Burgess COMMENTARY

Peter Burgess

Calculating the Human Cost of Hanjin’s Collapse

The policy of U.S. immigration officials, who have barred Hanjin sailors from coming ashore, is merely the most overt part of the pain being experienced by these mariners –and others, all over the globe.

A long time ago – way before there was something called MLC 2006 – I was a cargo surveyor and loss control man working out of Houston, Texas. That job took me to a lot of places, but much of that involved being sent 75 miles offshore into the U.S. Gulf to the various lightering zones where VLCC’s would arrive with far too much cargo (and associated draft) to enter U.S. ports. There, my principals would ask me to attend as many as three, four and even five crude oil STS lighterings. That crude oil, once transferred to smaller 500,000 barrel capacity vessels, eventually would discharge at Gulf coast refineries.

One such assignment took place off of Southwest Pass, Louisiana. The independent inspector and I were transported as usual via helicopter to meet the mother ship. Coincidentally, it was a Korean-manned tanker that had lifted its entire cargo of Nigerian crude oil more than two weeks prior. Upon disembarking the helicopter on board, we met with the Master who advised us that the first lightering vessel was still more than two days away. With that bit disappointing news out of the way (after all, there’s nothing like an extra two days offshore camped in the cadet’s cabin), we headed to the conference room of the non-air conditioned vessel to sift through the consignee’s documents.

Once seated in the conference room, the Master asked us if we wanted some refreshments – a beer, perhaps? – while we went through the documents. The inspector and I looked at each other and shrugged. With two days to kill and not much else to do, it sounded like as good an idea as any other. Sure, we’ll take a beer, we said. A few minutes later, the ice cold beverages appeared and as we cracked the seals, we found ourselves being stared at by what seemed like at least half of the ship’s complement. I turned to my inspector and said quietly, “I’ll bet you five bucks that these are the last two beers on the boat.” I was right.

They also didn’t have much of anything else. By day two on board, we were reduced to consuming some sort of thin gruel at each meal. By the third lightering operation, I finally asked the old man if they were planning on getting stores any time in the next decade. He apologized (profusely) and said that he had requested a full re-provisioning several times but that it had not yet come and probably wouldn’t until the full lightering operation had completed and they could move closer to Southwest Pass for bunkers and other logistics.

I was none too happy and I’m guessing the inspector – who was anything but a small man – joined me in that sentiment. He later confided in me that he had lost 10 pounds during that week from hell. Our discomfort, however unpleasant, was temporary. Unlike the VLCC’s crew, we could sneak a sandwich or a bite now and then on the lightering vessels as we crossed back and forth to do custody transfer surveys. Meanwhile, you had to feel for the crew, and we did.

You could see the impact of the reduced diet on these guys; both in terms of performance and general attitude. As we lifted off in the helicopter more than one week after arriving offshore, I was thankful that I had options that they did not. That sort of thing, they tell me, happens a lot less often these days. We can thank the Maritime Labour Convention, which entered into force in August 2013, for much of that progress. But, clearly there is more to be done.

Fast Forward to 2016

A prolonged downturn in many seagoing trades – offshore support vessels for energy, the bulk trades and container shipping, just to name a few – is still ongoing. You didn’t need me to tell you that, but the long term impact of low freight rates for the bulk and boxship trades is cumulatively taking its toll; here and globally. For the offshore support sector, this typically has translated into outright vessel layups. For those crews, the pain of unemployment is punishment enough. For those still employed at sea on marginally profitable or breakeven vessels, the fallout is less evident. Nonetheless, it is there, and it is significant. The downturn affects what operators can spend on amenities, safety, and everything else in between.

Perhaps the most egregious example of this situation has played out in the collapse of one of the world’s largest shipping companies. As Hanjin Shipping struggles to right the ship and satisfy its many creditors and customers, lost in the mix is the human cost of the disaster. Just last week, it was being reported that crews aboard Hanjin vessels in American ports were being prevented by U.S. authorities from coming ashore. Adding insult to injury, the policy further punishes crews who, through no fault of their own, are toiling for a principal that no longer has the means to pay for bunkers, never mind trivial things like fresh water, food and other basic necessities.

Soon after the announcement of Hanjin’s financial collapse, position reports of the 97 vessels under Hanjin’s control were widely broadcast. And, as the legal wheels churned in preparation of any Hanjin vessel that might try to reach berth, plans were made from the other side for the arrest of the vessels. The operator, in return, pondered its next move and knowing what was likely to come next, hesitated in berthing its vessels as scheduled. For all that planning, I’m guessing very little thought was put into mitigating the impact that the situation might have on the thousands of mariners that found themselves stranded on board Hanjin tonnage. Preventing those who did get to the berth from disembarking for a few hours of respite at U.S. ports (under the misguided premise that they might be flight risks) was a prime example of that metric in play.

Also lost on the many analysts, stakeholders and the Wall Street MBA’s who prognosticated on what might come next was the fact that a shipping company that can’t afford to pay its bills also lacked the wherewithal to feed its mariners and buy fuel to ensure that the hotel functions of the vessels remained viable. And, many of these vessels spent weeks at sea awaiting some sort of resolution that might allow the company to dock and discharge the vessels. During that time, of course, reprovisioning and refueling of these ships simply wasn’t possible. I’ve got a pretty good idea, based on previous experience, as to what they now eating.

In one case just recently reported, four Scottish cadets were finally repatriated from a Hanjin boxship in the Far East after spending weeks at sea as the operator schemed to avoid the vessel’s arrest international waters. Now reportedly back in the UK, the cadets are among the lucky ones. Another estimated 2,500 seafarers haven’t been as fortunate. As the situation plays out, we have to hope that all will eventually be returned home, paid in full for their services and given assurances that this will never happen again. That said, and in a time when we need to be attracting the best and the brightest for the future, forecasted mariner shortage, many just won’t be coming back. Those four UK-based cadets are probably having second thoughts, as well.

The Tip of the Iceberg

The Hanjin crisis is no doubt the most visible manifestation of a difficult shipping climate for some sectors. For my part, I wonder how many operators in a time of repressed freight rates, and facing tough decisions, have already cut back on many of the basic necessities that mariners rely upon, every day at sea and in port. I’ll double down on my earlier five dollar bet that it is far more prevalent than you might otherwise think.

We’ve come a long way in the quest to make sure that today’s mariners are properly trained, safely billeted, adequately compensated and treated with dignity. We’ve also got a long way to go. That said; until the accountants and lawyers begin to factor in the human cost of shipping, the effort to recruit and retain competent mariners will be about as successful as Hanjin’s efforts to stay solvent. It is easy math, actually. – Maritime Logistics Professional

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Joseph Keefe is the lead commentator of MaritimeProfessional.com. Additionally, he is Editor of both Maritime Professional and MarineNews print magazines. He can be reached at jkeefe@maritimeprofessional.com or at Keefe@marinelink.com. MaritimeProfessional.com is the largest business networking site devoted to the marine industry. Each day thousands of industry professionals around the world log on to network, connect, and communicate.