perhaps because the report caters to an industry that is focused- to the point of obsession-on cost cutting, Drewry MD Nigel Gardiner said, “Manning costs look set to come under renewed upward pressure, putting a further squeeze on profitability unless owners are able to push freight rates higher." Particularly hit, the report adds, will be specialised vessels like LNGs. The availability of senior engineers across segments, shorter tours and ‘increased benefits’ to seamen (which ones??) are said to be other issues of concern to ship owners.

(Somebody should really compile statistics- in India, at least- of all those who have paid through their noses for Pre Sea training and have not been able to secure an on-board training berth for years. This is how we are gearing up for that presumed officer shortage.)

Here’s what I wrote a couple of years ago in this same column- “In 2009, a manning report put out by a leading British consultancy said that there would be a shortage of 33000 officers at sea in that year, and that this figure would reach 42700 by 2013. This despite the fact that, months earlier, the worst financial crisis since the Great Depression had already hit us”.  

Deja Boo! (A term I just coined. It means: trying to scare somebody with a story he has heard before.)

As far as I am concerned, all such reports are suspect and- more importantly- eventually useless. Alarming officer shortage statistics were put out from about 2005 onwards; the numbers seemed to rise every month. If the industry actually believed those reports, it should have been employing and training tens of thousands of future officers. Since it did nothing of the sort, then the inference I make is that either it did not believe such reports or that it believed them but did not see a problem because it had its usual Plan A all ready and fired up- find cheaper officers and/or reduce manning levels. 

Besides, these officer shortage tales, however well-intentioned or well compiled they may be, end up feeding a complex system of continuing fraud that is perpetuated- in India at least- against those who want to go out to sea. Training establishments will quote, once again, huge ‘officer shortage’ statistics to lure the innocent. Many officials in ownership or management firms will continue to take money under the table in return for putting these cadets out at sea. And, the low calibre, poor language and low motivation of many of these cadets will continue to guarantee that they never will make good officers- even if squeeze through their competency exams.

That is a point often forgotten in the numbers game; that the industry needs efficient and motivated officers, not just certified warm bodies. As things stand, only owners or management setups that train cadets and absorb all of them in their fleets have a chance in hell of achieving this.

Of course there is no shortage of ratings, and analysts will have us believe that the International Bargaining Forum (IBF, made up of the ITF and the maritime employers’ Joint Negotiation Group) works well to ensure that wages are well-negotiated and decent supply is continued. The same IBF has just concluded an agreement for three years, by the way; ratings’ wages will rise at a princely rate of 1% in 2015, 2% in 2016 and 3.5% in 2017.

In any other industry, a proposal for such a niggardly wage increment would cause hysterical reactions, but not in shipping. Here, it is survival of the cheapest and to hell with the seamen. We will worry about the risk that low quality of manpower poses later. Perhaps we can meet in Geneva or Bali to discuss this.

So beware seamen and wannabe seamen. Incompetent or malevolent statistics that-to quote myself again, sorry- “promote the myth and try to flood the market with mariners that ship owners will not pay an extra dime for” should be taken with a big pinch of sea-salt. 

The industry does not have to pay surplus officers anything if they sit at home jobless. Pushing the story of seafarer shortage is, therefore, to its advantage and to your detriment.

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