The shipping industry performed far better than expected in 2010 and, at least in the liner sector, the turnaround was simply stunning. The economic recovery is still far from being elevated to any level of fait accompli, but it did put to rest firmly the likelihood of a double-dip recession that some had conjectured. World output grew by about 5 percent in 2010 and trade in goods and services by 11.4 percent in contrast to its 11 percent decline in 2009. The longest post-World War II economic downturn in American history ended; unemployment figures are now heading in the right direction, and economic policies are bearing fruit even though at least 14 million Americans are still searching for a job.
Although real GDP growth in most Organization for Economic Cooperation and Development countries was slightly higher than expected, once again the global recovery was anchored by China and India. The Chinese GDP grew an estimated 10.3 percent in 2010. However, unlike prior years, it was not the Middle Kingdom’s exports to North America or Europe that served as the backbone for a shipping recovery, but its increased imports and the fast growing intra-Asia trade. Indian GDP also grew at a blistering pace of 9.7 percent, with both exports and imports picking up tremendously and several new carriers calling Indian ports.
A rejuvenated global economy is music to the ears of ship owners and operators, given the derived demand nature of the industry. Seaborne trade in 2010 rose to 8.3 billion metric tons, an increase of 438 million tons from 2009. U.S. manufacturing exports, a key agenda item for President Barack Obama, grew by 20 percent, driven primarily by the lower-valued dollar; exports to South Korea experienced the largest increase.
However, this is where the humiliating Sisyphean curse of ship owners and operators reappears. The improving market conditions have led to a renewed splurge in ordering new ships, driven at least in part by shipyards’ eagerness to drum up new business. Such a cavalier attitude toward capacity building intrinsically leads to excess supply and rate erosion. So, although the world economy is in a far better shape today than it was a year ago, its performance is not to be taken for granted. A recent survey by international shipping consultant Moore Stephens found a sustained drop in shipping confidence, which is a rather bitter pill to swallow at this stage in the recovery game.
Overall, this has been a year for reflection and strategic realignment by the maritime sector, although some of the recent fleet-expansion decisions of ship owners leave one questioning their rationale. Current market conditions and other domestic and international developments of interest are discussed in this review.
Market Developments
The year 2010 turned out to be a watershed period for the maritime sector in stemming its pecuniary decline. While increased world trade in goods and services provided the ambience for a shipping market recovery and even a modest level of across-the-board prosperity, the good judgment and extraordinary caution exercised by ship owners and operators in their business decisions (in 2009 and early 2010) also contributed to the nascent ongoing market recovery.
The core strategy used was fundamental economics: controlling supply to match market demand and, in the liner markets in particular, restoring freight rates from their abysmal lows in 2009. Less than two-thirds of new ships scheduled for delivery in 2010 were actually delivered; many new-ship construction contracts were postponed to a later year or in some cases even canceled, at a significant cost penalty. In the liner market in particular, the impact of excess capacity was ameliorated through judicious slow steaming. Current market conditions appear to be somewhat analogous to where we were in 2003, before the shipping boom began, although the uncertainties are more complex today.
Dry-Bulk Market
The demand for dry-bulk tonnage increased 13 percent in 2010, and marginally exceeded the growth in new tonnage supply according to the 2011 Plateau Report. A substantial increase in production by all major steel-producing nations contributed to this. Although both freight rates and ship values rose moderately during the first half of the year, the recovery lost steam during the second half as more new ships entered the trade at a rapid rate and the dry bulk index reached its nadir in early February 2011. Korea Lines, a major dry-bulk carrier that operated 180 ships, declared bankruptcy in early 2011 after encountering severe loss for two years.
On average, three new bulk carriers were delivered each day of the year in 2010, even after postponing or canceling 40 percent of contracted new ships. The supply imbalance in this sector is expected to worsen until 2013, as an even greater infusion of new bulk ships is expected. One new trend in this market is the evolution of purpose-built very large ore carriers (VLOCs). This is led by Vale, the Brazilian mining giant that has announced plans for a giant fleet of 80 VLOCs by 2015.
Tanker Market
The 2009 decline in global oil consumption after 40 years of continuous rise appears to have been short-lived. Oil consumption in 2010 increased 3.2 percent worldwide, with China’s alone rising 11.6 percent, and the United States’ 2.5 percent. This led to a major boost of 7 percent annual increase in demand for tanker ton-miles. The 5 percent fleet growth did not keep up with the increased demand, which led to a good rate of recovery in the first half of 2010. But during the latter half of the year, the release of several very large crude carriers (VLCCs) from their use as floating storage tankers created a supply spike despite the required removal of 25 million deadweight of single-hull tankers. The market imbalance will worsen in coming years, with supply exceeding demand and even more VLCCs coming off their storage tanker engagement; a recent drop in resale value of second-hand ships confirms this.
A year ago it was unclear what would happen to all the relatively new single-hull tankers that were administratively phased out. Forty-two of these VLCCs are now being converted to VLOCs, the brand-new category of dry-bulk ships previously mentioned. Interestingly, one new convert to this category is the Chinese-owned Don Fang Ocean, formerly known as the ill-fated Exxon Valdez (built in 1986).
Liner Market
The liner sector completely turned around its fortunes in 2010, thanks to the global economic recovery and increasing consumer confidence worldwide. Container imports to the United States alone increased 15 percent in 2010, with more than half of those containers originating from China. Freight rate per 20-foot-equivalent unit (TEU) rose 30 percent in 2010, and the liner sector earned an all-time high of $13 billion profit compared with 2009’s collective loss of about $15 billion.
Contrary to wide speculations, there were no major bankruptcies or consolidations among liner operators. In fact, CMA CGM, the French operator that underwent a $5 billion restructuring in 2009, returned to profitability in 2010. Jacques R. Saadé, its founder and CEO, who had been asked to step down as part of the bail-out, was reinstated in early 2011.
All major liner operators are reporting record profits for the year. The performance by Maersk Line, the world’s biggest containership operator, is an excellent case study in analyzing the sector’s $28 billion turnaround. From a loss of $2.13 billion in 2009, Maersk ended 2010 with a profit of $2.64 billion. While the reversal is partly attributable to the increase in world trade and rate restoration, the company undertook several cost-cutting efforts that were very helpful. Maersk, as well as several of its competitors, has adopted slow steaming as an enduring business strategy, cutting down its ships’ service speed by 25 percent to 17-18 knots.
Trade volumes continue their rise. Monthly figures show significant growth, especially in the trade with emerging nations. However, as forecast by Alphaliner, a shipping consultancy group, the global container fleet will grow 8.7 percent in 2011, with 1.2 million TEUs due for delivery in 2011 and another 1.33 million in 2012. As noted previously, this is a major cause for concern, although in theory there should be a threadbare, delicate balance between capacity growth and projected trade growth. With all the new big ships coming on line, a shift in emphasis from rate restoration to market-share enhancement is very likely.
Cruise Market
The cruise sector continued its relentless growth in 2010. Twelve new ships costing $5.9 billion joined the fleet in 2010, including Royal Caribbean’s Allure of the Seas, delivered in November. She is five centimeters longer than Oasis of the Seas, her sister ship delivered a year ago, and boasts the first Starbucks at sea. Cruise Lines International Association (CLIA) member lines operated at 103 percent occupancy rate and carried 15 million passengers in 2010, 74 percent of whom were North Americans.
According to CLIA data, cruise lines and their passengers spent $17.15 billion directly on U.S. goods and services in 2009 and generated total economic benefits of $35.11 billion. This included 313,998 jobs paying $14.23 billion in wages and salaries nationwide. The sector estimates carrying 6.6 percent more passengers in 2011. Fourteen new cruise ships are expected in 2011, and eight in 2012. Utopia, the first luxury residential ship costing $1.1 billion, is scheduled for delivery in 2013.
The U.S. Merchant Marine
The impetus of developments in 2010 came from various governmental initiatives and also the commercial sector. The current privately owned oceangoing U.S.-flag commercial fleet consists of 97 Jones Act ships and 94 foreign-trade ships. A recent PricewaterhouseCoopers Study estimated the total economic impact of the Jones Act fleet to be around $100 billion, including $29 billion in wages and $11 billion in taxes. The foreign-trade fleet has an average age of 15 years; among the 94, 50 are containerships and 23 are roll-on, roll-off. These ships transport 1.5 percent of U.S. waterborne commerce and employ approximately 3,760 mariners. Sixty foreign-trade ships are covered under the Maritime Security Program (MSP) and receive a fixed payment of $2.9 million per ship annually. President Obama extended the MSP program to Fiscal Year 2025 through the National Defense Authorization Act of 2011.
The Department of Transportation (DOT) and Maritime Administration chose three contractors to operate 10 National Defense Reserve Fleet ships through 27 July 2015. The $77 million contract is to ensure the ships will be maintained in good condition with their crews available on demand. Eight of these ships are in the Ready Reserve Force, and two are used to assist Missile Defense Agency operations. Ready Reserve Force ships have been activated 91 times since 2002.
The second round of DOT infrastructure grants (TIGER II) was announced in October 2010; 17 percent of the $600 million is for seaports. The oft-cited guesstimate of U.S.-flag shipping operation being three times more expensive than standard international-flag operation remains an enigma. The Maritime Administration has hired a consultant to investigate this.
The 1954 Cargo Preference Act law gives priority to U.S.-flag ships for transporting all government-generated cargoes. This has been a cornerstone of U.S. maritime policy and often accounts for 50 percent of everything carried by American ships. Its application to imports funded through the Department of Energy loan guarantees (Title XVII of the Energy Act of 2005) gained attention in 2010, when DOE lawyers interpreted the law differently. The issue was resolved in favor of U.S. carriers and avoided delays and costly litigation.
Jones Act Developments
The Maritime Cabotage Task Force, a broad-based coalition of U.S. maritime interests, has renamed itself the American Maritime Partnership. Another key player, the American Shipbuilding Association, with a membership including six big shipyards and more than 100 suppliers, dissolved on 31 December 2010. The association’s mission was to educate policymakers and the American public on the need for a strong shipbuilding industrial base for national security and economic prosperity.
A class-action shipper lawsuit accusing Horizon Lines and Matson Navigation of price-fixing on routes between the U.S. mainland and Hawaii and Guam was dismissed by a U.S. District Court. For the second time, the judge ruled that plaintiffs had failed to prove their claim that carriers had participated in an antitrust conspiracy.
A separate criminal investigation into allegations about a wide-ranging conspiracy to rig bids, fix prices, and allocate market shares in the U.S.-Puerto Rico trade over a six-year period from 2002 to 2008 resulted in five convictions—three former carrier executives from Horizon Lines and two from Sea Star Line were convicted for collusion on pricing or tampering with evidence. A fourth carrier, Trailer Bridge, was cleared of all charges.
Shippers were given the choice of accepting the settlement, receiving a two-year freeze in base rates, or opting out and pursuing on their own, each carrier’s offer to be treated separately. A total of 1,470 small shippers settled the class-action lawsuit, accepting the $52.25 million payment from Horizon Lines ($20 million), Sea Star ($18.5 million), and Crowley ($13.75 million), of which $25 million would go to the plaintiff’s lawyers. Many large shippers such as Walmart, Unilever, Home Depot, Kraft, and Procter & Gamble opted out of the settlement.
In February 2011, Horizon Lines pleaded guilty to antitrust violations in the Puerto Rico trade and agreed to pay $45 million in fines, payable in installments over five years. It also entered into a $1.8 million settlement with the Commonwealth of Puerto Rico and attorneys representing indirect purchasers of goods transported by Horizon Line. The company will not face any additional charges in either the Puerto Rican or Alaskan trade. In addition, Horizon underwent a top-level management shakeup.
Marine Highways Initiative
The DOT announced its support for the Marine Highways program in 2010, choosing eight projects from 35 applicants for $7 million grant funding. The program’s goal is to reduce congestion in road and rail networks through greater use of the waterways. In addition to being environmentally friendly, a system of marine highways will likely create numerous new jobs.
American Feeder Lines could become the first major player on the American marine highways, and the company is planning a hub-and-spoke model for providing coastal shipping services on the East and Gulf Coasts, from Portland, Maine, to Galveston, Texas. The DOT grant recipient plans to raise $750 million and build ten 1,300 TEU containerships in U.S. shipyards at $70 million apiece. Their longer-term plan includes a fleet of 30-40 energy-efficient ships of optimal capacity, some wholly owned and the rest on long-term charter.
Marine highways of the proposed scope remain an untested business model in the United States. Ironically, Columbia Coastal, an established operator for the past 20 years, decided to shut down its container-on-barge service from Port Elizabeth, New Jersey, to Boston, Massachusetts, one week after becoming eligible for the DOT grant. The reintroduction of direct port calls to Boston took away its market niche.
Another venture that went south for lack of financing was Seabridge Freight, a pioneer operator between Port Manatee, Florida, and Brownswille, Texas. The company began its tug-and-barge operations in December 2008, targeting containers too heavy to move by road. It did not raise enough capital and wound up operations in November 2010.
Labor Issues
The decision by Del Monte Fresh Produce Company to move shipping operations from an International Longshoremen’s Association (ILA) terminal in Philadelphia to a non-union terminal in New Jersey became controversial. Unannounced, ILA workers at the six container terminals in the Port of New York and New Jersey brought all cargo operations to a complete standstill for two days, protesting the loss of 200 union jobs. The New York Shipping Association, the affected port employer, is now seeking $5 million in damages resulting from the illegal secondary boycott.
There were continued allegations of racketeering at the Port of New York and New Jersey. Three ILA members were charged with committing perjury during testimony before a federal grand jury investigating mob activity on the waterfront. In early 2011, there was a major federal crackdown on organized crime that led to 127 arrests; 18 among them had connections to the port, and 16 were current or former ILA members, many of them elected officials.
Thirteen former union members were charged with various racketeering-related offenses including extortion of some New Jersey members for annual “Christmas tribute” payoffs, illegal bookmaking, gambling, and other crimes. The Christmas-tribute racket involved ILA members being pressured to donate part of their container royalty bonuses (paid by shipping companies) to their union’s local officials—who then diverted those funds to the Genovese crime family.
Port Dilemmas
The challenges facing American ports today are particularly vexing. Far too many uncertainties are on the horizon, especially for the East Coast container ports. Their temporary gains in market share over West Coast rivals were stemmed in 2010, thanks to the current trend toward slow steaming and increasing bunker costs. West Coast ports are once again capitalizing on their geographical advantage and capturing high-value time-sensitive cargo bound for Eastern consumption centers. An all-water movement from Shenzhen, China, to Savannah, Georgia, takes 37 days, whereas an intermodal transit through the West Coast takes only 22 days, resulting in significantly lower total logistics costs.
Then there is the ongoing $5.25 billion Panama Canal expansion, due to be completed in 2014. The very rationale for building the third set of locks is now questionable because of changing market conditions. Regardless, while a wider Panama Canal will bring bigger ships to the East Coast, it is unlikely to gain additional cargo at the expense of West Coast ports. Furthermore, while the West Coast’s anti-growth sentiment and labor issues seem to be abating, conditions on the East Coast are heading the other way. The current demeanor of ILA and the ensuing contract renewal negotiation in 2012, especially in light of their recent industrial action, do not augur well.
Even with a widened Panama Canal and increased all-water services to the East Coast, the competitive dynamics among U.S. ports do not look promising. There is the increasing threat of competition from potential Caribbean hub ports where mother ships could make direct call and lessen the role of U.S. ports to secondary, feeder-port status. Aside from that, intra-regional port competition is raising the ante higher. With the exception of Norfolk, Virginia, no other East Coast port is capable of handling the bigger 6,500+ TEU ships transiting the widened canal. As illustrated by the ongoing legal tussle between the ports of South Carolina and Georgia, neighboring areas are engaged in legal maneuvers for slowing down, if not preventing, competing ports from deepening their approach channels.
Environmental Issues
The U.S.-Canadian Emission Control Area adopted in March 2010 is the world’s largest ECA. It extends up to 200 miles off the coast and goes into effect 1 August 2011. In another year’s time, oceangoing ships will be required to use low-sulfur fuel oil within the region. The International Maritime Organization (IMO) has also approved a much smaller U.S.-Caribbean ECA that covers waters adjacent to the coasts of Puerto Rico and the U.S. Virgin Islands. It is expected to come into force by 2014 and will lower emissions from ships.
The Clean Air Action Plan provisions adopted by the California ports of Los Angeles and Long Beach will enter their next phase on 1 January 2012. As of that date, all pre-2007 model trucks will be prohibited from operating in the port region; ships will lower speed while approaching port, and once on berth they will switch to shore power. The Southern California ports are well ahead in terms of meeting their stated goals and are setting more aggressive Clean Air Action Plan goals. Similar efforts, including the implementation of the clean-trucks program, are under way in other ports too.
Green Shipping
According to a European Union report, greenhouse-gas emissions from maritime transport (also referred to as the carbon footprint) constitute 4-5 percent of all such emissions worldwide. As yet, there is no global consensus on an acceptable methodology to cut emissions from ships. Some IMO member nations prefer a cap-and-trade system, while others opt for a tax on bunker fuel (with the funds raised used to assist developing countries curb their carbon emissions).
If unchecked, shipping emissions may reach one-fifth of global CO2 emissions by 2050. There is speculation that the IMO may be ten years away from reaching a consensus that has prompted the EU to threaten unilateral action. European nations see their goal slipping away of cutting emissions to 20 percent below 2005 levels by 2020. Should the EU enforce its Emissions Trading Scheme rule on all ships calling its ports, the impact on the industry will be $3.3-4.5 billion per year for emission permits, depending on the benchmark price per metric ton of emission. The introduction of larger containerships and the current proclivity toward slow steaming has lowered the carbon produced (in grams per ton-mile) by 25 percent in four years. Yet even in the most environmentally efficient Asia-Europe trade route, the CO2 emission rate for a door-to-door movement is 0.4 tons per ton of cargo delivered.
Overall, there is considerable pressure on ship owners to cut down their fuel use and greenhouse-gas emissions. Maersk, the market leader in liner shipping, is advocating a green label on consumer goods showing carbon emissions associated with the product’s door-to-shelf supply chain. The day that customers will have the option to track the carbon footprint of their shipments is not far off. The Energy Efficiency Design Index (EEDI) is now available as a benchmarking scheme for ship designers to create more fuel-efficient ships.
Together with the Ship Energy Efficiency Management Plan, this shows that potential reduction in emissions is attainable from individual ships, and provides a methodology to calculate the CO2 emitted in grams per ton-mile. In the future, shipbuilders will include pre-delivery trials to verify that vessels do reach the planned EEDI threshold.
In 2008, the IMO’s Marine Environmental Protection Committee amended the existing pollution-prevention regulation (MARPOL Annex VI) to phase in low-sulfur fuel on ships. Accordingly, the sulfur content in bunker fuel used will drop from 4.5 percent to 0.5 percent by 2020. It doubles the cost of fuel but lowers health risk from pollutants by more than 80 percent. However, limited availability of low-sulfur fuel may necessitate that IMO exercise its authorized discretion and postpone the deadline by five years. In designated ECAs, the sulfur emissions should drop to 0.1 percent by 2015. Options available to ship owners include switching to ultra-low-sulfur diesel fuel from heavy fuel oil, installing and operating exhaust gas scrubbers when entering the ECA, or using liquefied natural gas as marine fuel.
Liquefied natural gas boil-off has been used as fuel in steam-turbine-based propulsion plants for many years; it is cheaper than heavy fuel oil and produces 20-25 percent less CO2, reduces nitrogen oxides (NOx) by 85-90 percent, and cuts out nearly all sulfur oxides (SOx) and particulate-matter emissions. Liquefied natural gas is ideal for short sea and ferry operations in ECAs, and is seen as a strong alternative to traditional bunker fuel in future years.
Shipbuilding
The IMO Maritime Safety Committee adopted goal-based ship-construction standards in May 2010, charting the course for a new era in shipbuilding. It provides designers and builders the freedom to pursue a more flexible system to achieve safety and environmental-protection goals rather than the traditional, highly detailed, prescriptive standards. It will promote innovation without compromising quality and safety, and will apply to oil tankers and bulk carriers 150 meters in length or more.
This is a timely change, as owners are demanding better designs and greater efficiency today. The Norwegian ship-classification society DNV is reportedly undertaking design analysis for VLCCs fueled by liquefied natural gas with planned market entry by 2014. These ships will cost more to build, but their new hull design will help eliminate the need for ballast water and result in considerable savings.
The backlog in construction has started ebbing, with shipyards delivering more tonnage than new orders received. New-building prices in 2010 reflect these market developments and are much lower than 2008 figures. As an aftermath of the market conditions that laid up close to 800 containerships in 2009, no new orders were executed from late 2008 to June 2010. Evergreen Lines broke the stalemate by ordering ten new ships at $103 million per ship, followed by several others, including a gigantic order from industry leader Maersk Line.
The Maersk order is to build ten 18,000-TEU ships, for a total cost of $1.9 billion, the largest single order in the entire history of containerization. This is part of a reported $6 billion new-building plan that includes options for additional ships. The ships will be of the biggest size that can transit the Malacca Strait (named Malaccamax, as Panamax refers to the biggest ships that can transit the Panama Canal, and so on). Maersk calls them Triple E ships because of planned economies of scale, energy efficiency, and environmental performance. They will be 1,312 feet long with dedicated slow-steaming engines, perhaps fueled by liquefied natural gas, and will reportedly lower unit-transport cost by 26 percent.
As noted previously, there are serious market concerns about the number and size of new shipbuilding orders, and their underlying economics. The number of new ships that will be delivered before 2013 includes 600 oil tankers, 2,850 bulk carriers, and more than 400 containerships (with carrying capacity greater than 3,300 TEUs). Data from the shipping consultant Clarkson show that seaborne trade will have to grow at least 7 percent annually to fully utilize the projected infusion of new ships. In the post-World War II era, this has only happened during two decades: 1950-60 (7.5 percent) and 1961-70 (9.1 percent). Even during the recent boom period (2001-9) led by an emergent China, seaborne trade grew only 2.9 percent. We are unlikely to surpass that in the near future.
Shipbuilding in China
China had a very modest shipbuilding base in December 2001, when that nation joined the World Trade Organization, but its subsequent growth has been meteoric. Chinese shipbuilders focused initially on tankers and bulk carriers, gradually progressing into complex vessels such as drill ships, jack-up rigs, and liquefied-natural-gas carriers. There are now more than 100 major yards in China, thanks to an eight-point stimulus framework enacted by the Chinese government to support shipbuilding.
Nine among the top 18 yards are state-owned and employ a million people. Chinese banks are actively engaged in the sector, through traditional financing as well as direct ownership. All this contributed to Chinese shipbuilding’s spectacular annual growth rate of 41 percent according to IHS Global. The country overtook Japan in 2009, Korea in 2010, and is now the unquestionable world leader in new orders and contracting.
Piracy
The year 2010 was a record for maritime piracy with 445 attacks, almost twice as many as in 2006; 53 ships were hijacked; 1,181 mariners where taken hostage, and 8 killed. Somalia, the anarchic East African nation with a 20-year law-and-order lacuna, accounted for 92 percent of all seizures and 1,016 hostages. The pirates have become more aggressive, often using hijacked ships as mother ships for secondary attacks with hostage crews serving as human shields.
Pirate activities in the Gulf of Aden have subsided because of the presence of naval forces and the adoption of Best Management Practices Version 3, a booklet published by the shipping industry and navies. The pirate economy, however, seems to be thriving, with escalating ransom payments (see Table 1). While the average payment was $1 million in 2008 and $2 million in 2009, the reported payment now exceeds $4 million per ship. A 2010 actuarial-profession report puts the total cost of piracy at $9 million per “successful” incident.
Mariner Issues
According to the 2010 Shipping Industry Flag State Performance Table, only six flags are completely safe: Denmark, France, Germany, Greece, the Isle of Man, and Norway. Black-listed flags now include Albania, Bolivia, Cambodia, Colombia, Costa Rica, Côte d’Ivoire, the Democratic Republic of Congo, Georgia, Honduras, Lebanon, St. Kitts and Nevis, Sao Tome and Principe, and Sierra Leone. Their number has declined significantly, implying a rising tide in compliance and safety at sea.
Merchant-marine manpower issues continue to be particularly vexing. At the 2010 Manila conference, IMO member governments unanimously adopted a resolution, expressing deep appreciation and gratitude to seafarers for their contributions to the international seaborne trade, the world economy, and society as a whole. An important set of amendments (2010 Manila Amendments) were added to the Standardization of Training, Certification, and Watchkeeping Convention and Code. We have, thus, elevated the international benchmark for training and educating seafarers. The date 25 June, when the Manila Amendments were adopted, has been declared the Day of the Seafarer.
Efforts by the International Labor Organization to update 80 years of international labor standards relating to seafarers is getting closer to full ratification. The revised Maritime Labor Convention, specifying comprehensive rights and protection for all seafarers, is expected in April 2012. The elimination of “innocent transit privileges” (allowing seamen to walk out of a ship unescorted and go outside the port or terminal) in U.S. ports, an oft-criticized Maritime Transportation Security Act (2002) provision, was amended in 2010. The Coast Guard Authorization Act (2010) requires facility security plans to include a mechanism for seamen and their representatives in welfare and labor organizations to board and depart ships in a timely manner, at no cost to the individual.
The findings of the 2010 BIMCO/ISF Manpower Study, deemed most reliable and accurate to date, were released in late 2010. This documents the current supply of 624,000 merchant marine officers versus a demand for 637,000, and a balanced market of 747,000 ratings. Accordingly, there is a 2 percent global shortage of officers. Assuming ceteris paribus conditions (2.3 percent annual fleet growth and recruitment and wastage at assumed levels), the shortage will rise to 5 percent by 2015 and then decline. The most sensitive assumption is fleet growth; for example, a growth of 3.2 percent will result in an 11 percent officer shortage (or 60,000 officers) by 2015. Recruitment and retention remain crucial to maintain a healthy supply of officers for the growing world shipping fleet.
An Indian seaman employed on a ship owned by Mediterranean Shipping Company was wrongfully blamed in 2008 for the death of a stowaway, but thanks to the unyielding persistence of his employer, seafarer labor unions, and crewing agents, he was finally released on 2 November 2010, after two long years in an Algerian jail. This illustrates why seafaring is losing its appeal, and why crew cost is still the fastest-growing component of ship-operating cost.
P&O Cruises, the 173-year-old and much-revered British cruise line, appointed its first female captain in 2010. Out of the 11,300 certified officers in the U.K., the number of female captains is just 36. I could not find such information for U.S.-licensed female captains, but the fact remains that there are very slim chances of women at sea becoming masters or chief engineers, which is a true irony. The industry could easily adopt several steps to promote better career opportunities for women. Currently, they remain a vastly untapped market for resolving the global merchant-marine officer deficit.
It has been an extraordinary year. The global economy is recovering, and the maritime sector has benefited. Shipping fortunes are back again on an upward trajectory, although adverse conditions may persist in certain markets because of some questionable investment decisions. But in the words of French poet, philosopher, and essayist Paul Valéry, “the future is not what it used to be.” We can make observations and educated guesses based on logic and scientific thinking, but more powerful forces always reconfigure our world in unimaginable ways. At times this is manifested in inhumanity toward others, and at other times it is the sheer fury of nature. Au revoir!