Global financial crisis setting in for shipping

Published by rudy Date posted on December 12, 2008

MANILA, Philippines —  Ernesto Igama quit his job as a ship’s engineer after a pirate attack seven years ago. His love for the sea has brought him back, but now the global financial crisis could keep him stranded on land.

“If you only know what I’ve gone through _ disasters, accidents, my leg was broken and there was a time our ship nearly sank,” said Igama, 64. “But I really enjoy my job. I feel like my strength is being sapped when I am on land.”

These days, though, he spends afternoons chatting with other idled Filipino sailors looking for jobs at shipping agency recruitment booths in a Manila park amidst a downturn in business.

The turbulence from the global financial meltdown is finally crashing down on the shipping industry, which appears to be increasingly headed for the docks because fewer companies are ordering goods to transport.

Thanks to a backlog of orders, shipping was initially immune when the world’s economy started its downturn in September. Now, those orders are running out, as is time for what has been a boom industry in recent years.

That is particularly bad news for the Philippines, which has earned the title of the world’s ship-staffing capital by supplying about 30 percent of the world’s 1.2 million mariners.

Igama, who has spent 27 years working on a ship and is taking refresher courses to sail again, figures shipping will weather the current storm, saying cargo vessels will continue to sail “as long as the world needs oil to run cars and factories.”

The secretary-general of the London-based International Maritime Organization, Efthimios E. Mitropoulos, said last month he did not expect the financial crisis to have a serious impact on the volume of at least basic commodities transported by sea.

A shortfall of officers in the global fleet, currently at 34,000, is projected to more than double by 2012, he said, citing a report by Drewry Shipping Consultants.

Still, the numbers aren’t encouraging. Figures from the Philippine government’s Overseas Employment Administration already show a 2.3 percent drop in deployment of seamen for January to October, compared with the same period last year. Seafarers unions and recruitment agencies fear grimmer prospects early next year, with jobs and salaries likely to be pared.

Philippine Labor Secretary Marianito Roque said layoffs may happen by the first quarter, with cruise and cargo ship workers likely targets. He hopes for a recovery by the third quarter.

“Up to 2011, we can foresee a deficit of about 34,000 marine officers so, we just need to keep on training people,” he added.

Since captain Jones Tulod’s four-month contract ended in October, he has been giving lectures at a maritime training center in a Manila suburb while waiting to board another ship in February.

The bulk carrier that Tulod used to skipper has been anchored in Hong Kong for more than a month, idled by low demand for iron ore, its main cargo.

The ship, chartered for a fixed three-year contract, “is just waiting for the market to rise,” Tulod said.

The 21 crew members continue to receive their pay, but the charter company says it is suffering $100,000 a day in losses on the rental.

Tulod said an increase in piracy also is raising expenses. Aside from paying ransom and higher insurance costs, ship operators sometimes opt to take longer routes to avoid pirates, jacking up their fuel bills.

Somali pirates, preying mostly on ships in the perilous Gulf of Aden that links the Indian Ocean to the Suez Canal and the Mediterranean Sea, have seized 208 Filipino seamen on 17 ships from April to November. Philippine officials say 100 have been freed and 108 on seven ships were still being held as of early December.

The risk does not deter Onofre Andrada, 46, who has been working on ships for 17 years and was aboard a ship attacked by pirates off Indonesia.

“If you have a monthly mortgage, what can you do?” he said as he puffed a cigarette on a break from a welders’ training course.

Capt. Teodoro Quijano, vice president of the Filipino Association for Mariners Employment that groups 110 recruitment agencies, said his association had projected that a shortage of ship officers would last another five years. He said that looks unlikely now.

Instead, freight trade has slumped, and some of the 12,000 new ships ordered for delivery in 2010-13 are being canceled, he said.

“The first ones who will lose their jobs are those who are highly paid,” Quijano said.

A Filipino ship master, for example, gets as much as $12,000-$18,000 a month, while a chief engineer earns up to $8,000 a month, plus other perks, industry insiders say.

Manolo Abella, an official of the International Labor Organization, said the challenge for governments is to provide safety nets to dislocated workers.

“But it’s not so easy, because if you’re a seafarer … and you lose your job, you’re not necessarily going to go into soap-making,” Abella added. –Teresa Cerojano, Philippine Star

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