P&O sacks Indian crew over pay protest

P&O- that has announced its 175 anniversary celebrations with much fanfare- has sacked 150 Indian waiters for daring to protest against cutbacks in tips, British media reports. The long simmering resentment over tips- that are the most important part of the waiters' income- had resulted in the company agreeing, in 2010, to 'review procedures, to instigate more auto-tipping, and underwrite the crew’s precarious wages.' 

Nothing was done thereafter; instead, we reported two months ago of the P&O Cruise's decision to withhold passenger tips unless 'performance targets' were met, something that had not gone down well with their mainly Asian crews. The actions of the Indian waiters have to be seen in this context.

For daring to protest, and despite assurances from the Captain and the Head Office "the careers of about 150 people have been quietly, summarily ended, the British Guardian says, pointing out that the livelihood of much of the crew- the lowest paid, getting as little as 75p an hour- depends on the 'goodwill of clientele'.

P&O's  'Arcadia,' on a cruise from Southampton to Alaska via the Panama Canal, was at Seattle in the USA when about 150 Indian waiters gathered- just before dinner- on the wharf to protest after anticipated tips from passengers 'did not materialise'.  Disturbed about the impact on the passengers- one of whom said later that the protest was 'good humoured'- the ship's Captain Kevin Oprey spoke to the waiters- after talking to the Head Office at Southampton- who eventually returned to work after a one and a half hour interruption. Captain Oprey assured them that there would be no repercussions or comebacks later, and that the matter was settled. 

However, when the crew returned home after completing their contracts, a letter was sent to them from Carnival- P&O's owners- which claimed that although Carnival were examining possibilities of “more guaranteed remuneration package at some point in the future” and “working on a project to address the issues”, they could not tolerate the crewmember's protest on the Arcadia. “Unfortunately", the letter said, "the majority of the restaurant crew on the Arcadia chose not to wait ... Instead these crew, which included yourself, chose to take industrial action ... greatly impacting our customers. This behaviour is not something Carnival UK is prepared to tolerate.” Not a single protesting crewmember was to be recalled, or offered a contract by the Mumbai based Fleet Maritime Service International, the manning agents, which send about 9,000 crew to the cruise industry.

P&O Cruises issued a statement: "The withdrawal of labour which was undertaken by some of Arcadia's restaurant team on May 10, 2011 was without warning, "unofficial" and greatly impacted our customers. At the time, the Captain committed that no disciplinary action would be taken. As a result, all crew were allowed to complete their current contracts. However, given the serious and inappropriate nature of the staff's actions, P&O Cruises has decided not to offer any further contracts to the crew concerned.”

The Arcadia is registered in Bermuda, and the company knows that there will be little protection for the sacked crew. Carnival UK's CEO David Dingle had dismissed Asian crew's concerns earlier this year, saying people were 'queuing in the street' to get into the Fleet Maritime Service offices in Mumbai. Britain’s minimum wage is £6.08 per hour.

Says Steve Todd of the British RMT union, “Big, reputable cruise companies have got convoluted ways of getting past the employment legislation of countries they belong to. It’s a shabby, unacceptable practice to exploit cheap foreign labour and it needs stamping out.”

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The Chinese coasters are coming!

The slowdown in China and falling demand for raw material at home will result in a major impact on the global bulk trade; increasing numbers of ships out of the country's massive coastal fleet- that totals about 2000 ships- is looking for employment in the international market, sending shock waves through the dry bulk markets in the process. The situation is exacerbated by falling Chinese demand from steel mills and other plants as massive stockpiles of coal and iron ore in China have meant that there is little business for coastal shipping. Industry watchers say that the impact of these vessel's entering depressed global markets will be large. 

"The iron ore and coal inventories at Chinese ports are very high," says shipping analyst Moses Ma of ICBC International, who expects continuing pressure on the dry bulk markets this year. 

Many coastal Chinese vessels- a Reuter's estimate says two thirds of the coastal fleet- are old, unregistered, unclassified and thus unfit for any international deployment. "These smaller ships don't get released into the spot market, they're often very old and only fit to hug the coast," says Reuters, quoting an anonymous shipping source. The remaining one third- still a sizeable number- are modern, fuel efficient ships, Supramax or Handymax sized and owned by established companies that are in a position to push them into international waters. These companies include China Shipping, COSCO and the Fujian Guohang Ocean Group. 

"There are many more ships lying idle at Chinese ports now - the environment for making money is not so good," a shipper says. Many of these are seeking employment in the choppy Indonesian coal trade, where the future is uncertain. "We've seen these Chinese vessels in the market, attacking the Indonesian coal business and undercutting everybody," a shipbroker with RS Platou told Reuters. 

China is the world's biggest coal producer and the biggest coal and iron ore importer. Its coastal trade has grown exponentially (up 88 percent since 2006, to 639 million tonnes) on the back of industrialisation and power demand in the south of the country: Chinese coal mines are in the north. The total coastal trade is estimated at a billion tonnes- including coal, steel, grain and fertiliser. However, this is now shrinking and has already fallen 3 percent this year, resulting in many coastal ships around with no cargoes to load. 

"China seems to have reached its limit for bringing in imported and domestic coal to the south and until that clears, they are not buying," a coal supplier told Reuters. Another said, "There have been defaults and deferrals to imports but also around 20 percent of our domestic sales to utilities have been cancelled or delayed for months because of high inventories - there are more ships idle."

In other connected developments, Indonesia slapped a 20% tax on nickel exports recently in a bid to restrict movement of raw material out of the country. It is considering similar restrictions on coal; should that happen, large numbers of Chinese ships will be on the hunt for other international markets again. India- with a recent unconfirmed 'official' announcement in Kerala that its Cabotage laws are being relaxed- had better watch out. The situation will be no better even if there are no Indonesian coal export restrictions; India is on track to become the leading international buyer of Indonesian coal later this year. Will Chinese ex-coastal ships be carrying it instead of Indian bottoms?

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Is the ex-Exxon Valdez defying Supreme Court orders?

In a story still unfolding, the Gujarat Maritime Board (GMB) has let the MV Oriental N anchor six miles off the Bhavnagar coast around 0700 on Saturday. Officials have inspected the vessel. This despite protests from the environmental group-Toxics Watch Alliance that has gone to the Supreme Court to ban vessel- the former Exxon Valdez- from Indian waters, claiming it was toxic and hazardous. Gopal Krishna, the petitioner in the case, has now alleged that the GMB is acting against the Supreme Court order and that the ship's “movement must be halted to demonstrate that Indian law enforcement agencies are not subservient to US’s ship disposal policy”. 

Krishna’s petition to the Supreme Court had stated that the Basel Convention should be implemented in the case and the vessel be banned from Indian waters because there had been no prior decontamination. The Central government's response to the court was that it was up to the GMB to decide whether the Oriental N should be allowed into Alang for scrapping.  The Court had set another hearing before an "appropriate" bench for July 9. 

Media reports had said yesterday that the Gujarat Customs and the Gujarat Pollution Control Board (GPCB) would allow the controversial vessel to anchor, even as Krishna has written to a half dozen Union ministers and the CBI Director saying that the Supreme Court's orders are being violated. 

GMB official Captain S Chadha told reporters on June 29, “The Customs has given its no-objection certificate for inspection of the MV Oriental N. GPCB did so yesterday. The vessel is expected to arrive by tomorrow evening. It will anchor in sheltered water about three to four nautical miles from the shore, and an inspection team will most likely board and inspect it day after tomorrow.” 

In its letter to the CBI Director, Krishna says that the 'inspection' is just a pretext for allowing the vessel to anchor off Gujarat awaiting dismantling. Toxics Watch Alliance says that the vessel has aboard hazardous materials such as asbestos and polychlorinated biphenyls (PCBs), creating grave danger to the ecology and worker's lives. “Workers labour on tidal sands to cut ships up by hand, exposing themselves to the risk of toxic chemicals, fires, explosions and falling steel plates,” Krishna said.

Toxics Watch says that the Supreme Court May 3 order was clear. “Inform this court as to the steps being taken to prevent the ship berthing in any of the ports in India without following the conditions indicated in the Basel Convention,” it quotes. Krishna also warned that another hazardous US flagged ship, the Delaware Trader, is en route to India. “It was last reported at the Port of Maputo, Mozambique on 13 June, 2012,” he said, and demanded that it be stopped from entering Indian waters immediately.

Krishna says that over 5,000 dead foreign ships had been broken up at Alang since 1982 at great cost to the environment, and asks that the government stop what he calls the “green washing “of sins by the US in South Asia."There is compelling logic for the Indian Coast Guards and Directorate General of Shipping to ensure that the ship moves out of Indian waters," he writes.

Indian news channel TimesNow had said last week that the Oriental N was "lurking" in international waters 12 miles offshore even as the coast guard and other experts worried about the possibility of the vessel sinking in the monsoon weather, causing environmental damage close to the coast. TimesNOW quoted a DGS circular from 2008 in its report. “Analysis of the accidents over the last 3 years showed a significant correlation between age of vessels and the break-downs which caused these casualties....the committee recommended, inter-alia, the revision of guidelines to restrict the age of vessels plying in Indian waters,” it claims the circular says.

"All agencies concerned with the maritime situation are aware and have questioned the ships presence off Mumbai. However, none have acted yet", the news channel concluded.

Sniffer bees set to create a buzz in port security

Trained sniffer honeybees may soon become indispensable for port and airport security.  A wondrously new  invention- cheap, lightning fast and easy to use- is being rolled out by the UK company Inscentinel, who, in collaboration with the UK's Office for Security and Counter Terrorism, have produced a prototype detector the size of a small vacuum cleaner, the Vasor136. Standing for "Volatile Analysis by Specific Odour Recognition", the innovative technological application allows bulk cargo screening using specially trained bees- and could change the way port security is carried out. 

That the olfactory senses of bees rival those of sniffer dogs has been known for some time.  Sniffer bees have now been trained to detect substances such as explosives and drugs- and some human and plant diseases. Inscentinel has simply applied this knowledge remarkably well. As Head of Research Mathilde Briens explains: "It all revolves around training and reward, a classical Pavlovian conditioning of the honeybees. We expose the bees to the odour, say the smell of TNT explosive, for a few seconds and simultaneously give the bees a sugar syrup reward. After 4 or 5 exposures the bees associate the odour with the reward."

Sniffer bees " can detect extremely low concentrations of volatile compounds - parts per trillion for some chemicals - with very high specificity. This makes them ideal sensors to detect trace vapours, with applications ranging from screening for explosives and drugs to medical diagnostics," an analysis says.

Honeybees are trained at Inscentinel to associate drugs and explosives with sugar water, and, eventually, to 'stick out their tongue'- technically, the Proboscis Extension Reflex (PER) - when exposed to specific stimuli. After the training, the bee exhibits the PER whenever it is exposed to explosives, and fast- it can detect the presence of the substance in six seconds. The Vasor136 contains a 'cassette' of trained sniffer bees being monitored by an infrared sensor. The results are displayed in a simple 'Yes/No' format on a coloured square LCD screen.

Besides their acute sense of smell, trained sniffer honeybees have many other advantages over other methods of detection of explosives or drugs. Compared to sniffer dogs, for example, they are quick to train, inexpensive to keep and do not take up space. They are also in plentiful supply- a beehive can contain up to 60,000 bees and a single beekeeper can manage 20 hives.

Inscentinel says that it can train 500 sniffer bees in just five hours, and the Vasor136 can be used by just about anybody. In contrast, just one sniffer dog takes six months to train and requires a special handler.  Another major advantage is that sniffer bees can be used around the clock. And don't forget the cost- dog handler team costs in the US run to $118,000 in the first year and $80,000 in the second. The US Federal Government spends $48 million dollars a year on 600 trained dogs and their handlers.

"I have no doubt that the bees will perform brilliantly," says Inscentinel CEO Ivan Hoo," who is looking to run field tests soon. "After all, sniffer bees were not developed only in the last decade but over millennium to achieve their level of sensitivity." 

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Bankers turn shipowners, shipmanagement companies benefit.

Banks are being forced to take over ships as shipowners default, reports say, with the situation made more complex because of the plunge in second hand asset prices. And, although this state of affairs is not new- a similar situation prevailed in the eighties- what is new is that bankers are finding it difficult to lay up, sell or scrap ships since their financial exposure is hugely greater today. Many of them are cash strapped anyway, thanks to the Euro zone meltdown.

 “The biggest difference to the 1980s, which was the last major crisis, is the value of the assets could be up to 10 times higher, which is why banks have been reluctant up to now to force anything in the hope that the market was going to recover. Clearly that’s not going to happen, and banks are looking at taking other action now,” MRM’s chief executive John Dalby told Reuters.

Shipmanagement companies are trying to capitalise on the opportunity presented; many banks are in a corner, forced to contract with these companies to operate the seized vessels. The alternatives- selling or laying up seized ships- mean huge losses running into tens of millions of dollars for each ship. Amongst the many companies that are offering technical, manning and chartering services are Germany's Oldendorff Carriers and UK's Bibby Ship Management. Bibby is also collaborating for this purpose with Marine Risk Management (MRM), a recovery company that is employed by banks to seize a defaulting vessel. 

“What we do is come in and provide technical management of the vessel and provide a full crew to run the vessel and get it to a standard where it is fit for resale by the bank or whatever they want to do,” Bibby’s business development manager Brian Williams says. 

Oldendorff Chairman Henning Oldendorff says, “These days we are offering banks to ‘park’ the ships with us - where we effectively take care of the technical and commercial management. It is very straightforward and transparent. If the banks want to sell the ship, we can terminate the charter.”

Amongst the banks that have recently seized ships are Credit Suisse and others who took over seven tankers from a Singapore yard in lieu of $250 million in debts. Others are more tight lipped but, says HSBC's Nigel Prentis, “Many banks are thought to have contingency plans to take over ships and run them through the cycle rather than further undermine values with an auction process. The correction in values has been enough to wipe out equity in many cases, meaning that many ships will be worth less than the outstanding loan: negative equity. Hence, this is a problem for many European banks. Faced with big writedowns, on top of haircuts on peripheral euro zone bonds, they have generally chosen forbearance.”

ABN Amro's MD Harris Antoniou told Reuters that the present situation is likely to continue. “There is still pain on the horizon because of the deliveries and because of the slowing economy,” he said.

Just a few days ago, U.S. bank Citigroup had said in a statement that it had reached an agreement with Societe Generale to buy a portion of that bank's shipping loan book.  “Societe Generale Corporate & Investment Banking and Citi have today confirmed an agreement for the sale of a portion of Societe Generale’s shipping portfolio to Citi,” it said. 

This trend- bankers seizing ships and passing them on to shipmanagement companies, even as a stopgap measure, may well continue. Says Keith McRae of DVB Bank, “Banks are not ship owners, and therefore do not want to own lots of ships. You may have to warehouse a ship for a period of time, but that’s not a business plan for a bank — it’s an expedient measure.”