September 2007

I sometimes wonder whether the media and maybe we ourselves do not joyfully embrace schadenfreude and the indulgence of self-fulfilling prophesy of doom. We seem to be overwhelmed just now with talk of “Recession”.

There can be no doubt that past overindulgence and borrowing have brought about the “sub prime” credit crisis and energy panic. What to me is surprising is that so few people seemed to have any idea that this sequence of events was completely inevitable. Government and bankers, particularly, showed themselves to be incompetent and ignorant or, at best, absurdly optimistic by refusing to acknowledge – and therefore make suitable provision for – what was to come.

The world economic situation is indeed serious and predicates that much will have to change in our hopes and expectations in the Western World.

Amidst all this however how should the Maritime Industries react, and what are our peculiar problems?

I am trying to be optimistic but realistic.

Market

The 6.5 billion humans who live on our little planet continue to “consume”. Thus economic activities – not least in food production – will continue to grow. The balance of trade position of the various continents will ineluctably alter but the total activity will continue.

Shipping, as the main method of transport will continue to grow amid changing trade patterns. But I sincerely hope that we shall not repeat the folly of yesterday and overbuild and oversupply. A very difficult thing it is to counsel prudence when freight rates have for so long been buoyant.

Already though there are creaking noises in Tanker and Dry Bulk rates while Containers are experiencing my dreary forecast of very serious over-tonnaging and falling rates. Indeed the Container Trades present a gloomy picture for 2009. A combination of over-supply of ships, sluggish growth of trade (1.7% growth in 2008 and 2.8% in 2009), soaring operating costs (bunkers, crew etc etc) is not a gleeful picture. The final death of the once mighty FEFC (Freight Conference) now banned by the European Commission comes at the very moment when it might have had a stabilising effect. Slow steaming and lay up now become a stark necessity rather than a matter of choice.

Ecology

Ecological concern over the conflicting influences of CO2 and sulphur will further promote inter governmental “action”. Thus the fuels themselves and the machinery of ships will need to conform to new legally enforced requirements. The opportunity for the Maritime Community presented by this is to institute a well ordered and presented PR movement to demonstrate the eco friendly position of shipping when compared with other forms of transport (notably road). Parenthetically, is slow steaming (“big, fat and slow”) now here to stay?

It would represent a real triumph for me as I have for decades been supporting the concept of the ‘pipeline’ as opposed to high speed projectile like freight vessels.

Manning

Much has been said and written – though rather less done – about the need to attract and train young people to “go to sea”. The profession has changed beyond recognition during my lifetime; it has lost much of its unique attraction and cachet. (“Only sailors – jack tars – see the world.” Very different today.) Crews are small; port time (often at a miserable terminal) is short, etc etc. The working life cycle of seagoing still needs to be re-approached so that the young can enjoy their years until, say, mid thirties, in the highly responsible shipboard life before coming ashore as trained “Transportants”. Ship people have become far more akin to airline pilots and must be awarded more defined leave, pay and conditions.

This is an old hobbyhorse of mine, I know.

Regulation

The industry is becoming awash with international and national regulatory rules. One is not arguing just against this nanny type behaviour but at the steady growth of different authorities in dreaming up “rules” and individually enforcing them. IMO should be the only arbiter of maritime behaviour, backed by its constituent sovereign states.

Safety

In our “blame society” day-by-day attention is being directed at identifying just who can be named as being responsible for any and every act. Owners, Flag States, Classification Societies, Insurers, Port Authorities, Financiers can individually or severally be enthusiastically accused of negligence.

In reality Shipping has an enviable safety record and though complacency must be resisted this record should be fiercely protected to the public. Personally I have been surprised at the weak response from the Industry who have frequently adopted a tremulous “Yes we must do better” attitude to inaccurate criticism.

Piracy

With hijacking becoming positively regular in the Gulf of Aden (more than 40 this year) and the West African Coast on top of many previous occurrences in the Malacca Straits, it becomes imperative that Governments should get together and enforce police activity through combined Naval presence. It is appropriate that the IMO through Efthimios Mitropoulos its excellent Secretary-General is taking the initiative in this.

I am proposing that IMIF will over the next period at its regular lunches and elsewhere address all these continuing aspects. They are by no means original but a determination towards action rather than words will be.

PS        Since writing the above we have had the appalling further shocks involving Lehman, HBOS, even Fortis and Goldman Sachs. Does it mark the final obsequy of Investment Banking? What surely it does indicate is the need to return to living within one’s means and working on the productive areas of the economy rather than the esoteric paper/money shuffling devices of the Capital Markets.

 

Jim Davis