Speech given to ICS by Mr Bill O’Neil

Apr 20, 2005
Author: P&S

President of the Institute of Chartered Shipbrokers and former secretary-general of the International Maritime Organisation (IMO)

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Good evening ladies and gentleman it is a pleasure for me to join you at this Executive Council meeting in Durban and I appreciate the great effort that Alison (Sibbald – former president of the South African chapter of ICS) and your members have put into organising the various activities for the week. Not only have we been provided with first class facilities to conduct our business affairs most efficiently but the tours and ancillary programs have made our stay in South Africa a most enjoyable one.

I do not need to tell you how well shipping is doing these days because you are not only in the midst of the action but are major players. The fact that all segments of the industry; tankers, bulkers and container ships are commanding the highest rates ever, has even the most pessimistic shipowners smiling from ear to ear. So from my point of view it is an ideal time to reflect for a few minutes on how the industry has evolved over the years, how it has coped with change, and what some of the current issues are.

The transport of people and goods by water has been going on for centuries and the development of ships and shipping has played an integral part in shaping the world as we see it today. Early on the mass migrations of people from continent to continent was largely achieved through the skills of navigators capable of dealing with the elements in remote, uncharted and inhospitable seas coupled with the skills of shipbuilders who provided the vessels for the voyages. And subsequently the industrial revolution was made possible by ships feeding the system with raw materials and transporting finished products to markets throughout the globe. Never has the importance of shipping been more evident than it is in China today which is drawing in tremendous amounts of raw materials and sources of energy and then is disgorging immense quantities of manufactured products of all descriptions to every continent – all being moved on ships. China and India have become the current engines of the industrial world and as well as boosting their own economies have provided shipowners with the ‘holy grail’ they have been seeking for years – the highest sustained rates ever recorded for ships.

The capability to transport cargoes efficiently and effectively has not just happened by chance. It has been achieved through the far-sighted thinking of many people in various components of the fragmented shipping industry who have collectively adjusted to and managed change in an orderly fashion. And this is particularly so during the last half of the 20th century when developments in vessel design have been astonishing and have revolutionized the transportation world. Advances in engineering technology have permitted mammoth dry bulk, tanker and container ships to become commonplace. Electronics have also kept pace and instantaneous global communications have brought waterborne transportation directly into the production chain so that cargo deliveries have become crucial to maintaining a smooth flow of raw materials and manufactured goods. The demands on seafarers to meet the tight schedules, regardless of weather and mechanical conditions, places a tremendous stress on the mariners and particularly on the ships master and officers. The impact this has on vessel safety and security must be kept in mind when addressing the human factor in shipping. Because so many accidents are blamed on people that we must determine the root cause of why highly skilled professional seafarers with superb academic and practical qualifications make seemingly irrational mistakes. Pressure of meeting schedules, boredom, isolation, fatigue, personal problems, job security and so on must all be identified, and corrective action must be introduced to cope with them.

The International Maritime Organisation was created as a specialised agency of the United Nations to deal with: safety of life at sea, the prevention of pollution of the marine environment by ships, and more recently with the threat posed by terrorists to ships and shore based maritime facilities.

To achieve its objectives the Organisation has developed a large number of treaties creating international standards, regulations and codes, which cover a broad range of topics which have been accepted by the vast majority of flag and coastal states. The results of these efforts have not been in vain and their worldwide application has resulted in fewer lives being lost at sea and in a reduction in pollution of the oceans from ships. IMO has truly earned its position as the focal point for the development of all standards and regulations related to the safety of international shipping. And shipowners who traditionally tended to shun the imposition of any regulations on their industry have in recent years repeatedly stated quite emphatically that IMO must be the only body responsible for dealing with these matters.

I felt that this bit of background on IMO might be helpful, particularly for those of you who have no occasion to deal with the Organization and its regulatory regimes on a routine basis.

I would now like to turn to a subject which gives me a great deal of concern and that is the increasing trend to initiate criminal proceedings following a ‘maritime mishap’ which results in oil pollution of a coastline.

There are two cases in particular which highlight the issue. The first concerns the tanker Prestige, which suffered a structural failure and sank off the coast of Spain. I will not go into all of the details but the ship’s master was detained by the Spanish authorities immediately when he set foot ashore and is still involved in criminal court proceedings which have severely limited his personal movements and have been the subject of grave concern within the industry.

The second case is the tanker Tasman Spirit, which was proceeding with the assistance of a pilot to the port of Karachi. She was fully laden and after running aground broke in half and spilled a substantial amount of her oil cargo. The Captain and six members of the crew were arrested. Later, the Salvage Master, who did not even arrive on the scene until after the ship had broken up, was also detained. The group was not released until after being in detention for more than eight months.

Ladies and gentlemen, there can be no question that anyone who deliberately breaks or flout the law deserves to be punished. And we certainly have every sympathy for all those who have been victims of accidents and in particular serious pollution incidents which can ruin livelihoods. There is clearly a need to discourage violation of pollution laws and to make sure that adequate compensation is paid to all those who suffer as a result of a maritime accident.

The trend to take criminal action following a mishap is done, ostensibly, to have a greater deterrent effect and, consequently, to lead to a reduction in this type of casualty. However, is punishment of this nature fair and does it fit the crime? Will it really have the desired effect or will it result in other negative consequences? There can be no doubt that anyone who deliberately commits an act of pollution or knowingly flouts pollution standards such as MARPOL should be appropriately punished; and MARPOL requires that adequate penalties should be imposed to discourage such violations. However, IMO conventions were not developed with the aim of requiring criminal sanctions for non-compliance and any move to criminalize polluters would be a major departure from the philosophy employed in their formulation. The point is emphasized by the fact that MARPOL does not specify what form the sanctions should take.

On the down side of criminalisation as a penalty in situations never before contemplated, is the potential impact on inducing young people to become seafarers and the concern of existing masters and crews concerning their possible incarceration even though they had taken all possible steps to mitigate pollution. And of course the hesitancy of salvors to become involved when they know that the success of their operations frequently depends on taking risks which in retrospect could be hard to defend if something goes wrong.

I would stress that criminal sanctions might not and in my view would not, stop at the level of the seafarer. In fact there is every likelihood that they would extend to shore management, owners and directors. One piece of proposed legislation I have seen recently includes the possibility of criminal charges for accidental discharge and includes directors and owners in the penalty provisions. While penalties under civil actions may be insurable, I understand that defence of criminal charges is not an insured risk.

I draw this matter to your attention because as Brokers and Agents I have concern that the full impact of what is taking place with respect to criminalisation in certain major jurisdiction has not been recognised.

You are aware that security has taken a dominant position on the maritime agenda since the 11 September tragedy. IMO developed the ISPS code, which became operative last July and while it may not be a perfect solution to the problem, it certainly highlights the exposure of ships and marine facilities, such as ports and canals to terrorist activities. Shore facilities, dry cargo ships, tankers, gas carriers and passenger vessels have relatively clearly defined soft spots which have been addressed by the industry and preventive measures have been introduced. However, container movements are another matter which requires special and expensive treatment. Boxes are packed all over the world in places remote from the delivery point to ships. They are transported by a myriad of vehicles types on shore passing through many hands and are difficult and costly to examine and determine with any precision their exact contents. All of which means that container movements must continue to be of concern from their point of origin to final destination.

I have been impressed with, the great interest The Institute has in fostering ‘professionalism’ amongst its members and I fully support this. In my view, the main role of the organisation is to assure that those wishing to participate in the business must meet the standards set, must be properly educated, possess the required skills, subscribe to a code of professional ethics and demonstrate these attributes to the satisfaction of the members. The education and training of candidates to achieve the status could be multi-faceted, for example:

Institute sponsored courses and tutorials

Distant learning programmes

Utilization of private or State run educational institution

Employment of a credit system where by a combination of systems could be utilized by the candidate

It would be essential that all curricula would be to institute standards and approved and audited by it. In addition examinations relative to the code of ethics would be held under the direct supervision of ICS. If membership in the Institute is to be expanded globally, which will be desirable, then some adaptation along the lines I have outlined would be helpful and appropriate.

As brokers, you have a role and an obligation to continue to work towards improving the quality of shipping and in weeding out the substandard ships and operators. You can not be expected to take on the role of policeman of the industry but you are in a unique position in both your chartering and S&P functions to be capable of identifying poor quality and assisting in its eradication.

The shipping industry constantly complains about its poor public image and to get from under this cloud there must be a demonstrable improvement in safety and pollution prevention and not just by giving lip service to it.

While over 90% of world trade is moved efficiently and effectively by shipping, this fact is overshadowed by one Exxon Valdez or Prestige incident. It is therefore an uphill struggle to clear the image and from my perspective, the only way this can be achieved is by elevating quality in all aspects of the industry and then dwelling on this theme until it is not only a fact but is believed by the public and politicians.

Thank you.
William O’Neil

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