Ship Crewing

Although reference to Ship Managers tends to make one think of one of the many independent companies offering management services, the most obvious place in which to find ship management is right there in a shipowner’s office. However, whether it is a shipowner’s department or a separate organisation the job is the same. In some owner’s offices, it may be difficult to see just where the chartering department ends and the operational elements of management begin. In others the management is kept entirely separate which permits, in several cases, shipowners to offer a management service to ships of other owners in addition to their own, so maximizing the output of the different sections. For the purpose of this lesson it will be easier to look at the task undertaken by independent management companies; these can vary widely depending upon what the principal requires. The most complete service arises where the ship has been bought as an investment and the owner wishes to have no actual part in running it. In such a case, (sometimes referred to as “total management”) the managers treat the ship as if it were part of their own fleet, including determining the trades in which she will operate and taking all the decisions about what freight rates to accept. At the other end of the scale the owners may simply wish to sub-contract one element of management such as the technical department. Today the one single part of management most often sub-contracted is that of crewing. The obvious question that will spring to one’s mind is why, if the actual owner is managing all other aspects of his ships, does he sub-contract the very important job of  supplying and supervising the personnel in whose hands such a valuable asset will be placed. In simplest terms the answer is cost. Do not, however, immediately jump to the conclusion that handing over the crewing to sub-contractors is a device practiced only by owners of sub-standard ships with sub-standard crews being paid wages far below the international average. Certainly such bad owners do exist despite the efforts of both governments and trade unions but many thoroughly respectable owners sub-contract crewing. Take a few names at random such as Shell, BP. Mobil, Denholm, Stephenson Clarke; all these owners and many more sub-contract the crewing of some or all of their ships. What such owners have done is to “flag-out”, that is to continue to run their ships from their own country but to place them under the flag of another which enables them to be crewed in accordance with the laws of the chosen country. To understand why this is done by first-class shipowners it is important to remind oneself that shipping is a truly international trade in which the ships of different countries compete in a common market place regardless of the cost/standard of living in the individual countries. Rates of pay for jobs ashore will be much higher in one of the wealthier countries than those in a less developed country will. To attract crews to work in their ships, the owners will have to match the shore wages. Whilst the owners in the wealthier country may be able to afford more modern and thus more economical ships, sooner or later the cost of matching shore wages will raise their costs to a level which makes them noncompetitive. In some cases the situation is exacerbated by powerful labor unions having been successful in not only negotiating high wages but also in insisting upon levels of manning (the number of crew) which are arguably more than safety demands. This leaves the owner with only two options, get out of ship owning altogether or place his ships under the flag of a country which either has a lower wage structure or no concern with seamen’s wages at all. Such an owner will still want to live in his own (or his chosen) country and manage his ships from there but will have to employ a crewing agency to provide his crews. A typical situation might be an American owner with ships under Liberian flag and his crews supplied by contractors in the Philippines. Britain has a peculiar situation because parts of the United Kingdom still have a limited degree of autonomy and the Isle of Man is a typical example. British ships have discovered they can have, to some extent, the best of both worlds in that Isle of Man registry still means British flag, but Isle of Man laws are not English laws. Flagging out to the Isle of Man, therefore, is by no means as radical as flying the Panama flag; but owners under the Isle of Man flag are not obliged to collect or contribute to social security payments. Neither do they have to collect personal Income Tax from their employees on behalf of the Inland Revenue Department. Minor though these details sound, the cost of running shore departments to collect the government’s taxes can absorb much of the profit if the market is only moderate. There is nothing new about shipowners contracting with overseas agencies for their crews. Certainly since the advent of steamships and probably before, ships trading in the tropics found that lascars recruited in India were not only less expensive but were much better able to cope with working in high heat and humidity than their European counterparts. Similarly, Arabs were by far the most efficient stokers in the engine rooms of coal burners. Supplying crews has now become a serious invisible export trade for many developing countries. There will, of course, always be the shipowner who wishes to operate ‘rust-buckets’ with crews being paid little better than slaves. However, there are three forces acting to counter such practices. First, there is the natural reluctance among most charterers/shippers to entrust their goods to sub-standard operators. Secondly there is international agreement to operate ‘Port State Control’ which allows all countries to immobilize ships in their ports if they are patently unsafe. This right is exercised with varying degrees of zeal (or lack of it) in different parts of the world. The third safeguard against undue exploitation of ship’s crews is exercised by the I.T.F. (The International Transport Workers’ Federation). Although most of us have only become aware of their activities over the last decade or two, the ITF (The International Transport Workers’ Federation)’s origins date back to the end of the last century. The ITF (The International Transport Workers’ Federation) is dedicated to ensuring that seamen receive adequate wages and conditions and its strength lies in the fact that almost all transport unions throughout the world are affiliated to it. This means that if the ITF decide that a ship should be immobilized until a suitable pay and conditions agreement is signed between employers and employees, they can easily ensure that the ship is ‘blacked’ by all the labor unions in the port.Sadly, as with so many well-meaning politically motivated institutions hypocrisy and extremism can sometimes arise and one hears of cases of ships being forced to sign unrealistic agreements for crew members that were already receiving wages well in line with the cost of living in their home country.