Upgrading of the shipping fleet
Left with a mere 14 over-age vessels, the PNSC management is busy trying to mitigate its losses and finds it difficult to show Pakistan Flag world-wide due to the very old ships.. The private sector ceased operating with the closure of Pan-Islamic Steamship Co. in 1998. Its last passenger vessel Safina-e-Arab, was demolished at Gaddani Yard. Since then, the shipping industry has made no progress.
A task force on Ports and Shipping in 1996 drafted a shipping policy and revised the Merchant Shipping Act of 1921 which was presented before the government. However, the government delayed the implementation of recommended measures and entrepreneurs lost all interest. In 2001, a new policy and a Merchant Shipping Act saw the light of the day after a lapse of five years. The document has become outdated in a rapidly changing world.
The private sector did not come forward. It demanded a level playing field with the public sector monopoly. The main disadvantage was that Pakistan flag vessels were denied entry to Indian ports. In 2005, a committee with participation of private entrepreneurs was formed and the shipping policy-2001 was amended. At the same time, a shipping protocol was signed in December 2006 removing some of the impediments. Only one private sector entrepreneur ventured with a container vessel but he too could not survive. Now a major effort is needed to induct private entrepreneurs and replace the PNSCs aging public sector fleet of 14 vessels, of which 11 are nearing 30 years.
Ports are being developed with land lord port concept and new container terminals are emerging, totally dependent on foreign ship owners. Pakistans growing trade of $50 billion remains largely dependent on foreign shipping lines and their local agents who increase freight at their sweet will, making our exports uncompetitive and imports expensive.
Pakistan seafarers who brought annually $70 million not long ago, were virtually jobless after 9/11 and were discriminated against. The Pakistani crew find it hard to survive while the . country continues to loose about $1.8 billion in terms of freight bill annually. Fortunately since 2003, the freight market is firm and due to a shortage of 10,000 officials, Pakistanis now find jobs with better salaries on foreign vessels. China, Philippine and India are emerging as the biggest source of human resource for world wide ship owning sector. Indian seafarers employed on foreign ships remit over $1 billion to their country.
With the changing world scenario, Pakistan has to update its marketing strategy for human resource which is second to none professionally,. . Shipping in the 21 century will be a new game of professionals. Gone are the days of monopoly trade and we have to be competitive to survive in a global free market .
Huge structural changes have taken place in the shipping industrys ownership, financing, management and crewing of the worlds fleet. The organisation of shipping activities has become truly international, with owners, operators, charters and crews coming from many different countries.
The changes have been accompanied by effective deregulation, particularly in the pay and conditions on board for seafarers. Unwittingly and unintentionally, the shipping industry has found itself with the worlds first working example of a relatively open labour market.
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 millions tonnes gross, a rise nearly of one-third ( in tonnes ) in a decade. Shipyards are busy and are not accepting new orders till 2010. Certain type of ships, such as cruise ships and container vessels, have seen growth rates of as much as nine per cent 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 per cent 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 an 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 up to $1 million a year between a typical Netherlands flag tanker and a comparable FOC. A Japanese crew of 11 could be replaced on an FOC vessel by a South East Asian crew of 22 and will save the owner US$ l million.
The industry has seen increased specialisation in both the type 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 centres of the world. Deregulation and intense competition have seen the average pay of seafarers fall by 25 per cent between 1992 and 1999 but improved 30 per cent 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 Oranisations minimum basic wage for an AB of $435. Far more fail to reach the ITFs consolidated AB minimum of $1.250 ( as at 2001) although a number of vessel 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 ratings
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 say SIRC. English language ability is probably the decisive factor in most of these cases.
Serious thinking is necessary for growth of Pakistans merchant fleet and to find lucrative employment to out trained seafarers.
The writer is ex-chairman, Gwadar Port Authority
Upgrading of the shipping fleet -DAWN - Business; November 26, 2007
