Globalization of Domestic Shipping Services Doesn't Work


Published Mar 3, 2017 7:10 PM by Mark Dickinson

The old Chinese curse – may you live in interesting times – is certainly something we are all having to confront right now. It’s been a long time since European and world politics have been quite so unpredictable.

What lies at the heart of this political and economic turmoil? The answer can be found in the nature of the economic reality for so many European workers. Insecure employment, flexible working, zero hours’ contracts and bogus self-employment. And that’s before we talk about the march of technology and automation in particular. A day does not go by without someone foretelling how many millions of jobs will be lost to robots!

At the heart of Brexit (and you could throw in the election of Donald Trump too) is the real sense felt by many communities that globalization has not been delivering. The trickle-down theory has failed to protect us from the worst excesses of the market. This should be deeply troubling for the shipping industry which is undoubtedly at the center of the globalization project.

And ironically, the most globalized industry in the world – and the industry which made globalization possible – demonstrates how it’s all gone horribly wrong. Shipping is a microcosm of the damage done by unchecked and unfair competition.

The Frankenstein’s monster of the flag of convenience system - which invented liability avoidance, tax dodging, rule bending, weak employment rights, limited social protection and opaque corporate structures – is a model for multinational companies who play fast and loose with traditional regulatory systems and, in doing so, manage to be more powerful than many national governments.

Colleagues, in this context is it any wonder that European seafarers feel disillusioned and angry, when we see that Europe accounts for 40 percent of the world fleet, but an increasingly small and declining fraction of the world’s seafarers? How can it be right that fewer than 40 percent of the seafaring posts on European ships are filled by E.U. seafarers? How can it be right that many workplace rights stop at the shore?

And when we argue for improvements, or for E.U. workers’ rights to apply to European seafarers and ships, we are told that this isn’t possible, as it will undermine our competitiveness.

How can it be right that we see South East Asian pay rates on North West European shipping services? For the past 30 years, European seafarers have been repeating warnings about the future of the maritime profession within the E.U. – and conferences as far back as the 1990s addressed the theme of the endangered marine species that is the European seafarer.

Sadly, however, all the fine words have done little to arrest what is still an ominous decline. The drastic decline in training has left us with an increasingly ageing population of European seafarers and maritime clusters, and the wider economy face damaging consequences as that pool of knowledge and experience diminishes as they move towards retirement with woefully inadequate numbers of young seafarers to follow in their footsteps.

It has to be said that while the E.U. state aid guidelines have helped to soften the impact of this decline, they have failed to arrest it and at best have merely slowed the steady hemorrhage of jobs.

OECD countries now supply 23 percent of the world’s officers and 14 percent of the world’s ratings – compared with 28 percent of officers and 24 percent of ratings a decade ago.

Are we just meant to accept those trends and decide that seafaring is no longer a first world profession? I don’t think so. We’ve come to a point in time where we really do have a stark choice. Do we continue on this path – with the consequences that are so evident – or do we find another way?

Greater intellects than I are suggesting that we need to change course – and have told how that should be done. In a speech last year, the deputy managing director of the International Monetary Fund, David Lipton, warned – I quote – “Too many people in the developed world see only a loss of jobs to lower wage destinations. Too many people fear that immigration is compromising their economic well-being,” and he described how it’s time for “a new form of globalization that works for all.”

The European Transport Workers' Federation (ETF) has always acknowledged that shipping is a worldwide industry and that in many sectors of the industry competition is on a global scale. But we don’t believe there’s any room for global competition on regional routes and services. All it does is fuel a race to the bottom. That is how we got into this mess.

When we hear talk about the creation of a single maritime transport space across the E.U., we shouldn’t just see that in the context of harmonizing administrative and customs procedures. The social dimension should be as important as the bureaucracy. Yet the black hole created by the failure to agree on a manning directive (most recently in 2004) continues to be filled by a steady flow of social dumping in our ferry trades and offshore services.

Globalization of domestic shipping services simply doesn’t work. Regulating the competitive climate for such routes will not only ensure that we combat exploitation in our waters, but also encourage operators to compete on quality, not cost, as well as improving the job security of European seafarers and protecting the maritime skills base and thus the E.U. maritime cluster. It will allow us to set E.U. standards and thus set a level playing field for all those who wish to trade in our waters.

Colleagues, we know from Oxford Economics that seafarers are not just essential for sustaining the wider maritime cluster, but also are highly value-added workers. Earlier this week we learnt that each E.U. employee in the shipping industry is estimated to have generated €89,000 ($109,000) of GDP, significantly above the E.U. average of around €53,000 ($65,000). It makes sense to support the continued and sustainable supply of E.U. seafarers.

And whilst I may have criticized the state aid guidelines, there is no way that I want to sound ungrateful. They have indeed helped to prevent the extinction of this endangered marine species. But we must look to the future, and we must ask ourselves whether the guidelines should be requiring more return on the investment – and that the operators who benefit from such support should be giving back more in terms of employment and training of E.U. nationals?

Surely it is reasonable to ask that taxpayers’ money should not be spent to employ non-E.U. seafarers? And how ludicrous it is for state-subsidized E.U. shipping, employing mostly Far Eastern crew, to complain that they can't access the U.S. coastwise traffic protected by the Jones Act when such trade is unsubsidized, employs 100 percent U.S. crews and is focused on the strategic needs of the United States?

Mark Dickinson is general secretary of the trade union Nautilus International. He was speaking in his capacity as European Transport Workers' Federation spokesman at a European Shipping Week 2017 seminar on February 28.

The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.