Clay Maitland: “Cost-cutting, not quality, is now king”

 

New York: One of North America’s most outspoken men in shipping, Clay Maitland, has slammed the encroachment of financial institutions into the industry, something he reckons is damaging the soul and integrity of the sector. 

The managing partner of International Registries, Inc, which administers the Marshall Islands flag, speaking to Maritime CEO from New York, said that many of the leading figures in the industry are not particularly well-versed in what ships, and the people who work in them, are all about. 

“Leading shipping executives tend to be finance types, and are poor executives to have in the wheelhouse, particularly when things get bad. We are living in such an era, and we need leaders with more depth of knowledge, and experience,” he warned. 

One example, he cited, is the inability to judge, and allow for, substantial risk. 

“We are seeing this in the extremely expensive misjudgments that have led to major financial losses, and, particularly, massive casualties,” he said, mentioning Deepwater Horizon and Costa Condordia as two recent examples. 

“There have been many others, and these errors in judgement are penalizing our entire industry. Just watch the cost of insurance go up,” he noted. 


Warming to the theme, Maitland suggested that there was a crewing crisis currently, and the problem, once again, “is very much of our own making”.

“We as an industry have fallen into the clutches of the bean counters, the finance types, who, in the words of an English author, "know the cost of everything, but the value of nothing," Maitland said. 

“This is not only reflected in the rising cost of casualties at sea,” he continued, “but in the fondness of the finance types for cutting costs, without due regard to the consequences. In the case of crewing, there is a growing tendency to choose a vessel's flag or registry on the flexibility of that registry's policy on the issuance of minimum safe manning certificates.”

This has led to smaller and smaller officer cadres aboard ships of all types, with the possible exception of passenger vessels.

As a result, Maitland pointed out officers have more and more work to do, and not just whilst on watch. 

“The shrinkage in crew sizes that we have seen in recent years,” Maitland observed, “is one of the major culprits in contributing to fatigue. Let's face it: not only is the job of an officer aboard a commercial vessel become hugely burdensome — it threatens to become overwhelming in many trades.”


With fatigue now a leading cause of casualties, and the financial situation of many companies becoming increasingly shaky, Maitland said there is a reluctance on the part of qualified young people to undertake careers at sea. “No wonder!” he said, exasperated. 

“In an industry where charter rates often do not cover operating expenses, and where private equity funds increasingly call the tune, I believe that the biggest crisis that we face, in the short and medium terms, is the loss of competent managers, particularly managers of risk. Cost-cutting, not quality, is now king,” Maitland suggested. 

Flag states like the Marshall Islands have to take a stand for quality, and halt the race to the bottom, the IRI boss said. 

“Safe manning,” Maitland explained, “not only speaks to the quality of the individual seafarer, but to hours of work, of rest, and of quality of life aboard ship. We need to get away from ‘maximum unsafe manning’, and stabilise the drive to cut costs regardless of any other consideration.”

The IRI fleet now stands at around 2,800 ships, aggregating roughly 89m gross tonnes 

According to Clarkson Research Services, the Marshall Islands grew by 11.7% in 2012. This rate of growth was only exceeded by that of Hong Kong, which grew by 14.9%, and Singapore, which grew by 12.1%.  [29/01/13]

 

READER POLL:
Do you agree with Clay Maitland’s claims that cost-cutting is now king? “In an industry where charter rates often do not cover operating expenses, and where private equity funds increasingly call the tune, I believe that the biggest crisis that we face, in the short and medium terms, is the loss of competent managers, particularly managers of risk. Cost-cutting, not quality, is now king.” Have your say by voting on the matter at our Maritime CEO LinkedIn poll here.   
 

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