THE DECLINE OF THE BRITISH MERCHANT NAVY 

(This article is under 'repair' the opening & concluding paragraphs got chopped of during my modifying of the page it was previously on, I hope to restore it to its original as soon as i find were I found it on the WWW. ed)

Introduction
There are some adverse effects in the development of an open international economy, which may be unforeseen, and which market forces and national governments alone cannot mitigate.
Specifically, there are mismatches between regulations, which have to be enforced at national levels, and work and management practices within a global industrial environment.
One such case is the loss of recognised accountability towards merchant ship multi-national crews, which are recruited internationally by offshore agencies and serve on open registry ships.

Merchant shipping has always of course been an international activity involving the carriage of goods bought and sold on the world markets.

The global commercial network was greatly facilitated in the 1860s by the development of the submarine telegraph system.
At that time the shipping industry and world trade were controlled by only a few rich states.
There were in these countries, and especially Britain, well established tramp and liner companies with ships flying their national flags and crewed mainly by nationals, plus some lower-level manning drawn from colonial territories.

At that time a tramp ship would have a crew of 40 or so. Many of these seamen would come not only from the same country but from the same town, or even village.
They spoke the same language, had similar cultural backgrounds, education and training, and common preferences in food, recreation and working practices.

Life was often hard on many ships, but seafarers knew who they were working for (sometimes even the face of the owner) and they had recourse to national legal systems directly and through their trade unions.
Going to sea had then, for all its hazards, hardships, and the social deprivation of long absences from families, an appeal for young men (and a few women). Ashore there were frequently strong bonds between seafaring families and systems of mutual support in port towns and village communities.

Many of these features of shipping in the traditional maritime countries (TMCs) remained in place until the mid-20th century.
The ships operated in an international economic context under national laws which were enforced by the flag states, and gave effect to a body of safety regulations which had emerged internationally since the late 19th century.
This relative stability of the maritime world began to change after the mid-20th century and especially following the 1973 oil crisis.
In the process a new economic environment emerged which had enormous consequences for the structure and regulation of merchant shipping and especially for those employed on ships.

The merchant ships of the late 19th and first half of the 20th century were generally owned, built, surveyed, insured and managed nationally.
Their operations were regulated under flag state laws - many of which were aligned between the major maritime states, and 'self-regulated' by companies in the liner trades under conference agreements.

The main economic changes in shipping from the mid-20th century have taken two related paths.

First, technological advances toward larger and more specialised vessels with reduced crewing;

Second, a shift from national flags of the TMCs to foreign flags, primarily flags of convenience (FOC). The device of FOC enabled the retention of ship owning in the TMCs and the recruitment of low-cost crews from countries around the world, without the requirements to comply with own national laws and the fiscal systems of the states of the beneficial owners.

The FOC states of registry had neither the capacity nor inclination to enforce legal requirements.

The shift to FOC was accelerated by the 1973 oil price increases, the related economic crisis, drastic temporary reductions in world trade, and the continued production of ships built under subsidies which added to an already world surplus capacity.
Freight rates fell, as did rates of return. These features of shipping were accompanied by the general deregulation of financial markets and trade, and intense international competition with emphasis on reducing costs.
Shipowners sought cost reductions in labour, but also in many other inputs on a global scale

With deregulation it became quite possible for a single vessel to be owned, mortgaged, built, registered, insured and managed all in differing countries.
The crew could be recruited from several countries by a manning agency offshore, the vessel chartered to yet another country (and even leased back to the country of the beneficial owner) and engaged in trading worldwide.

In the post-1970s era many of the beneficial owners of the world merchant fleets were still in the TMCs and in some of the newly-industrialised states of Asia, but most of the ships they owned were under foreign flags, as is shown by Table 1 for 1996.
Furthermore, some shipping companies in the most developed countries combined into multi- and transnational organisations - several with interests beyond shipping, including port terminals, road transport and hotel ownership worldwide.

Table 1: Principal Ship Owning Countries and Flags of Registry 1996 

Country -           own flag ships-      FOC flag ships
Greece -                          912 -------------2003 
Japan -                            922------------- 1829 
United States-                482 --------------732    
Norway-                         836 --------------568 
China -                         1594 --------------378 
Hong Kong -                  104 --------------503 
Rep. of Korea -              501 --------------303 

United Kingdom-          388------------     510 
Germany-                     478 --------------984
Russian Federation-   2595--------- -----239 
Source: UN Review of Maritime Transport, 1997

The countries which offered their flags to world shipowners as flags of convenience were interested primarily in income from ship registrations.

They permitted an owner to put each one of his ships under a different company in their state, thus drawing a corporate veil over the owners.

This, amongst other things, protected the vessel from cross-liabilities.

The principal FOC states are shown by Table 2.

Table 2: Major Open Registry (FOC) Fleets,
as at December 1996
Country -     Total Ships -----Thousand DWT
Panama -     3478 ----------------108904
Liberia -       1515 ------------------92714
Cyprus -       1348 ------------------33050
Bahamas-      959 ------------------35579
Malta-            930 ------------------27535
Bermuda-         80------------------- 5082
Vanuatu-        126 -------------------1757
Total -          8346                   304,421
Source: UN Review of Maritime Transport, 1997
Country  Total

Very low freight rates now became expected by world industry and shippers.

As a result ships that remained under national flags were subject to relentless competitive pressures to cut costs.
The options, as many shipowners saw them, were either to get out of shipping, obtain subsidies, introduce new technologies, reduce crew numbers and conditions, extend the economic life of ships, reduce maintenance costs and/or flag out.
This was rather like governments which advise national firms and employees that they must be prepared to reduce employment procedures and conditions as desired by a transnational company, or the company will invest its capital in another part of the world where these conditions could or do exist.

In the case of shipping, however, it is not only capital which is mobile internationally, but labour.

Crews thereby came to be recruited under the same cost reducing pressures by offshore agencies from the poorer countries of the world and sent for employment to ships owned in the richer states, but under flags which have few or no links with the crew, the owner or the trade.

It is the widening gulfs between flag states, owners, and crews recruited globally which have been the basis of many of the adverse effects on the conditions of many seafarers.

Modern Globalisation of Shipping

The Consequences for Seafarers
As a result of the technological changes and the open world labour market, substantial declines have taken place in the seafaring populations of all the TMCs.

British seafarers, for example, numbered about 100,000 in the late 1960s. They were reduced to 27,000 in 1993.
Of the 1-1/4 million merchant seafarers in the world in 1995 the major places of their recruitment were the Philippines, about 250,000; Russia and the Ukraine, 88,000; Indonesia, 84,000; China and Turkey, about 80,000 each; and India, 53,000.

Ships crews are now multi-national and culturally diverse.
However, about half of the officers are drawn from OECD states and the ratings predominantly from Asia and the former socialist countries.

There is now a major world shortage of officers since the TMCs have not been recruiting and training sufficient numbers for these posts over the past decades.

(India, Malaysia, & China are turning out significant numbers of MN officers) ed.

There are tensions on board many multi-national vessels leading to poor levels of maintenance, accidents and low morale.

The shipping companies that flagged out have made substantial savings in crew costs depending on the mix of nationalities employed.
A US chief officer (1997) would expect a wage of about US$11,000 a month; British US$5,000 and Filipino US$2,000.
Differences in salaries are even greater amongst ratings from different countries.

But savings also depend on how the ship is managed and operated.
An FOC owner can still provide reasonable standards of wages, welfare and safety and employ an efficient crew, and several do.

There are others who have no interest in seafarers and use the lack of competence and responsibility of FOC states as a means of escaping basic ethical behaviour and their own national, fiscal and social regulations, as well as international law.

They are thereby free to exploit seafarers and their families from the poorest countries in ways that are worse than those experienced in the 19th century, when there was at least some national accountability required of an owner.

Because these Flag of Convenience states have lacked the administrative capacity and the will to enforce existing international regulations it has been left to the ship owners to self-regulate.
Some companies have done so very well and they run FOC vessels where conditions are superior to ships under some national flags.

Port State Control (PSC), where it exists, has also detained vessels with safety defects.

However, PSC measures have not often extended to crews which are exposed to unfair contracts, low wages, and abandonment in foreign ports.
Multi-national crewing, cultural diversity, and remoteness from home countries and from the states of registry and ownership, have left such crews virtually defenceless and exposed to exploitation.

Legislation has not been of great assistance in curtailing abuse and abandonment since most regulations focus on safety and technical competence.

A few examples may illustrate some of the issues of concern which have been intensified in recent years.

Typical Concerns

From very inadequate world statistics collected by SIRC (1998) (none was available from FOC states) the average annual mortality of serving seafarers internationally was calculated as 2,027, of which 1,102 was due to ship losses, 521 to illness, 419 to accidents on board and 91 to suicides.2

It is not, of course, only a matter of substandard ships and their hazards; what is really involved are the substandard owners and their attitudes to a globalised labour force.

At least one merchant ship per week is arrested or abandoned by owners in a port somewhere around the world.

This is due either to the poor condition of the ship and/or debts the owner is unable or unwilling to meet.

For the crew it means deprivation of their earnings for the voyage, and little prospect for returning home unless, in the course of time, the vessel is repossessed and sold by a mortgagee.
ITF and other records show thousands of seafarers from poor countries left on these abandoned vessels for periods of several weeks to over two years, and their families rendered homeless because of debts to money lenders.

Seafarers working for a company which is often hidden from the crew have regularly been denied medical care and deprived of compensation from accidents.

Many of those who have taken action against such abuses have had their names and descriptions circulated to world employment agencies on a blacklist.

Contracts of employment may stipulate that trade union contacts are prohibited, and there are sometimes dual contracts, one detailing wages for 'show', and the other the lower wages which will be paid.

Most of these and many other abuses arise within the FOC sector.
Not only does this have terrible impacts on seafarers and their families, but it constitutes unfair competition towards decent shipping companies under both national and FOC.

Under the present system much of the existing international legislation relating to the rights of seafarers can in fact be avoided.
But the effects of globalisation in shipping are somewhat wider than that.
The institutions of shipping are also subject to international competitive pressures which can likewise result in a down-levelling of the conditions they are supposed to uphold in the shipping world.

There are, for example, about 50 classification societies which carry out ship surveys.

A ship is expected to always be 'in class', i.e. up to required standards of condition.
Surveys by classification societies, especially those outside the International Association of Classification Societies, do not now always have the veracity of those carried out in the late 19th century.
A shipowner can move from one society to another (class hopping) to keep his vessel in class.

There is also a problem in standards of financing ships.

Major banks and financial institutions compete in the global market in lending capital to shipowners, regardless of flag.

Shipowners that have abandoned ships and crews appear to have little difficulty in raising millions of dollars from financiers to come back on the market.

They even do so with a re-named company and buy back their abandoned ships at 'knock-down prices'.
As new owners they have no obligations to creditors or to the seafarers who are left destitute.
More responsible mortgagees may meet the cost of repatriating the crews of these vessels, but others refuse even to acknowledge that they are the mortgagees.
Some do not even repossess the ships, as the associated costs of doing so are more than the value of the vessel.

Seafarers are as a result left destitute in many ports throughout the world.
They are fed by local people and the missions to seamen.
Many are ultimately rescued by the International Transport Workers Federation, and sometimes their wages are paid by mortgagees.
Their families in very poor countries suffer even more, they lose their homes, furniture and health, and some are seriously abused by the money lenders.

Modern Globalisation of Shipping
 
Enforcement of National and International Regulations
There are of course regulations.
The problem lies in enforcement.
There are some 36 international conventions and 26 recommendations which have been adopted by ILO since 1920, specifically for the protection of seafarers.

Not all have been ratified, some have passed into national law subtly diluted, others have been ratified but are not implemented by some flag states.
 As with the IMO conventions relating to safety, it is the flag state that has to implement international legislation.
The international agencies which produce protective legislation do not have enforcement authority.

It is the flag state which has sovereign rights over a merchant ship at sea, and can determine what are acceptable working conditions.
Some of the owners who have flagged out ensure that their ships comply with the main international regulations, even if the flag state has no interest in enforcement.

But it is only when vessels enter the port of some foreign states that the power of the flag state is challenged with respect to standards of ship safety.

Port state controls, however, are in the nature of spot checks, and there are many ports in the world where this is not carried out, and in most ports where it is, it is confined to safety and has not extended to the living and employment conditions of seafarers.

New legislation including STCW(95) and the International Safety Management Code will ultimately help to improve safety standards, along with more effective PSC, but will have little impact on the treatment of crews.

The flag states which tolerate abuses of crew fall into two main categories.

First, those which are interested only in earnings from registration payments as FOC, and have not created the necessary maritime administrations capable of implementation.

Second, national flag vessels, including Romanian, Russian and Ukrainian, whose chaotic administrative circumstances and lack of finance in the transition period to capitalism have left seafarers at the mercy of some uncaring and often corrupt management.

Only time will tell if laws will ultimately be applied by these states to their flag ships, and if so, will the result be flagging out by the new owners to FOC?

Conclusions

About 75% of merchant ships are owned in the TMCs.

About half of all merchant ships are now registered in countries which are not those of the beneficial owners, and the majority of ordinary seafarers and, increasingly, officers, are drawn from the third world and the former socialist states of Europe.
(At break up of the USSR many ex soviet MN seaman were thrown on the beach, they were picked up cheap by many FOC flag companies.

(One large Pakistani tanker company who ships I went on regulary in Port Botany carried quite a few Russian Engineers, they told me that in the early days many Russian deck officers and seamen also worked for many of these FOC companies but they didn't keep them long as they proved in many cases to be unreliable and to fond of Vodka.

The engineers were desperate to go home but they had signed 7 year contracts and they were still getting the same pay despite the fact that inflation back home had gone up a 1000% their pay would not buy a loaf of bread now, the Seamen's Mission and the MUA used to look after then somewhat.) ed. 

Most vessels have multi-national crewing and many are operated for owners by management companies in tax havens.

The lack of accountability is the principal defect in the new free world market in seafaring employment.
A multi-national crew that has, for example, been abandoned may appeal to the judicial authority in the country of abandonment in order to secure their wages after the sale of the vessel.

They may be told by a court that the responsibility lies with the courts of the flag states, or the country of the manning agency, or of the beneficial owner, or of the mortgagee of the vessel - or in their own countries.
All these may deny responsibility.
In fact most aspects of social justice and human rights can be removed from seafarers within this structure.

When it comes to the substandard ships some port states may exercise jurisdiction over crew conditions.

However, this is limited to certain ports and curtailed by lack of sufficient inspectors.
In any case PSC officers are simply carrying out, at their own taxpayers expense, the surveys that should be conducted by the flag states of registry.

Accountability for abused and abandoned seafarers can only be truly achieved by bringing the process of enforcement into line with the new global economic structure of the industry.

The desideratum for changing the situation would include the views that the registration of a ship should not be the right of a state that has not the resources or the will to enforce the technical and social requirements agreed internationally.

Nor should classification societies incapable or unwilling to conduct rigorous surveys be allowed to function.

Charterers, brokers, cargo owners, insurers, and those who finance ships, should equally well not be permitted to use the caveats of free market competition to justify tolerance of low standards.

The free market has of course brought about very low freight rates internationally that world industry has enjoyed, but at the expense of much social injustice at sea.

There is a growing body of opinion that the only way to achieve the melioration of the adverse effects of the global market is through more supranational regulatory enforcement.

This requires co-ordinated agreements and actions by the UN agencies IMO, ILO, UNCTAD, the International Transport Workers Federation, the International Shipping Federation, and other institutions of shipping, towards more control of ship registration, and indeed ultimately to an international register which will correspond to a global industry.

References;

Roberts, S. (1998), Occupational Mortality Among Merchant Seafarers in the British, Singapore and Hong Kong Fleets (1981-1995), Seafarers International Research Centre, Cardiff.

Couper, A.D. and Walsh, C. (et al) (1999), Voyages of Abuse: Seafarers, Human Rights, and International Shipping, Pluto Press, London.  

The major concerns are for the significant minority of shipping companies whose seafarers are under poor quality management, on unseaworthy ships, and have low levels of conditions and rights.