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Micawber’s Dilemma – part two

Micawber’s Dilemma – part two

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In my last article, I suggested that ways of looking at ship operating costs have not changed very much since the 1970s. If we cast our minds back thus far, we find that shipowners in the seventies were very much exercised by operating costs, and were going to considerable lengths to understand them.

I know a man who, as a junior officer brought ashore, was paid to calculate the cost of painting the elegant white stripe round the hull of each ship in his employer’s fleet. He announced that it cost them a hundred and odd thousand dollars a year – whereupon this practice was abruptly discontinued.

Staying with paint, it is from the same era – an era of alkyd paints, be it noted – that we derive the common wisdom of today that the cheapest colours to paint a ship are red antifouling and boot top, red decks, and black topsides. Aristotle Onassis, in the days of his pre-eminence, painted his big tankers white, with green decks, to show just how rich he was, because, in those days, the rust-concealing white paints used on the cruiseships of today had not been developed. It was, I think, BP, who sat down and calculated which colours were cheapest. The reason for the red antifouling is that the biocides are copper compounds, so you waste less pigment.

Why were the owners of the 1970s so interested in analysing the small details of operating cost? Because this was the time when the European owners first faced real competition, not just from the emerging Asian owners but from European and American owners using the open registers and employing lower cost crews. This was an era when operating costs in dollar terms could be, and often were, starkly different between owners, and those owners who failed to adapt efficiently found themselves driven out of business, with similar ships having operating costs that differed by as much as a thousand dollars a day and more.

The end of that struggle saw the definitive victory of cheap. The clever, hard working owners who employed expensive, hard working, clever crews lost out to the owners who employed cheap crews. Now, this had a consequence. The consequence was that people decided that there was no longer any point in carefully analysing operating costs. We’d all done that. We knew about it. We automated our stores inventory and ordering processes, with AMOS or one of its clones, and thought – “Job done!”

It is worth noting that ship operating costs have not changed very much in dollar terms since the end of the 1980s. Before we pat ourselves on the back for this achievement, we should note that global inflation has been low for quite a bit of that time, so pressure on crew pay has been moderate, and the cost of stores and spares has been efficiently held down by the widespread adoption of the sort of software and the sort of buying policies favoured by the professional shipmanagers.

The cost of oil, and thus not only the cost of fuel but of luboil and paint, is not a number that we can do much about, but we can give a tip of the hat in passing to B&W and their Alpha Lubricator, which has put an end to gratuitous cylinder oil consumption (you used to be able to tell whether a ship was owned or managed by the positions of the cylinder oil taps!) and a tip of the hat to the paint companies for weldable primers and ‘shipyard friendly’ epoxy paints, which have made it possible to have ships that really don’t need to rust.

The point which I am coming to is this – for the past 30 years, the ‘playing field’ in ship operating costs has been more or less level. There has not been pressure to reduce operating costs, for at least the following reasons:

There is precious little transparency in operating costs. Moore Stephens have made a good effort with their annual operating cost reviews, but many people suspect that people put in slightly high figures, in order to make their own numbers look good. In general “My operating costs are ‘x’ a day”, is up there with “I didn’t vote for that bastard, either” (the second great lie – “My cheque is in the post!” – has been overtaken by technology, and the third one is too obscene to mention here).

Thirty years ago I joked, rather unkindly, to a gathering of Hong Kong shipmanagers that their conversations could be summed up as, “Have you tried Burmese yet?”. There are no new sources of magically cheaper manning waiting to be tapped. No nation remains “uncrimped”!

The drive to reduce crew numbers has come to a halt. All attempts to get below “sixteen warm bodies plus a riding crew” on big ships seem to have been more or less abandoned. It is some years since the late John Newton, a man whose rise to fame began on the day when the chief engineer of the Queen of Bermuda was suddenly taken to hospital shortly before sailing, and the young John was just as suddenly the youngest chief engineer of a large passenger ship in history (and the Queen of Bermuda, 1933-67, was turbo-electric, quadruple screw, with two pressurised boiler rooms and a chief engineer’s writer whose sole task was to write up the four engine room log books) announced to me, with some glee, that his agents’ scrutiny of his competitors’ portage bills had revealed the interesting fact that competitor A’s claim to run their ships with a crew of 16 omitted the permanent presence of a riding squad of six.

Now, the point that I am coming to is that this is about to change, and rather few people are thinking about this as much as they should.

Part Three contains some actual numbers, but the maths won’t be that hard.

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Andrew Craig-Bennett

Andrew Craig-Bennett works for a well known Asian shipowner. Previous employers include Wallem, China Navigation, Charles Taylor Consulting and Swire Pacific Offshore. Andrew was also a columnist for Lloyd's List for a decade.

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3 Comments

  1. Ed Enos
    March 9, 2017 at 1:29 am

    I’m thoroughly enjoying this series and look forward to the next part.

    Here’s a “cost conscious owner’ story told to me when I was a new 3rd Mate by a seasoned old Captain. The ship i was working on was an old converted T-2 tanker, made into a bulker. She was in a regular trade between the ports of Corpus Christi, Texas and Longview, Washington, run by Reynolds Aluminum for many years. They would transit the Panama Canal and sail coast wise up and down US west coast. The passage along the Mexican coast and being blasted by inclement weather from the infamous winds known as “Tihuanpecer” always made for a challenging trip.

    On one voyage this Captain signed on just hours before sailing out of Texas. They were anxiously trying to get out before a raging hurricane blasting across the Gulf of Mexico slammed into the southern Texas coastline. They barely made it. The trip across the gulf was as horrible as one could imagine. But they made it a little battered and bruised. The transit through the canal was routine, even though they had to wait 2 days longer than normal. Once out of the canal and in the Pacific, they headed north to Longview. Lo and behold the Gulf storm had wandered its way across the Mexican landmass and now would slam the ship one more time.

    They were buffeted by winds and seas for days as they slogged north, with no where to run. Relieved once they cleared the Mexican coast, they ultimately made Longview for their load, well behind schedule but safe nevertheless. A quick turnaround with cargo aboard, the Captain routinely got his “ship stores order” in to the local agent so that their provisions would be awaiting the ship’s arrival back in Corpus Christi upon their return.

    Now southbound with another load, the ship once more faced a seasonal hurricane off the Mexican coast. Several more days of horrific weather before they pulled into Balboa anchorage before another canal transit. Again they transit without incident and turned north through the gulf headed for home in south Texas.

    But not before being buffeted by yet one more storm. Would it ever end the Captain wondered?

    Finally, as the Pilot and Captain stood on the bridge wing in the harbor of Corpus Christi, the ship eased along side her berth and the voyage in effect was over. The Captain was silently relieved that, thought it all, the storms and delays, all was well. No injuries and the crew was safe. No problems with the ship. No breakdowns and the cargo would be unloaded shortly.

    But he noticed one of the owners was standing on the dock as they were tying up. This was a bit odd he thought, rarely did this gentlemen actually bring himself down to the pier to discuss matters. Perhaps he was here to discuss with the Captain his good fortune for getting the ship back to port after a long and trying voyage.

    When the gangway was down, the Captain stepped out and went down onto the main deck to meet the owner as he came aboard. The Captain stood there smiling, warmed by the thought he was about to be praised for a job well done.

    But the owners face looked a bit twisted as he stepped off the gangway and approached the Captain. His face contorted even more as he drew near.

    “Captain! Captain Smith! Well I’m glad you are here now finally. I noticed on your last stores order, you have ordered ten gallons of strawberry ice cream, more than you had on your prior voyage. Whats the meaning of this? Since when do you and the crew go about eating all this ice cream so much that you have to order ten gallons more than you already have? We won’t stand for this type of thing, I’ll have you know.”

    And with that Andrew, I’ll give you credit for recognizing the “cheap” owner more concerned about the ice cream on a stores order, than the big picture of a well trained and hard working crew that gets the job done safely. Cheers!

    1. Andrew Craig-Bennett
      March 9, 2017 at 1:07 pm

      Thanks, Ed…

      My favourite ice cream story…

      The products tanker “Nordic Trader”, owned by Swires and Finn Axel Bugge and managed by the latter, was hit by an Iranian missile during the Iran-Iraq war and the accomodation block was set ablaze. The fire was fought and extinguished by the crew who were using copious amounts of ice cream (flavour not recorded) to cool off during breaks away from the hose end; a tug came alongside and offered LOF – the reply was an ice cream cornet hurled, accurately, in their direction. The Master and Chief Engineer were awarded Lloyds Gold Medal for their (sucessfu)l efforts

  2. arvind
    March 9, 2017 at 10:02 am

    i really love this story Ed –thanks a lot for posting it —–Jesus stated Jonas was a sailor and he gotta be forgiven whatever the cause ( may have the scriputres wrong here but think most “affected ” readers would get the point am making ! ) —–but dont know if shipwoning was a chosen craft in his days