The future of seafaring . . .

There is no cogent number on how many seafarers there are in the world, simply because there is a vast range - mainstream ocean going ships, armed forces, research vessels, coastal fleets, inshore transport, pleasure craft, support services, port auxiliaries, and the rest of it. Then, add to this, the vast number of "ir-regulars", from pirates in the Indian Ocean to people forced to work on fishing boats, and on to pure and simple "unknown ventures". The last known figure for seafarers on mainstream ships alone was about 1.2 million, by BIMCO - but way back in 2005. The ballpark figure for seafarers of all sorts, worldwide,  qualified in some form or the other, is around 4-6 million - and may well be more if one takes into account the number of people who are at sea variously and absolutely unqualified.

 

Add to this the number of people from other trades who, for one reason or the other, also work on ships - as inspectors, security personnel, repair workers, hospitality workers on cruise ships and similar - and can be said to have acquired reasonable seafaring skillsets - and you have an even bigger pool of people who can, in some way or the other, work on ships. And who will, obviously, impact the supply-demand economics. Ideally, much of this group of people should have been organised, in one way or the other. Truth is, the number of seafarers who are part of any ITF affiliated agreements, is said to be around 600,000 (ITF, 2010). So, at a modest estimate, almost 90% of the people who are "at sea" are really that - disorganised groups of people without direction or collective strengths.

 

Organised or otherwise - and it is important to remember that the global bastion of worker rights, People's Republic of China, does not permit its seafarers to be part of unions - all seafarers share one thing in common, though - being party to the tendency and economic requirement on the part of the owner and operator to always keep cutting costs. Sure, suitable noises are made about "quality", but if you compare quality of life ashore in other professions with the way quality of life onboard has evolved for the seafarer over the last few decades, then one thing is clear - the shipowners of the world are absolutely aware of how the largely "open register" system of ship-owning works towards making the seafarer a commodity which can be exploited almost at will.

 

There is yet another deeper issue at play - if salaries at sea are increased, and quality of life improved, then more people from the costlier developed countries will want to come to sea. These people will then certainly be well organised, as well as lobby with good success rates with governance in their own countries, to ensure reservations and jobs for themselves. However, at the same time, higher salaries will also lead to more qualified people from these countries coming to sea - and then leaving seafaring early. Because (i) they would have saved up enough in a short time and (b) their qualifications would find a ready market ashore.

 

This, if you are a shipowner looking at a bottomline before anything else, is disaster. First you spend a lot of money training up a lot of expensive people which will also make your ships uncompetitive. Next, these very people will move on rapidly, leading the shipowner into a fresh spiral of high training costs. So, basic truth Number One if you want to be a succesful shipowner is to ensure that the system works to keep seafaring as an inferior career choice, depending more on people coming in from poorer countries, where some minimum levels of competency can be obtained. After that, they have to ensure that their ships are able to employ such people, which is where the conflict between "better than just technically seaworthy" and "open reigster" comes in.

 

Are we, then, likely to see an improvement in quality of life at sea and for seafarers in the near future? Or will it always be a situation where salary is driven by supply/demand as well as cyclical surplus/deficit scenarios, tweaked around a tipping point, where 2% makes all the difference between good times and bad?

 

The answer, as always, is not as simple as pure numbers would lead many of us to believe. Here are some possibilities that may impact things:-

 

# The "Black Swan" effect - where a logical but unseen effect may suddenly cause a huge change in seafarer dynamics. Increasing prices of oil, shut-down of a major trade route, unpredictable weather, and more. The lessons of Suez Canal being shut down in the '70s are not all that far behind us, nor the effects of the various defaults and failures in the financial markets, or simply the possible effects of more regulations impacting shipping.

 

# Higher unemployment ashore in many countries, including the traditional seafaring countries in Europe which saw seafaring going on the back-burner, which could see more people come "back to sea". This, incidentally, is already being observed in England and Scandinavia. Shipowners will always prefer people from their own countries, choosing to save on the foreigners they end up hiring - sanctified by ITF, by the way.

 

# The faint chance that life at sea may well become better soon - with better communications, lesser working hours, bigger complements on board and most of all - introduction of suitable relevant HR practices pertaining to seafarers more than "crewing department" kind of treatment most seafarers are subjected to. Another simple truth and influencing factor - the freshest air is still what you get at sea.

 

In all this and more, morality and ethics have hardly any role to play, especially as far as shipowners and operators are concerned. The drivers are always, but always, purely economic. Due sounds are made, of course, towards flags and nations - but if true beneficial ownerships are analysed, then these seldom, if ever, stand any test of truth.

 

The seafarer, on the other hand, is expected to perform at sea as per a variety of unwritten traditions, the most important one being "ship before self". Never mind double book-keeping on wages, substandard food, tremendous over-work. The psychological demand on seafarers is simply unrelated to the reality of numbers whether onboard or ashore.

 

What, then, is the solution for seafarers? Or are they destined to keep on sailing, generation after generation, with working conditions aimed at keeping them in what is known as "inferior goods" conditions? Truth be told, again, seafaring jobs do tend to fall into the category of "inferior goods", witness the drastic decline in basic courtesies and respect (not) being extended to seafarers by "authorities" worldwide. Be it restrictions on shore leave, criminalisation, or simply the way the juniormost of Customs or Immigration or Health or other categories of people who visit ships officially treat them, it is very clear that the seafarer commands less respect in some case now than, say, a State Transport bus driver. Sad, hard words - but true.

The Great Iron Ore Export scam - from Indian seaports . . .

Previously published at Moneylife . . .

http://moneylife.in/article/the-great-iron-ore-rip-off-buy-from-india-for-60-s-and-sell-it-for-around-200-a-tonne-landed-price-overseas/16790.html

The Great Iron Ore Rip-Off: Buy from India for 60 cents, and sell it for around $200 a tonne (landed price) overseas

As a nation, we are peddling our scarce natural resources that cannot be replenished. Global players are mining iron ore for a song, destroying the natural habitat around the mines and shipping it to metal-hungry destinations and making super-profits. As usual, the powers-that-be are silent  

As an ex-seafarer, the first cargo I loaded on a ship, way back in 1975, was iron ore from Vishakhapatnam (or Vizag) to Japan. Always interested in matters beyond my purview, I remember that the charterer in this case was the government-controlled monolith, MMTC (Minerals and Metals TradingCorporation), the buyer a Japanese trading house connected with Sumitomo-and that the price achieved for this shipment, delivered at the port of Nagoya, way back then, was around $17 a tonne.

The price that the Indian Government achieved, through MMTC, was around $10-$11 per tonne -ex-Vizag, loaded onto our ship. The rest was on freight and other costs. Laughingly, it was pointed out that kickbacks were high, around 15%-20%, but were likely to be impacted because the Emergency was on everybody's heads in those days. Even people at MMTC and STC (StateTrading Corporation) had to be careful.

This was for what is known as '60% FE lumps'. A very highly sought-after grade of iron ore that we export from India, and the rate is set in such a way that it permits for variations in quality along a few other parameters, using this as a benchmark.

60% FE in lumps is about as good as it gets. The Japanese term for it was the equivalent of malai, or "full cream", and we have a lot more in India. In the area, largely, called "Maoist", but that's not the subject of the debate.

The debate then was whether it was more profitable for the Nation of India to ship this iron ore to the US-East Coast (Norfolk) area-where the price achieved was around $25-$27 a tonne, landed.

What came in the way, in those days, was not just the freight rate-ships had to go around the Cape, since the Suez was closed. In addition, it was whispered,doing business with Japan was better for some corrupt people, since the Japanese were rumoured to not be averse to the idea of more than a few dollars per tonne as kickbacks, and making "relationships", while the Americans got slightly moralistic about such things then-5% to 7% was what was supposed to be their limit, and you often had to accept it in wheat.

Which was not a good idea, because India was getting 'free' wheat under the PL-480 scheme in any case in those days, which is a scam many may have forgotten.

In addition, the Japanese were very keen to provide the funding as well astechnology for building a railway line from Vizag into the pristine Aruku Valley area, to get the iron ore out more efficiently, and this was pushed through as a 'people-friendly' step to help connect one of the remotest parts of central India to the rest of the country.

Of course, nothing is free, so India was going to pay the Japanese back. In iron ore. And remember, west of Hong Kong was a huge swamp called the Pearl River Delta, then. And South Korea? South Korea was still teaching its sailors to work on ships. Under Indians.

So, we sold our iron ore in Aruku Valley to the Japanese for a song. How much they sell it in further trading, now that China and South Korea are also consumers, would be interesting to learn. Chances are, the onwards sale is atmarket prices, while the first sale is at the old pre-negotiated prices. We are still paying for that Railway Line, remember?

Think of it like this-you have a home in a remote part of, say, Maharashtra. You have some great boulders there, which can be extracted, broken down, and made into brilliant granite slabs. But you don't want to sell them or move them, even to the nice Japanese guy who comes to your house, because technically you can't and even if you could, you want to sell it one rock at a time, because the house is in a remote place.

So now the Japanese guy goes back to the government guy, and makes him a deal-the Japanese will pretend he is loaning money to the government, which will then cover the loan through its public sector banks, and the Japanese guy will then make a road to your house which nobody else can use, not even you, and then he will take all the granite away as soon as he can, for free, in payment for the road he helped build.

You will be left sucking your thumb, you may have to pay a toll to enter your own house on that nice new road, and if you protest, you will be called Maoist. But then, this is not about them.

That railway line from Vizag up into one of the prettiest parts of India rapidly being mined out of existence (the natural caverns being formed nearby are used as oil reservoirs, incidentally) now stands as a tribute to Japanese engineering skills. And runs between 40-80 rakes of iron loaded trains to the port cities of Vizag and Gangavaram, from where it heads off mainly towards the hungry steel mills of China, South Korea and Japan. But there are hardly any passenger trains on that route, and the few that operate, have to give way to the iron ore trains. I have been on this route once-and reached the other end 24 hours late, as we kept giving "pass" to iron ore rakes thundering past us.

To anybody except the most foolish it is clear to those who know this industrythat we are as a nation selling our resources. Fair enough, this does not want to become yet another article on the political and sociological, as well as economic aspects of this trade-people have been called 'Maoist' for less. But can we look at the numbers again?

The international prices of iron ore are shooting upwards, by as much as $20 to $30 in the last few weeks, and anticipated to go up by a similar amount to around $200 per metric tonne in the next few months. This is despite much lower requirements in Japan, and slightly reduced requirements in China, the two top global markets for iron ore. The top three suppliers of iron ore are Australia, Brazil and India.

The indicative price currently is around $170 per metric tonne for iron-ore lumps with a 60% FE content, cost plus freight landed at Qingdao in China as a benchmark, and freight rates varying from $8 to $16 per metric tonne depending on size of ship as well as market forces on freight rates. The saleprice of this kind of iron ore from Australia or Brazil is around $130-$150 per metric tonne, and rising, with some minor amounts for insurance, loading costs, holding costs, and other such expenses.

The royalty paid to the Indian government by the new iron ore exporters being invited in, like Posco, is Rs27 rupees a tonne for iron ore lumps. That's all. 60 cents. Not even a dollar a tonne. The rest is, apparently, part of the whole loan-loan-loan and more loan cycle, since Posco will help develop the area. At every stage in this financial game, there is a transaction cost, and it is instead of being in percentage points, now into multiples of the costs involved.

Agreed, there is a cost involved in mining the iron ore, extracting it, and converting it into lumps, which even after allowing for all sorts of cost overruns is not going to exceed $20 a tonne-an extremely high outer estimate. Agreed there is a cost towards "developing" the area, whatever it means. Agreed, some babu somewhere can justify how after 35 years, our export price is down from $15 a tonne to 60 cents a tonne.

But can anybody justify why the Indian government, the state government, the various public sector entities, the watchdogs, the parliamentary committees, the environmentalists, the media, everybody and more-why can't we get even some percentage of the increase in iron ore prices to the country's account?

Assuming the price has gone up by $50 a tonne, all other costs remaining the same, shouldn't the nation get at least some part of it-especially when all we appear to be getting is 60 cents a tonne?

And that is why anybody who disagrees will be called a Maoist, a seditionist and an anti-national. But this article just wants to know-how much of the increased price will we in India get?

An aside: The same companies who bid for iron ore mines in India, also bid for iron ore mines elsewhere in the world. The higher costs being achieved make it feasible to prospect for and take iron ore out from all new areas. There are more than a few Indian companies in the running for this business, and the royalty that apparently some of them are willing to pay for "futures" is in the $100 plus levels-for future imports into India, when we become an iron ore scarce and deficit region. Already plans are being made to ensure that ports being developed under infrastructure loans are geared up to handle current export and future import of iron ore.

Will DG Shipping soon face the next DGCA kind of probe?

And why not, then, when the truth is known in every back-lane and side-lane near every port.

This article from today's MINT is self-explanatory:-

http://www.livemint.com/2011/05/05234419/DGCA-warns-staff-with-kin-in-a.html


DGCA warns staff with kin in airlines

Regulator bars officers from taking decisions about carriers where their wards work to avoid conflict of interest.


Can we start thinking about whether the DG Shipping, Mr. Agnihtori, would consider implementing something like this at the DG Shipping and other allied offices, to start with?

RPS guidelines on employers of seafarers - DGS rules - essential reading

For anybody in the business of commenting on Somali pirates, please do a 360 and read these rules as applicable to employment of seafarers, and try to work out who else are the pirates as far as seafarers are concerned.

It is easy to blame piracy, but let us look within, also?




http://www.dgshipping.com/dgship/final/rules/ms_recruit_placement_seafarers_2005_Cov.htm

http://www.dgshipping.com/dgship/final/rules/ms_recruit_placement_seafarers_2005.doc

Defined - employer, bank guarantee amounts, and much more which the average seafarer just does not know about, to start with . . . consider this - from the day the aspirant seafarer answers her or his first advertisement on the subject of wanting to go to sea, how many pirates do they meet who take them for a ride?

One way of trying to join cruise ships . . .

Advice given to a young man in Delhi on how to join cruise ships - comments and corrections as well as views apprecited and welcome:-

To join cruise ships now, you will need:-

1)  To do 4 x basic courses called STCW/78, these can be done at  SIMS/Bijwasan, and would take about 2 weeks, cost about 15k.

2) An InDOS number, which the institute will apply for you, costs about 800-1000/-

3) Then, with these two things in hand, you simultaneously start looking for jobs, for which you have to check out the newspapers, catering colleges, etc.etc.

4) Once you have an offer, that company will or may sponsor you for a CDC of that flag which their cruise ship flies. There are hardly any Indian pax ships, and they dont require anything like what you have in mind. So it will be Panama and similar. Take a look here:- http://www.tsrahaman.org/  . . . you can do the 4 courses listed in "1" over here and hopefully pick up some grapevine on agents/jobs etc. Pleasant place, residential campus.

5) One more 3 day course called Passenger Ship Course, this is done in Cal/Madras/Mumbai. But is better done AFTER you have acquired a CDC or atleast got somewhere.

6) To acquire a CDC, a govt document, involves some run-around in Mumbai as well as the courses listed in "a". Also a job offer from some shipping line. All the foegin flag consulates are de-facto present there.

You can also do the 4 courses listed in "1" at SIMS (Sriram Institute of Marine . . .) Bijwasan,
http://simsnd.org/courses.php,

These are the 4 courses you will need to do, either at SIMS/Bijwasan (day course) or at TS RAHMAN (residential, nearest station by train from Delhi will be PANVEL, do not go by air or by train to Bombay central)

Personal Survival Technique

Personal Safety and Social Responsibility

Fire Prevention & Fire Fighting

Elementary First Aid
http://simsnd.org/courses.php

+++

Please also apply to:-

mumbai.leisure@vships.com

___

What do you think, short and sweet?

Lok Sabha, Parliament, and Indian Shipping . . .

Lok Sabha is where matters of great importance are discussed and often also debated. In between other episodes, of course, which many of us see on television and most of us otherwise have no information about.

Now and then some questions and answers are also handled, to do with shipping.

Here is a sample from the recent past:-

The Government has been taking various steps from time to time for the growth of Indian tonnage. These include:-

(i) In order to create level playing field for the Indian Shipping Companies with their global counter parts, the Government has introduced Tonnage Tax regime in India since the year 2004. Further, the liberalized policy on ship acquisition has been introduced and acquisition of all types of ships has been brought under Open General License (OGL). Besides, 100% FDI has been permitted in ship acquisition and registration formalities of newly acquired ships have been simplified.

(ii) The Government of India has formulated the National Maritime Development Programme (NMDP). It is a comprehensive programme aimed at various issues that need to be addressed to bring holistic growth in the Indian Shipping Industry. Under the NMDP, Shipping Corporation of India, the only Public Sector Shipping Company is in the process of acquiring a total of 76 new vessels with a total outlay of approximately Rs.15,000 crores, to be completed in phases till 2015. Of these, 22 ships have already been delivered and orders have been placed for construction of another 30 vessels.
The above information was given by the Minister of Shipping, Shri G.K. Vasan in Lok Sabha

So, now you know why Indian Shipping is still where it is.