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Life in a silo and its consequences

There is a management-speak jargon phrase about people working in ‘silos’ such that they are unaware of what their colleagues are doing.

Asian companies, where the culture emphasises deference to authority rather than inquisitiveness, are more than usually prone to the ‘silo mentality’, and very often they neither know nor care what people elsewhere in their own offices are doing.

This is a story about how very little people know or care about the industry – merchant shipping – that they work in.

It came to pass, not terribly long ago, that ships which loaded nickel ore concentrate sometimes failed to arrive.

This was a fairly new cargo. Nickel as a cargo was not new, but for very many years nickel was smelted and carried in the less bulky, more readily portable form of ingots, notably from places like Noumea in New Caledonia.

As Chinese industrial production grew there was an increase in the demand for nickel, and other sources of supply were found. Nickel ore could be mined in Indonesia and in the Philippines. New mines were established, and, as often happens, the mines were not very well capitalised and their facilities for shipping out their product were rather simple.

Rather than smelt the ore, and ship ingots, these mines concentrated the ore and shipped it as fines in handysize bulk carriers. And China bought the cargoes, and everybody was happy. Until ships sometimes did not turn up.

When a ship is lost at sea, it often happens that she is insured, and so is her cargo. The people concerned with insurance noticed that ships with cargoes of nickel ore loaded at unknown and unheard of ports in Southeast Asia sometimes sank. And they asked why this might be. They asked experts. And the experts told them that small mines in tropical climates were not in a good position to control the moisture content of the nickel ore fines that they stockpiled in order to load onto ships, because sometimes, it rains in Southeast Asia.

And the experts said that the cargoes were slurry liquefying because they were above the transportable moisture limit, which is a number set up by the IMO as being the wettest that a given ore cargo can be before it becomes unsafe to carry in bulk by sea, as if it is any wetter it may suddenly behave like a liquid.

Now, the insurance people in general, and the P&I Clubs in particular, decided to do something, because ships sinking and seamen drowning are messy, and also expensive.

And it came to pass that the West of England P&I Club issued a circular requiring its member shipowners to ensure that cargoes of nickel ore fines should be checked by capable surveyors before they were loaded, to make sure that they were safe.

So the charterers wrote a clause into their charter parties for the carriage of nickel ore in bulk.

Did it say: “Cargo to be loaded under survey of a capable surveyor…?”

No. It said: “Vessel not to be insured by the West of England P&I Club.”

And shipowners’ chartering departments read this, and told their insurance departments not to insure ships with the West of England P&I Club.

And because the chartering department is mightier than the insurance department, a significant number of blithering idiots actually said okay, and drowned seamen and sank ships.

This is a true story of people in offices in shipping companies in Asia within the past five years, being too lazy to read up a problem, incredibly stupid, unbelievably stupid, and scared of their bosses, and greedy.

The problem is now less acute because the Indonesian government decided that it suited Indonesia better to export ingots, not fines.

This is not something that happened long ago. This is something that happened a couple of years ago. The people who did this have not been fired. They are still drawing their salaries today.

I think they should have been fired. Don’t you?


This article first appeared in Maritime CEO magazine, which was published this week, Readers can access the whole magazine for free online by clicking here.

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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