Shipping in the 21st century

Pakistan's ship owning industry virtually collapsed and was left with 14 overage vessels owned by PNSC, a public sector organisation. The management is sincerely trying to mitigate the losses of past and finds it difficult to show Pak Flag worldwide due to old tonnage.
The private sector ceased operation with the closure of Pan Islamic Steamship Co in 1998 and the last passenger vessel under Pak Flag Safina-e-Arab, which I commanded in 70's too was demolished at Gaddani Yard.
The government of PML, being concerned, made a task force on Ports and Shipping in 1996 and members of the task force voluntarily at their own expense drafted a Shipping Policy and revised Merchant Shipping Act of 1921. The policy and act were presented to Government for implementation.
However, delayed implementation to such an extent that interested entrepreneurs lost interest and finally in 2001, a new policy and Merchant Shipping Act saw the light of the day after a lapse of 5 years, a stale document now in this rapidly changing and innovative world.
In spite of Government's efforts, no private sector interest came forward as they demand level playing field and no protection. The main disadvantage was Pak flag vessels were denied entry to Indian ports, an economy of over 200 USD billions. The Government in 2005 again constituted a committee with participation of private entrepreneurs and Shipping policy 2001 was amended and at the same time Shipping Protocol was signed in December 2006 removing some impediments.
Only one private sector entrepreneur ventured with container vessel Mega one, but due to poor commercial planning could not survive. Thus there is no private sector in ship owning. We have to strive hard to induct private entrepreneurs and replace the aging public sector fleet of 14 vessels, out of which 11 are nearing 30 years.
Ports are being developed with landlord port concept and new container terminals are emerging. However totally dependent on foreign ship owners' dictates. With no ship owning Pakistan IMPO/EXPO. Trade of 35 Billion USD, largely remains dependent on foreign ship owners and their local agents, increasing freight at their sweet will, thus making our IMPO/EXPO incompetitive.
Pakistan seafarers, who brought annually 70 million USD approximately, were virtually jobless after 9/11 and Pakistanis are discriminated against. Pak Crew is finding hard to survive - loss to exchequer. No one even pondered how to address the problem of trade and Pak crew as little importance is attached in shipping sector and the country continues to lose about 1.8 billion USD in terms of freight bill.
We must thank Almighty that since 2003 the freight market is firm and due to shortage of 10,000 officers, now Pakistanis can find jobs with better salaries on foreign vessels. China, Philippine and India are emerging as the biggest human resource for worldwide ship owning sector. Indian seafarers employed on foreign ships remit over USD 1 Billion to their exchequer. In Pakistan, with the changing world scenario, we have to address the problem professionally by marketing our human resource, professionally second to none, if we wish to have a slice in the cake. IMO is willing to offer free assistance in training of seafarers.
The Shipping in the 21st century will be a new ball game of professionals only. Gone are the days of monopolised trade and now we can only survive, if we are competent to survive in the free market economy. "We heard a lot of inflation, but now world may face "deflation" with interest rates falling. Warming up of Chinese economy with over trillion dollar reserves and the India, the economy is set to grow at 10% but recent collapse of household loans in US may create financial problems warned Bern Bernaske the Chief of US Federal Reserve.
Global Changes - international perspective.
Huge structural changes have taken place in the shipping industry in the ownership, financing, management and crewing of the world's fleet. The organisation of shipping activities has become truly international, with owners, operators, charters and crews coming from as many different countries. The changes have been accompanied by effective deregulation, particularly in the pay and conditions onboard for seafarers.
Unwittingly and unintentionally, the shipping industry has found itself with the world's first working example of a relatively open labour market. Taken together, these changes signify little less than a revolutionary transformation of the shipping industry and the emergence of the world's first genuinely global industry.
The development of international technical standards and their implementation through port state control have not been matched by agreement and enforcement of minimum social condition. In those sectors of the industry exposed to ruthless competition on freight rates , there has been an inevitable temptation to "cut corners".
The world shipping fleet continues to grow. It is estimated that there are around 87,000 merchant vessels of 544 million tonnes gross, a rise nearly one third (in tonnes) in a decade. The shipyards are busy and are not accepting new orders till 2010. Certain types of ships, such as cruise ships and container vessels, have seen growth rates of as much as nine percent per year, although there has been a decline in the number of general cargo and mixed oil, bulk, ore (OBO) carriers.
More importantly for seafarers, the importance of flags of convenience (FOCs) and second register has risen dramatically and they now cover nearly two thirds of the ocean going merchant fleet measured by tonnage. Just 10 years ago, the proportion was 44.5 percent. "Flagging out" to FOCs is primarily caused by a drive to cut costs, even though crew costs as a proportion of total voyage costs kept falling steadily since the 1960s.
They are inevitably the first target, as one of the few variable factors ship owners can control in the short term. However 2006 has seen increase in crew salaries and shortage compels owners to pay the market rates. Owners who flagged out, when the trend began in the 1980s had a competitive advantage - said to be upto US $1 million a year between a typical Netherlands flag tanker and a comparable FOC. A Japanese crew of 11 could be replaced on an FOC vessel by a South East Asian crew of 22 and will save the owner US $l million.
The industry has seen increased specialisation in both the types of ship containers specially tankers, and roll-on roll-off ferries - and in the management of vessels. A new breed of fleet managers has grown up in the last 20 years and is present in all the traditional shipping centers of the world, such as Glasgow, Hamburg, London, New York and Piraeus as well as Hong Kong, Singapore, Kuala Lumpur and Bombay. Deregulation and intense competition have seen the average pay of seafarers fall by 25 percent between 1992 and 1999 but improved 30% in 2006.
Nearly a third of those at sea report working more than 12 hours a day and modern ships are just as likely as older vessels to have accommodation that is cramped, noisy and infested with cockroaches. Many seafarers are paid below the International Labour Organisation's minimum basic wage for an AB of US $435. Far more fail to reach the ITF's consolidated AB minimum of US $1.250 (as at 2001) although a number of vessels are signing ITF agreements. The largest study of the supply of seafarers suggests there are about 404,000 officers and 823,000 ratings worldwide. They are chasing 1.02 million jobs, split between 420,000 officers and 599,000 rating.
As a consequence, there is a slight shortage of officers and a global surplus of rating. Seafarers increasingly are from the east of Asia, the Indian subcontinent and from eastern Europe. The numbers from the industrialised countries continue to fall. The most recent survey by the Seafarers International Research Centre (SIRC) says crewing levels have stabilised with the average crew for bulkers, container ships and reefers now being 20 and 24 for tankers.
Crew of mixed nationality are common, but they are chosen deliberately. Language ability and inter-regional preference are often the deciding factors. "While Filipino, Polish and Indian seafarers frequently provide large proportions of crews, they are less likely to form whole crews in FOC ships", says SIRC.
English language ability is probably the decisive factor in most of these cases. Where standards of English are relatively low, as is widely held to be the case among seafarers from the Russian Federation and the Republic of Korea, it is presumably prudent to employ them in homogeneous and monoglot crews. Indian, Filipinos and Poles are on the other hand, thought to be sufficiently proficient in English and can therefore be more safely mixed with English speaking senior officers of other nationalities.
We, as Pakistan merchant fleet or crew have lost our ground. Serious thinking is necessitated for growth of merchant fleet and to find lucrative employment to our trained seafarers in the global scenario, addressing impediments of post 9/11 scenario. Training of seafarers and inducing them to modern technology and proficiency in English language can create an edge over other nationalities. Needless to mention we must also train the trainers to teach IMO / ILO Conventions and Safety/Pollution requirements.
The indicators that Pakistan may re-emerge as ship owning country is bleak. However we must strive to capitalise our human resource potential by producing good quality seafarers who are compatible to international standards and set a target min 100,000 officers/rating to cater the worldwide demand on foreign vessels. It is not an ambitious target as Philippines has a registered crew of 0.5 mill people and earning 2/3 Billion USD for their national exchequer.
(The writer is Ex. Additional Secretary & Director General Ports & Shipping, Ex. Chairman Gwadar Port, Member Board Port Qasim Authority, Governor World Maritime University Malmao (Sweden) Member (IMO Secretary general's Panel of Experts, London.)