Friday, October 14, 2011

Cost/benefit ratio

New Zealand Government and authorities have created a situation where substandard flag of convenience shipping has been encouraged and enabled.

The Maritime Union of New Zealand has it right. Jenny Shipley's govt basically made it just a matter of time before we had a large container ship breaking up and distributing containers and oil along the coastline for the unlucky locals to clean up, and the govts that followed have been completely OK with that.

It's a simple matter of cost-benefit ratios, but don't expect John Key to get up and tell that to the world's news media. The NZ govt's view of this ("govt" here including Shipley's and Clark's ones) has been that using substandard flag-of-convenience shipping is so much cheaper than doing it properly that the cost of the occasional big clean-up is worth it. Yeah, if I was them I wouldn't much want to have to defend that view publicly either. But it does give us a good insight into what their attitude to safety precautions for deep sea oil drilling would be.

31 comments:

Quintin Hogg said...

ipPM,
The ship is breaking up because it banged into a reef at 17knots. It is breaking up because being perched on the reef it is exposed to the elements more so than it would otherwise have been.
It is not breaking up because it is "substandard".

Psycho Milt said...

I dunno, for my part I consider shipping that bangs into a clearly-marked and well-known reef at 17 knots to meet the definition of "substandard."

PM of NZ said...

And what would supposedly 'standard' NZ-flagged ship bring?

Increased costs for exporters and importers, along with all the nausea of overmanned stoppy unionised labour. For zero gain in any perceived 'standard'. The chances of a ship hitting the bricks if the captain has a birthday at sea are probably the same. Ships would still be inspected to internationally agreed maritime regs at various ports.

Come on PM, please tells us how standards would be improved by changing flags.

Anonymous said...

Maybe you are lucky you've never made a really big mistake. A kiwi piloting a cruise ship probably did a few years ago. Did the facts of that come out? Who paid?

The locals having a poke at the Philipinos living there is pretty tacky. What a pack of small minded racist shits NZ'rs can be.

Quintin Hogg said...

PM,

That is what is called a navigation error. Or more bluntly a cock up.

They happen all the time. Except this one has more serious consequences than most.

Have a look at the Maritime NZ accident reports which are produced on a monthly basis.

Have a look at Cargolaw website which summarises on a daily basis worldwide shipping casulaties.

If you do then by your defintion every seafaring vessel will be substandard.

Anonymous said...

I am pleased to see that if we only allowed access to our waters to be by New Zealand owned ships, manned by New Zealand Maritime Union crews this sort of thing would never happen.
My memories of the Wahine sinking, with the death of 51 people, are obviously false as such a disaster could obviously never have happened.

Alwyn

JC said...

The NZ Maritime Union is a 2002 amalgamation of the old Waterfront and Seafarers unions.. about the two most disruptive and destructive unions we have ever had.

For its own economic survival this country has had to take risks to get out of the hands of these yobbos. This current mess will be a million times cheaper to fix than a regression to union madness.

The fact is, NZ is at the bottom of a very long shipping chain where it is expensive and not very profitable for ships to come unless there's a margin.. our log freight prices have varied from US$18 - 85 per tonnes in recent years.. reflecting the cost of enticing shipping to come our way.

In passing I note that Liberian registered ships are 10% of the shipping trade, deal with all countries and carry over one third of all the oil imported to the US.. all such ships have to be less 20 years old.

JC

Adolf Fiinkensein said...

Substandard, Milt?


The ship was relatively modern, built in 1990.

The only thing substandard here was the navigational skill of the pissed captain and his first officer.

Go on, blame John Key and Jenny Shipley for that, why don't you?

Psycho Milt said...

If the Maritime Union or I have written somewhere that shipwrecks wouldn't happen if we didn't allow flag-of-convenience shipping, I don't recall it. Standards don't prevent accidents, they just make them less likely - which carries a cost, which is why govts and right-wingers don't like them, which is the point of the post.

And what would supposedly 'standard' NZ-flagged ship bring?

Less use of slave labour in the fishing industry, fewer fishing boats sinking for unexplained reasons, container vessels operating along the coast that have appropriate charts and properly-trained crews, etc. Mere trivialities, I'm sure.

Come on PM, please tells us how standards would be improved by changing flags.

Er, have you ever stopped to wonder why shipping companies register their ships in Liberia rather than in their home countries? Perhaps they just liked having an exotic home port name on the back of the ship?

JC: you're actually restating my post: NZ govts have accepted a risk for the sake of cheaper shipping. The oil and containers washing up in the Bay of Plenty is the losing end of that risk. Key will regard that cost as a small price for the locals to pay, but he certainly won't be standing up and saying so in public.

Keeping Stock said...

@ Milt; if the reforms passed by Shipley's government were so bad, or if the Maritime Union's case was so strong, why was there no reform of the law between 1999 and 2008?

JC said...

"JC: you're actually restating my post: NZ govts have accepted a risk for the sake of cheaper shipping."

Milt, your case is thus based on your perception that Liberian registered ships are more risky than average. As near as I can tell from Google such ships have safety records about or slightly above the world shipping average.

JC

Adolf Fiinkensein said...

Milt, only in the hallowed halls of academe would anyone think that it is a BAD thing to balance off risk against return.

Ask all your yobbo friends how they'd like to pay ten dollars for that which currently costs five dollars and you might start to get the answer. That's what would happen if your maritime union friends got their way.

What? You don't have any yobbo friends?

Ah well. Ask Hone Harawira.

Psycho Milt said...

IV2: if you read the post, you'll find its definition of "govt" specifically includes Clark's one.

That said, and as per Adolf's comment immediately above, if Labour had announced that they'd decided to make shipping a lot more expensive in order to reduce the risk of environmental disaster, they'd have been completely fucking nuts. Key could declare it now and get away with it, but no-one could have up until this week.

Adolf: all entirely true. And yet, somehow, the PM lacks the integrity to say so to the nation's journalists. Why is that?

Andrew W said...

The majority of merchant vessels fly flags of convenience, they do so because the cost of registering vessels under those flags is far less, it has nothing to do with safety standards.

Adolf Fiinkensein said...

Milt, what preposterous nonsense.

What you propose is something sane people call 'knee jerk' or 'policy on the hoof,' both of which are Labour's specialty.

Psycho Milt said...

What I propose is that the govt should be honest about its risk assessment. Key is not only being dishonest about his positive opinion of the cost/benefit ratio involved in this disaster, he's asking us to take on significantly greater risk (deep sea oil drilling) while being just as dishonest about it.

The majority of merchant vessels fly flags of convenience, they do so because the cost of registering vessels under those flags is far less, it has nothing to do with safety standards.

Now that's humour - really, it was absolutely deadpan.
http://en.wikipedia.org/wiki/Flag_of_convenience#Criticism

http://www.nytimes.com/2011/04/25/opinion/25george.html?_r=2&ref=opinion

Andrew W said...

ROFLMAO.

So your refutation is of my claim that using flags of convenience has nothing to do with safety standards is a link to Wiki that doesn't mention safety standards, and an opinion piece by someone called Rose George that offers only a couple of brief references to safety standards but no specific criticisms or comparisons of those standards on FOC vs non FOC registered vessels.

Psycho Milt said...

Your claim that a system used specifically to allow shipowners to "escape the minimum health, safety and environmental standards of their home countries" couldn't possibly lead to increased risk? I don't really need to refute that claim, it's kind of self-refuting.

Andrew W said...

So unable to find some objective source you've resorted to spouting the words of the American Federation of Labor. Please Milt, stick with Wiki or Rose George, they're far more respectable opinions.

Spam said...

But it does give us a good insight into what their attitude to safety precautions for deep sea oil drilling would be.

Yeah... because the oil industry is just a bunch of cowboys who are completely unregulated.

Next time out independent external verifier comes along here to beat us up, I'll just show him my cowboy boots, and based on that I'm sure he'll be more than happy to sign-off our license-to-operate.

http://www.maritimenz.govt.nz/Environmental/Environmental-requirements/Requirements-for-installations/Requirements-for-installations.asp

http://www.pepanz.org.nz/newsDocument/improving-health-safety.pdf

http://www.med.govt.nz/upload/Offshore%20Petroleum%20-%20Final%20Report%20and%20Annexures.pdf

http://www.med.govt.nz/templates/Page____45456.aspx

Psycho Milt said...

Andrew W: OK, your argument is persuasive. Clearly, shipping companies only use flags of convenience to take advantage of a somewhat lower registration fee, and the accompanying ability to avoid taxes, conceal ownership, engage in criminal activity, and not be subject to the health, safety and labour standards of their home countries are completely irrelevant. How foolish I was.

Anonymous said...

If we had never had a sinking in NZ of a vessel registered here or crewed by union seamen this would have legs (tho stupmy ones at best). The issue is not the flag of convenience but the facts as to what went wrong. All the legalities in the world don't protect against stupidity and crews don't sail off the edge of the world on purpose.

An example of stupidity is that the Navy don't like it Upham.

Anon2 said...

crews don't sail off the edge of the world on purpose.

Oh really? And people don't murder their partners for the insurance either, do they...

Strange how no one can believe a corporate would do something like this for over 4b insurance on a sub-standard vessel.

Anonymous said...

the $4b insurance is its public liability insurance. It goes to affected parties not the owner. Aer you saying some NZers lured it onto the rocks deliberately to get a payout?

insider

Anon2 said...

the $4b insurance is its public liability insurance

Part of it is public liability, certainly not all of it.

Aer you saying some NZers lured it onto the rocks deliberately to get a payout?

Remember in the 'old days' folk would put out false lights to put ships astray so as to get the cargo?

Of course I think it is an insurance scam. Not by NZers though.

There is no excuse for running into a well defined small reed in fair weather by an experienced crew, is there.

Andrew W said...

Clearly, shipping companies only use flags of convenience to take advantage of a somewhat lower registration fee, and the accompanying ability to avoid taxes, conceal ownership, engage in criminal activity, and not be subject to the health, safety and labour standards of their home countries are completely irrelevant. How foolish I was.

Obviously you think shipping companies that use FOC are evil and out to engage in criminal activity, create slaves of their employees and destroy the environment. Not foolish Milt, more like deranged.

Anonymous said...

Anon2

Well this sounds right up there with the 9/11 whack job theories. Do expound.

Do you know anyone who has really made any money off insurance? We are talking about a long term reputable ship owner here, not someone who burnt out a car he couldn't sell

Insider

Anonymous said...

While I hadn't contemplated insurance fraud Anon2 is not automatically off the wall. It may be unlikely but it wouldn't be the first time a corporate has done that. I doubt they would do it here in this manner though as the attention is a bit intense and the consequences of the wreck being so close to shore are a pain for no benefit.

Psycho Milt said...

Obviously you think shipping companies that use FOC are evil and out to engage in criminal activity, create slaves of their employees and destroy the environment.

Why is it so many people can only think in false dichotomies? This is about more likely/less likely, not either/or. Is a shipping company interested in avoiding meeting its home country's health, safety and labour safety standards more likely or less likely to go for a flag of convenience? If you chose "less likely," pick up the dunce's cap and go stand in the corner.

ZenTiger said...

Blaming the Rena purely on "flag of convenience" is like blaming the Wahine on unionised, local shipping.

There are lessons to learn from this, and if the government doesn't seek to review and improve the response, and the ability to charge negligent companies for the cost of clean-up, then I'd have an issue.

ZenTiger said...

PS: Thanks for "Michael" on a Frog Blog thread for the Wahine comparison.