Shipping’s money men get a lesson in seafaring

Below is the follow-up installment of my ongoing grapple with social media and the image of shipping for my BIMCO column.Perhaps no great revelations here but kudos to Citi’s Robert Parker for asking the question and Scorpio’s Robert Bugbee for telling it like it is.

Marine Money is an orthodox institution in an unholy sea of maritime conferences. It does money and ships and aside from the occasional diversion into the underlying markets, it sticks to this self-imposed philosophy.

So it’s a sign of the times perhaps that the recent London Forum, always one of the most interesting of its events, encompassed not just the freight market and lending landscape but ended by going completely off message. Pleasingly, this diversion was into an area of interest outside finance – the image of shipping.

Perhaps this time, the great and the good had decided that it was an issue to important to ignore. If a panel comprising Roberto Giorgi of V.Ships, Philippe Louis-Dreyfus of Louis Dreyfus Armateurs, Robert Bugbee of Scorpio Tankers, Rajaish Bajpaee of Bernhard Schulte and Dagfinn Lunde of DVB Bank couldn’t sort this out then who could?

I suspect that to many of the wheelers and dealers present, these were unfamiliar arguments and all the better for it. For those of us who had, optimism might crudely be said to extend as far as the gangway.

Rajaish Bajpaee fondly recalled the feeling many years ago of “seeing oneself in a white uniform, with a cap and epaulettes, off to see the world. But I was 16 years old and the world has changed. I don’t think people go to sea for its charm or to see the world or to wear a uniform”.

As recently as the 1960s and 70s, he said, the best of breed might choose to go to sea. Today, shipping wouldn’t even appear on a list of options. “The sad fact is that those who have no other choice look to ship as a career.”

Shipping would be unable to attract the best and brightest as long as issues such as criminalisation, piracy and the isolation were not remedied. Some of the changes are structural – a week to cross the Pacific rather than a month, port stays of 8-10 hours rather than days. Ever smaller crews feel a greater burden of paperwork, by his estimates 80% of a senior officer’s time is taken up on paperwork, 20% on running and maintaining the ship. Not even the lenders should be happy to hear that.

“There is no real representation of seafarers. We take them for granted at a conference like this, we hear about the best yard, the best bank. The real act of transporting cargo safely is done by a seafarer,” he added.

Roberto Giorgi was quick to agree – and in typically forceful style.

“We have to re-establish respect, dignity and pride in this job. Seafarers should be accorded the same respect as airline pilots, not treated with hostility as if they were terrorists. Without crew there are no bankers, no private equity, no ships and we would all starve to death!”

While the other half of the world froze, of course. This prompted an observation from Citibank’s Michael Parker, the panel’s unofficial sixth member. In his reasoned style, Parker wondered why such an important industry, one which only a few years ago was making huge profits, put no effort into improving its image, lobbying politicians and regulators while it had the cash on hand.

“We have ended up in weakened position where financing of shipping is made harder by regulators with no understanding of the industry. Can the industry have a greater say next time you are earning all that money,” he asked.

Philippe Louis-Dreyfus, himself a former banker before joining the family firm, called this “a good and a fundamental question”. He noted that in his time as chair of national and international ship owner associations, he urged members to spend as much money as possible to improve shipping’s image and let the public know how much good was being done.

“To be frank I wasn’t followed. No one wanted to spend money,” he said. “It should have been the main topic and now we pay every day for our bad image. We have created these problems when we should have been dealing with them as a priority. Most industry bodies have not proactive enough on environmental issues. We have lost time and politicians are making decisions for us.”

It’s a pretty damning assessment, but there was another to come from Scorpio’s Robert Bugbee and it underscores what I have tended to believe will always undermine the attempt at a group hug. If shipping is a zero sum game, why should its constituency play nicely?

“We strongly support crew safety and environmental protection and that starts with design of ships and working with our people. But I think we are destined to repeat our errors because it’s just not a team sport. We are all very motivated to make money when things are good and scramble to get out when they are bad.”

Quoting his wife’s description of shipping as “boys playing with their toys” he said it was precisely that exciting, volatile nature that would attract the mavericks, movers and shakers that make shipping what it is.

“Frankly I’m really all for more regulations and barriers to entry and I’m all for cycles because that’s where the opportunity is and where the fun is. It would be really boring if we created a ‘proper’ industry where everything was nice and rational. I would be out in two seconds.”

I don’t think Bugbee was being purposely cynical, just reflecting what he, his management, board, shareholders and staff are in it for. Doyen of the ship lenders and former INTERTANKO head Dagfinn Lunde of DVB Bank proffered a terrible statistic.

“Some 86% of the money in shipping is private and with a few notable exceptions, there is no will to put any of it into working on the image of shipping or education. The will is not there and the money is not there. Even between industry organisations, the will is sometimes not there,” he said.

Giorgi agreed that there was too much fragmentation and too little alignment between shipping organisations but there were possibilities. The book which gave its name to the conference session – Dynasties of the Sea – could be a useful tool to educate people who had no idea that most of what they consume comes by sea.

For Giorgi, the rot went deeper. A lack of common purpose meant shipping – and shipmanagers in particular – found themselves dictated to on ship and equipment design, making training and the retention of quality crew harder and harder.

It was refreshing to hear a panel not preaching to the converted but to an audience that has probably not heard these issues aired so frequently. As Rajaish Bajpaee pointed out, shipping has spent too long looking inward while not reaching the man on the street.

“Ask a taxi driver in Hong Kong where the gas for his cab comes from and he won’t know. Ask him the gold price or the stock exchange or which horse just won at Happy Valley and he knows. Shipping lacks that identity and we need to reach out to non-shipping community and make them understand how shipping touches their everyday life.”