It turns out that in shipping, ethics is actually just a county north of Kent and south of Suffolk. Mr Prospector is back and is not happy with his neighbour, nor the state of shipping dispute resolutions.
“Don’t let it annoy you,” my wife told me last week. I had lent my electric lawnmower to my neighbour after he spotted me in the garden, despite me hiding under a tarpaulin to avoid having to chat. My only instruction was to make sure I was in when he brought it back so I could put it straight in the shed, not to just lift it over the wall as my dog loves to chew cables in particular. Sure enough, he lifted it over the wall and left it in the garden while we were out for the day. Predictably, the dog chewed through the wire, rendering it useless.
The next day I had to clear out the car to make room to take the knackered mower to the tip. As I was heaving the dead mower into the back of my Y-reg Sierra Estate my neighbour strode past me in shorts and sandals, Sunday papers under his arm, on the way to the pub for a relaxing pint. “Hi Dave!” he said with a big smile. Three things here. Firstly, he didn’t mention the fact I was loading the mower he’d borrowed two days before into the car. Secondly, he made no attempt to lend me a hand loading it. Thirdly, my name isn’t Dave.
Disputes in shipping are every bit as common as disputes with neighbours and Lord knows, I’ve had a few of both. Looking back at them, with time to reflect, I have to conclude that of course I have always been right, but nevertheless rarely the winner. In fact, not always totally right, just mostly. In the same vein as my pub descriptions of what I said during arguments, mostly they represent actually what I wish I’d said when thinking about it afterwards. I would not like to be boring and remind you that in most rucks in shipping the wealthiest parties are the lawyers, but then again I should remind myself of that sometimes.
I’ve read so many officious emails protecting rights, without prejudice, legal wording sent by people I know couldn’t spell the word writ, sent in pique over points of principal worth less than the total hourly rate of the staff that met to draft them. Don’t get me wrong, people do often take liberties. I remember a ruck with a total travesty of a company that only got organised once it was into liquidation. Prior to that it had been run as such a shambles that, so I’m told by a well-placed source, when the CEO was informed that a million dollars of P&L was unaccounted for he actually checked his desk draw. Once shareholders realised there was actually a possibility to run away from creditors they became incredibly efficient and never put a foot wrong.
This particular shambles was interesting to me for the rhetoric that the shipping folk spewed. While a major litigation was ongoing a loud cry was that ‘shipping is a small world’ and that ‘people don’t forget’. I can confirm that to be utterly untrue. So untrue in fact that the boss of one of the biggest creditors, who threatened the worst of the long and painful retribution, ended up joining a company that assisted in stripping the assets he sought to seize. He seamlessly went from trying to seize the assets to expounding their virtues!
So we have people who sued companies that they then joined. It turns out that in shipping, ethics is actually just a county north of Kent and south of Suffolk. None of this will probably shock you. The simple stuff probably doesn’t shock anyone anymore. Opportunistic ‘failing’ on subs is not unusual. Charterers that ‘never default’ choosing to ‘renegotiate’ at horrific terms with menaces is not eyebrow-raising. Still, as owners and operators lick their wounds, at least the charterer didn’t default right? Our word, our bond is fanciful stuff. One trader was described to me as ‘the fittest man in shipping’ due to the amount of walking on deals he’d done over the years.
You cannot walk away from the big stuff of course. But experience tells you that despite the general attitude that people and companies that squabble over nothing do not understand the game might require a second look. Does it really disadvantage companies that use every trick in the book? From my experience, albeit limited and regional, the shit-houses rarely get called to task. Self-regulation is not regulation, and contracts are legally binding unless somebody chooses to ignore them. Almost everyone keeps their disputes behind closed doors. We all know of countless disputes, small and large, between ‘household’ shipping names, where who was right and wrong is unclear, but nobody breathed a word. I can’t avoid somebody who has done you wrong if I don’t know that they have done you wrong in the first place!
Could you make a case that every dispute is made public and there for all to see? If you can be bothered to do so, every ruck that leads to court cases in the most common shipping jurisdictions can be tracked (try PACER if you like, it’s fun!). I have read many of these and once you get through the waffle it becomes apparent that some are slam dunks (non-payment), some are technicalities (chancers), some are incredibly confusing as to who is in the right and who is not (charter party disputes).
How to handle disputes that range from Hanjin to stevedore damage is also not very clear. The best parallel that I can draw is when a player goes down injured in a football match. Does the team with the ball kick it out? If so, when? Does the other team give it straight back? Is it a ‘drop ball’? Is the player faking it to waste time? Does the referee stop the game immediately or wait a bit? There are no hard and fast rules on this, just passionate views on who occupies the moral high ground. That’s just like defining when a company should stop trying to settle things commercially and go legal. There are always going to be disputes in shipping, it is the nature of the business. But what constitutes the difference between a misunderstanding and a side street hustle?
One thing that does lurk in the back of my mind is that ‘friends together’ commercial discussions to disputes only work in a market when all sides involved is actually fair-minded. If I cast my mind back, the Hollywood ending where the good guy finally receives the fair justice that he seeks (and no bitter retribution, just the restoration of even-handed fairness) is so rare in shipping. The bigger the shit house, the more ‘wins’ they have in disputes. Does that sound fair? If the industry doesn’t know the facts of what people and companies are up to, how can we lean against bars all over the world, passing pub-style judgements?
I read that the Baltic Exchange has a dispute resolution service, which should very much be applauded. I also admit that I just couldn’t bring myself to click on the link to find out what it does. So it is gloved applause on a winter’s day as I actually have no idea what it is all about.
‘Shipping is a small world’ is not a solution though. It won’t get your money back, it won’t run people out of town and it won’t get me a new lawnmower. But the fact that I think my neighbour should buy me a new mower as he didn’t follow the terms of the deal doesn’t make me right in the eyes of the law, or provide resolution. I bought another, he’ll ask to borrow it and I’ll probably say yes. It makes me angry, but he was not giving it a second thought as he sat in the pub.
Not come across Mr Prospector before? Here’s a selection of scurrilous recent Tweets to give you an idea of who he is. And remember, he’s not called Dave!
New favourite analyst: this guy from Whatever & Co of 'merica. So let me get this right? A shipping company will benefit if the amount it can charge to use its ships goes up? NEVER! Also apparently it is most definitely going up because he says it is #shipping #oott pic.twitter.com/1oceLS9gq9
— Mr Prospector (@Prospectorship) June 12, 2019
Is there a shipping company anywhere in the world that doesn't 'outperform the Baltic benchmark'? Somebody needs to tell them that this is not a 'thing' #shipping #oott
— Mr Prospector (@Prospectorship) May 16, 2019
Sometimes analysts go so far off message it can be impossible to agree . . . #shipping #oott pic.twitter.com/XSU65l2YtA
— Mr Prospector (@Prospectorship) June 7, 2019
Does your neighbour read Splash?
We’ve barely spoken in 8 years other than for him to borrow stuff. Maybe he writes for Splash too for all I know!
It is a litigious game for sure. I don’t think we ought to judge turncoat CEOs so harshly though – a company has it’s own identity, it’s own opinion and it’s own disputes. The CEO, like the rest of the payroll, do what is best for the company in a given circumstance and nothing more. The good ones, anyway!
As so many investment banks found out, the thing you must protect most is your own reputation. These guys try all the moralising nonsense, then at the first chance they do exactly what they’ve been moaning about all along. I cannot for one second think how being holier than thou one minute, then a rat bag the next makes you CEO material. CEOs can put ‘I change sides and ditch my moral code at the drop of a hat’ on your CV. That should get them hired! As for this guy? If there were indeed no lawyers I’d be delighted to name and shame him!
I remember as a young man, I read about a guy who wanted to reform the world and his first sentence was “First, Shoot all the lawyers!!” I thought that this was rather harsh at the time, but now I know what he means. The more lawyers you have, the worse society becomes. It is no accident that almost all our politicians are lawyers, and the only one who isn’t, is getting things, that every normal working person wants, done!!! Off topic I know but just had to get that out there, CK