Reflections on 54 years in the Industry and a note to the next generation

By Roland Malins-Smith LLD Hon.

The English philosopher John Stewart Mill is said to have described the West Indies as “the place where England finds it convenient to carry on the production of sugar, coffee, and a few other tropical commodities”. Our history as plantation economies records a high dependence on external trade, as all production inputs including labor were imported by ship, and all of the product was exported by ship.

The limited size of our states further reinforces this dependence on external trade and shipping. As Caribbean economist William Demas noted, for any degree of development attained, a small country is likely to possess a more specialized structure of production and a correspondingly higher dependence on external trade than a large continental size economy.

Our historical experience and geography both dictate a strong dependence on maritime activity.

The question we must ask ourselves as Caribbean natives is whether we are sufficiently engaged in this maritime activity, whether a significant proportion of our young people find work at sea, how much do we participate in the various related fields of shipbuilding, drydocking, ship-repair, logistics, crewing, agency representation, IT, cyber security, port management, port state control, international regulation, maritime legal services, ship brokerage, ship operation, and ultimately ship ownership. Our people migrate in droves in part because of high unemployment rates and a relative lack of local opportunity. This is a reminder that there is a world of shipping out there which is crying out for talent. BIMCO, the International Chamber of Shipping and maritime consultants Drewry have all warned of a severe shortage of seafarers and officers in the coming years.

Tradition
Puerto Rico, the Dominican Republic, Panama, Venezuela and Colombia have a tradition of naval training. Jamaica, Trinidad, Guyana and The Bahamas have all emphasized and provided maritime education opportunities for their young people in recent years and are making progress in securing employment for their graduates on tankers, cruise ships and container ships. The governments of the Eastern Caribbean islands need to be made aware of these opportunities, encourage their high school students to take an interest in the maritime sphere, and support such tuition where it is available.

I would expect that more than 90% of the goods we consume, or export are carried by sea. Since maritime is obviously so critical to our economic well-being, the other question we should ask ourselves is whether the services available to us are adequate and cost-effective, and what should be our long-term strategy for participation.

Cargo liner services
My days of working with Caricom left me with the impression that the cargo liner services plying the Caribbean were expensive and fell short of our needs. My subsequent experience operating ships in the trade from Florida to the Caribbean has changed my views 180 degrees. One can argue that there are unmet inter-island shipping needs in the Eastern Caribbean, but there is little doubt that the network of extra-regional services provided to Caribbean ports from Europe, North America and the Far East is frequent, comprehensive and competitive. Weekly container connections exist on every sector. Rate agreements among carriers do exist, but their impact is only felt during times of vessel shortage, a global risk. The number of carriers involved in the trade, the right of independent action of each carrier, the bargaining strength of cargo interests and the ubiquity of shipper contracts all make for a very competitive external trade, and competition keeps profit margins to a minimum. In my own experience, consistent profitability is a challenge for most if not all of these operators.

Recently we have heard of initiatives, both private and government, to promote a cargo/passenger ferry service in the eastern Caribbean and Guianas. This appears to be an important pursuit for a few reasons.

The international container ship operators and even the specialized feeder operators typically take inter-port business if it is consistent with their overall scheduling objectives, which objectives prioritize transit time to key southbound ports, frequency, and day of arrival. Empty containers need to be evacuated and returned to the home port, and the cost of doing so is happily offset if export business is available. Taking the container to a third and fourth port however involves an analysis of marginal cost and revenue and is often not worth the effort if overall service objectives could be compromised. Simply put, inter-port service on its own is not a priority.

Yet there is a real need to support regional trade, particularly in foodstuffs, perishables and light consumer goods. This has always been a Caricom concern, and is attracting attention again at a time when inter-island air travel services are less frequent and rather more expensive. A modern ro-ro ferry service can move passengers, containers and cars among the ports to meet this perceived need. It could also help train our marine cadets.

There are however some ideas which should govern an approach to such services, and these suggestions are not altogether mine, no pride of ownership here.

Political
Government ownership and operation of shipping services is not recommended. We have gone this way before with West Indies Shipping Corporation (Wisco), with political decisions at regional and board level which make little commercial sense, and with unpaid subsidies. Shipping services must be run on a commercial basis, owned and operated by the private sector, geared to profit. Caribbean governments’ role would be to provide where needed suitable port infrastructure, and to publish regulations to facilitate the movement of cars, trucks and wheeled containers on the roads of each state to allow for movement of traffic after a reasonable time for formalities and inspection upon discharge. Importantly, Caricom members should adopt a common corporate tax holiday policy on shipping investment by nationals of member countries to promote shipping investment as part of a long-term strategy to develop the shipping sector.

We also need to preserve and protect our environment. Our natural Caribbean beauty is worthy of preservation even without mentioning its tremendous commercial value. The world regards Caribbean tourism as our comparative advantage. Our region gave birth to cruise shipping and still control 38% of global activity. We need to be more pro-active in implementing the MARPOL Convention to discourage pollution of our waters and to legally hold and fine those responsible for incidents of pollution. We need to continue to strengthen our Port State Control bodies to police the ships which enter our waters to help hold polluters accountable. We need to remove wrecks which threaten navigation, many of which still contain fuel. In the absence of these mundane and unglamorous steps by our governments we remain exposed to a major marine disaster and pollution incident which can do painful damage to our tourism sector. We had one recently off Tobago.

And so, there is a need for young people, enthusiastic and motivated people, to help us as maritime lawyers, as surveyors, as marine engineers, as salvors, as pilots, as captains, as entrepreneurs. We may even have innovators among us, as the industry searches for the next clean fuel.

Humble beginnings
Many of the captains of our global shipping industry had humble beginnings. Malcom McLean, the man credited with starting the container revolution, was a trucker who never went to college. Gianluigi Aponte, who founded MSC, was a ferry boat captain who bought a small breakbulk vessel with US$5,000 of his own money, now controls 645 ships, some of the largest in the world. I always remember the small picture of a 500-ton coaster vessel on the office wall of Ted Arison, the founder of Carnival Cruise. The caption below it read “Arison Bahamas Line”. I had the privilege of working for him. A positive, hugely successful and charming man, he was an inspiration to me. That picture was his reminder of his humble beginning in the shipping business. A great journey begins with one step, and the courage to take it, always believing in your dream.

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