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IMPACT OF MAN POWER ISSUES
FROM AN INDIAN OWNER
PERSPECTIVE
by
Capt. Pradeep Correa
General Manager
Great Eastern Shipping Co. Ltd
DECEMBER 19, 2008
Presentation Structure
• Growth in India’s Economy
• Overall Skilled-Manpower Situation in India
• Shipboard Manning Scenario
• What needs to be done
• Steps taken by Indian Shipping Companies
• Concluding Remarks
India’s Economic Scenario
• Seventh largest, second most populous and
world’s fourth largest economy in terms of
purchasing power parity.
• The real GDP growth has averaged about 6% per
annum since 1997.
• FY08 GDP growth rate of 8.5% - Second only to
China.
Indian Maritime Industry
• India’s Exim trade for 2007-08 stood at $391.30 billion, an
increase of 25.5% for the year
• India’s share in global merchandise trade in 2007-08 is 1.5% and
expected to be 5% by 2020.
• Growth rate of Indian logistics industry is around 7- 8% per
annum. Container trade growth expected to be 2-2.5 times of GDP
growth.
• As per NMDP projections, traffic at ports is expected to grow at a
rate of 13.58% till 2012.
• India has the largest merchant shipping fleet among the developing
countries
• Shipping tonnage under the Indian flag has notched a record of 9.0
mn GT as on Jan. 08
Indian Maritime Industry
Contd….
• Present Tonnage
– 9.03 Million Gross Tonnage
– 14.99 Million DWT
– About 1.16% of world fleet
• Ageing Indian Fleet - Average age of fleet is 18.7 years
• Needs over $20 billion in next 5 years for replacement/
augmentation of fleet so as to maintain existing share of
Indian ships in overseas trade.
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Total fleet mn GRT
Growth of Indian Fleet
10.00
9.00
8.00
7.00
6.00
5.00
4.00
Period
Composition of Indian Fleet as on
01.01.2008
Acid Carrier
1%
Other
11%
Bulker
32%
LPG carrier
4%
Tanker
52
Other: Includes Container,Multipurpose,Ro-Ro,Reefer,Offshore and others
Age Profile of Indian Fleet
as on 01-01-2008
Average Age of Indian Fleet is 18.7 years
Fleet size 850
% GT vs Age
50.0
46.4
40.0
30.0
20.0
14.2
14.3
12.7
12.4
5-9
yrs.
10 - 14
yrs.
15 - 19
yrs.
10.0
0.0
Under 5
yrs.
Over 20
yrs.
India’s Overall Skilled
Manpower Situation
• Tremendous requirement of skilled man power by the
growing Indian industrial sector for sustaining the growth
rate.
• Generated 11.3 million net new jobs annually between
2000 and 2005 - over 60% more than the 7 million new
jobs created in China.
• However, the industry is facing a shortage of Specialized
manpower to meet its present and future requirements.
• Ironically, still high level of unemployment
India’s Overall Skilled
Manpower Situation(cont)
• Present State of University Education –
– Second highest number of engineering graduates after
China - 401,791 engineers in 2003-04 and 464,743
engineers in 2004-05.
– Fast catching up with China with about 600,000
engineering graduates last year.
– The United States produces only 70,000 engineering
graduates every year. All of Europe produces just
100,000.
Seafarers – Global Scenario
• Worldwide shortage
– By 2015, shortage of marine officers projected to nearly
treble to 27,000 from the present 10,000.
– As predicted by BIMCO current shortage will
aggravate unless urgent steps are taken.
– Aging OECD Officers.
Seafarers – Global
Scenario(cont)
• Difficulties in attracting the manpower
– Lesser number of young people opting for seafaring as
a career.
– Physically demanding onboard job profile.
– Availability of well-remunerative shore-based jobs.
– Glamour and Fun associated with traditional seafaring
has waned.
Seafarers – Global
Scenario(cont)
• Increase in casualties
– Navigational accidents are on rise.
– Rise coincided with the start of the recent shipping boom.
– Number of accidents per ship close to mid-1980s; when safety
record was regarded as poor.
– 90% accidents can be traced to human error.
– With the current labour crisis and fleet growth, shipping’s safety
record is in danger
(Source: DNV as quoted in TradeWinds)
Seafarers – Indian Scenario
• Indian shipping industry is facing an acute shortage of Officers in the
nautical side – more critical in the ranks of Mate and Second Mate.
• Indian Ship Owners are unable to meet Matrix Requirements of Oil
Majors with respect to experience of senior Nautical and Engineer
officers, thereby losing lucrative business opportunities.
• Indian seafarers are much sought after all over the world for their skill,
knowledge, integrity and reliability.
• Drift of Indian seafarers from Indian flag ships to foreign flag under
the lure of ‘tax-free’ pay packet arising out of differential tax
treatment.
• Tonnage acquisition programme of the Indian shipping companies in
jeopardy due to shortage of quality manpower.
Indian Tonnage Acquisition – Seafaring
Officers Shortage
• Most of the Indian companies have launched ambitious
tonnage expansion programme
• Companies are also diversifying into new areas like
container, offshore, LPG/LNG etc.
• With such ambitious expansion program in India’s
tonnage, manpower (officers) shortage will worsen.
Reasons for Shortage
• Wages/cost to Indian companies is similar compared
with foreign flag – Indian companies lose skilled
manpower due to differential “Personal Income Tax”
• Recruitment of foreign nationals on Indian ships
permitted selectively by Administration. However,
feasibility almost NIL due to various clearances
• Indian Nationals holding Foreign Certificates from
Australia, Singapore, Canada, Hongkong, NewZealand,
Sri Lanka NOT RECOGNIZED by Indian Government
• Lengthy Fatigue prodded Exam process forces them to
go to other countries or even make a career change.
Dangers of Inadequacy in
Manpower
• Increased onboard accidents/incidents
• Higher detentions by PSC authorities
• Oil major approval failures on account of
non-compliance of experience/age matrix
• Reflection on reputation of company/flag
administration
Working Indian Seafarers
• India is the 6th largest manpower supplying country in the world
• The estimated seafaring population is as under:
Category
Officers
Indian flag
vessels
8900
Foreign flag
vessels
18000
Total
26900
Ratings
21000
34000
55000
Total
29900
52000
81900
• India is constantly widening the base to sustain its position as one of the largest
manpower supplying country.
Seafarers – Indian Scenario
• Safe Manning Requirement
Nautical Side
Engg Side
Master
1
Chief Engr.
1
Mate
1
Second Engr.
1
2nd Mate
2
3rd/ 4th Engr.
2
Rating Nav. Watch
3
Eng. Watch Rating
3
Deck Crew
3
Cook
1
• Govt support sought for:
– Faster and easier clearance procedure for recruitment of foreign officers
– Officers holding COC issued by Singapore, Australia, etc be permitted to
sail on Indian ships.
– Reduction of sailing time for cadets
– Reduction in Safe Manning Requirement in line with other Flags.
Presently short term dispensation for reduction in MSMD permitted.
Basic Changes that need to be
introduced
• Promote shipping as a long term career.
• Tap the length and breadth of the Country.
• Create more awareness about seafaring
• Resolving Shipping’s Image Crisis.
• Rationalization of seafarers’ taxation.
• SMD in line with the international norms.
• Sympathetic view of industry demands
Measures to address shortage of
officers
Allow Indian ship owners to recruit Indian Nationals
holding Foreign Certificates
Compulsory Service for Indian officers for 3 years on
Indian ships who have received on-board training on our
ships.
Under Tonnage Tax Regime, trainees trained on Indian Flag
Vessel obliged to serve tonnage tax company for 3 years Sea
Time after certification. Administration under Gazette
Notification obliged to devise mechanism to ensure
compliance by trainees. No procedure yet in place.
Rationalisation of manning scales in line with international
norms
Increase on-board training slots on foreign flag ships
Steps taken by Indian Companies
• Wages at par with foreign companies
– Grossing up salaries to take care of the tax burden
– Net result – Higher CTC for Indian companies
• Indian Shipping Companies have increased ship board
training berths. A leading Indian shipping company has
converted five vessels as cadet training vessels.
• Social security benefits at par with foreign cos.
• Extra resource allocation towards training
• Publicity campaigns
• Incorporating latest HRM techniques for better
understanding of the needs and problems
SHIPPING’S IMAGE
•
•
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•
What is it ?
Why is it important ?
How is it created ?
Who is responsible ?
What can we do about it ?
??
A FEW PERSONAL OBSERVATIONS:
• “Image” like beauty is in the eye of the
beholder; thus there exist a spectrum of
images of shipping
• The image of the industry shapes the
business and legislative environment,
and our ability to attract resources
SHIPPING’S IMAGE
• The image of the industry is created by the
performance of the industry players
(environmental, social responsibility, customer
satisfaction,..….)
• The image of the industry may also be
influenced (or reinforced) by the approach,
actions and comments of the media
(specialised and general), politicians,
regulators and ……………
SHIP STAFF
Frequently:
• Treated as second class citizens
• Criminalised after accidents
• Pressured by terminals, charterers and others
• Subjected to unnecessary number of ship
inspections
• Provided with inadequate manuals,
equipment and cargo information
• Flooded by a tsunami of paperwork
• Suffer from regulations developed without
recognition of the ramifications
• Suffer excessive fatigue
• More………………
SHIP STAFF
Owners actions include:
• Better accommodation standards, and
home communications
• Commitments to (lifetime) education
and training
• Welfare packages
SHIP STAFF
• In recent times the attitude of the
Ratings are seen to be more positive
than those of the Officers on board
Indian flag ships.
Maritime Administration
We appreciate and are grateful to our Govt. for
– Granting short term dispensations to SMD on bulk
carriers.
– Permitting NWKO(NCV) officers to sail on coastal
vessels including tankers.
– Revising SMD, thereby rationalizing manning on
NCV/Off – Shore Fleet.
– Reducing sea time requirements of cadets on cadet
training ships and introduction of graduate and NCV
cadet schemes for ratings.
– Tirelessly assisting us sail our vessels without any
hesitation at even odd hours of the day
Maritime Administration
• Areas of Concern: – Administration could not keep pace with the growth of
Indian Shipping and also could not adapt with the
changing scenario of the requirement of customers of
the industry.
– Examination process – long and lengthy. It is observed
that around 2000 TNOCs have joined every year since
introduction of IGNOU – DGS Scheme in 2004.
However, passing rate of second mate COC holders less
than 25% per annum.
Maritime Administration
• Actions Requested: – Full sea time for TNOCs for a period of Six months while
serving on Off – Shore / Research vessels.
– Outsourcing Junior level competency examinations such as
2M FG, Class IV etc.
– Review process time for issuance of certificates after
completion of examinations.
– Expedite documentation for endorsements and revalidations
– MMD Sight test may be conducted by a qualified
ophthalmologist.
– Overcome shortage of Surveyors. It is understood 50% of the
vacancies are lying vacant or are on ad hoc appointments.
Concluding Remarks
• With changing aspirations of the young population in a
growing economy, seafaring is not the most sought after
career choice, particularly for the urban youth.
• Indian shipping industry’s grand plans to acquire tonnage
faces severe shortage problem.
• Short term solution – rationalization in taxation, SMD,
allowing foreign officers, etc.
• Long term solution – As listed in earlier slides
THANK YOU