This article first appeared in the latest issue of the Market magazine. Use the link to the right to view the whole magazine. The shipping industry is booming. The need to move goods and raw materials around the planet has never been so high and ships have never been so big. The Secretary-General of the International Maritime Organisation said in December last year that “ship owners have rarely had it so good”.
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But while ship owners have been enjoying booming business and competitive rates for insurance, a growing shortage of skilled manpower has become so serious that it is being blamed for deteriorating safety standards at sea and is linked to rising claims.
The global shortfall of officers is estimated to be about 10,000, or about 2% of the total workforce, in the Manpower Update (2005). It forecast that the shortage would continue to deteriorate, reaching 27,000 by 2015, even assuming stability in factors such as the increasing size of the global fleet.
In fact, the world’s shipyards are working flat out and many commentators warn of problems with both recruitment and retention.
The International Union of Marine Insurance (IUMI) reported in March this year “a dramatic increase” in merchant ship losses. Major serious or partial losses increased by 270% in the decade 1998–2008 and total and partial losses were up by 37% for 2006. The figures related to the marine and offshore energy markets and were based on information from sources including Lloyd’s.
Dramatic increase in losses
Weather was the major cause of total losses but collisions had overtaken groundings as the next most common cause. IUMI president Deirdre Littlefield says: “These figures underline the relentless surge in marine claims that has come about due to a number of factors, not least the shipping boom itself, with ships and crews being driven harder than anyone can remember.”
The link between rising claims and crew shortages was also made by the Managing Director of Nordic marine insurance association and major marine insurer CEFOR. Helle Hammer reported at this year’s AGM: “With the cost of accidents due to human error on the rise, the scarcity of skilled seafarers to operate increasingly sophisticated vessels remains one of our main concerns.”
Simon Beale, Marine Underwriter at Amlin and an executive committee member of IUMI, says the number of crews needs to increase and that underwriters should discriminate in favour of better crews. A vessel crewed from an owner’s pool was a
more attractive risk than one crewed from an agency.
He says: “Understand what crews you’ve got on the vessel you’re insuring and find out whether they are qualified. If the officers are one nationality and have no respect for the ratings, that will cause problems. It’s those issues that underwriters need to understand better.”
Vessels, particularly container ships and liquefied natural gas carriers, have become bigger and more complex. Beale says: “Some of these crew are fantastic at the electronics but do they actually have the real nautical qualifications to be able to manage that vessel when the equipment goes down?”
More qualifications would help underwriters distinguish the higher-quality crews.
But the equipment intended to help navigate and control vessels may even present its own problems. It can fail, it can distract officers from the simple expedient of looking out of the window or it can be so complicated to use that it is
not as useful as intended.
Near miss
The Marine Accident Investigation Branch (MAIB) examined an incident in 2006 in which the ferry Maersk Dover, with 135 passengers on board, ‘sailed blind’ in the English Channel and had two misses – one of them within 200 yards of a supertanker. Had officers looked out of the window, they would have seen both vessels they narrowly missed, but neither were visible on the relevant radar screen. The MAIB report noted problems with the vessel’s radar and that the operator manuals for the equipment totalled 1,500 pages.
A project aiming to provide a comprehensive training and qualification regime is already under way, having come out of the International Marine Claims Conference founded by Charlotte Warr of Sarnia Training. Warr says the aim was for a comprehensive marine qualification scheme to serve the London and international marine markets, underwriters, claims personnel and brokers working across all classes of marine business.
The scheme is designed to use elements of existing qualifications, to cover every part of the marine market and to have a strong practical thread focusing on skills, not just knowledge. Warr adds that, following two years of consultation, she hopes the first phase of the qualifications could be ready for implementation in late 2009.
Beale adds that insurers should use deductibles or higher rates to penalise owners whose claims records show they do not use such good-quality crews. But, faced with the commercial reality of stiff competition for marine business, he accepts that some insurers in the global marketplace may find it hard to help drive up standards. He says: “It’s difficult to ask some of these questions when other underwriters around the world don’t need the answers. It’s difficult – but that doesn’t mean that we shouldn’t be trying.”
