MBM 5205 SHIPPING FINANCE MANAGEMENT AND LAW

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Attracting And Recruiting Officers for Tomorrows Merchant Marine

MBM 5205 SHIPPING FINANCE MANAGEMENT AND LAW

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Contents

Title

Page.No

Abstract

Introduction

Demand and Supply of Officers United Kingdom: A Case Study

4 5

Factors affecting Demand & Supply

Attracting new officers

Conclusion

11

Reference

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Abstract
The present maritime industry is increasingly aware of the lack of experienced and competent Officers however, the practices to increase recruitment and retention varied in application. This report studies and examines the issues faced by todays maritime industry in supply and demand of officers and how to increase the recruitment and retention of officers while satisfying the needs of the employees along with achieving the organisations goals and objective.

Introduction
Seafarers are those who are engaged or employed to serve in any capacity on board any vessel(Healey,1969).This concept of seafarer in maritime industry have changed considerably and present day seafarers are characterised by their qualifications and to some extend by the specifications of their vessels. The transitions or changes happened in maritime industry had significant effects on the roles and activities of seafarers. Officers include Masters, Chief Engineers and other certificated deck and engineering officers. The application of modern technology and the owners idea of reducing operation cost to improve operating efficiency has seriously affected the number of seafarers onboard (Alderton, 2004).The reduction in the crew size has increased the complexity of the job nature of the officers and implementation of the new technologies has resulted in the requirement of seafarers with specific knowledge and training such as navigation systems and advances in engine room automation. Most of the seafarers in present day are highly flexible and multi skilled and this is mainly because of the qualifications and the training they have undergone (Alderton, 2004).Officer composition onboard in the last few years have changed. Large number of ship owners are recruiting officers with less training and experience and also from different countries to minimise the cost and this have resulted a culturally diverse work environment which in turn have resulted in difficulty in management (Leggate,2004).The above mentioned cost cutting activities gradually resulted in the shortage of qualified and experienced officers in the industry. Seafaring population, particularly officers are aging population whose qualification are highly regarded internationally in the industry (Thompson Clarke Shipping ,2002) and to sustain the steady supply of officers it is essential to recruit of new officers while keeping the current officers whose knowledge is invaluable.

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Demand & Supply of Officers

The most recent BIMCO/ISF update showed a 13,000, equivalent to about 2% shortfall gap in officer supply of 624,000 compared to the 637,000 officers required (BIMCO/ISF, 2010), whereas in 2005 the gap was only 10000 (BIMCO/ISF, 2005).In the last five years the demand as well as supply of officers has increased but there is still an increase in shortage of officers compared to 2005. This indicates that even though there is no serious aggregate shortage of officers, it identifies some supply problems for senior officers and engineers in some labour markets and recruitment and retention problems in certain shipping market segments. (BIMCO/ISF, 2010) Figure 1.1 and 1.2 illustrate the supply and demand of officers and ratings from BIMCO/ISF (2000, 2005.2010) studies

Figure 1.

Source: Author 2011 Source for Figure:BIMCO/ISF(2000,2005,2010)

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Ratings level personnel increased 15 per cent since 2000 to 2005 with a surplus in supply of 721,000 compared to a demand of 586,000 (BIMCO/ISF, 2005) but in 2010 there is an equal balance of 747,000 ratings for both supply and demand(BIMCO/ISF, 2010).

Source: Author 2011 Source for Figure:BIMCO/ISF(2000,2005,2010)

Figure 2.

United Kingdom: A case study

According to the statistics done by Department Of Transport (DFT) there were around 925 new entrant officer cadets in 2008/09 in UK which is the highest number since the current system started but then the value fell down to 754 in 2009/10 (DFT,2010). The DFT study showed that in 2006 there were about 26,700 UK seafarers working at sea, of which 13,600 were deck and engine officers, 800

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technical

officers,2,300

catering

officers,

10,400

ratings

and

1,100

trainees.(DFT,2006) In 2010, about 27,800 UK nationals were seafarers working regularly at sea, consisting of 11,300 deck and engineering officers (assuming a retirement age of 62), 1,500 technical officers, 1,900 catering officers, 11,300 ratings and 1,800 trainees in training. (DFT, 2010) The statistics clearly defines that there is a decrease in seafarers during these years and it is evident that the reduction in seafarers is largely contributed by the decrease in officers. The number of certificated officers in 2010 was 21 per cent lower than in 1997.However the number of certificated officers was 1 per cent lower in 2010 than in 2009 .The certification system for deck and engine officers has been expanded in recent years, and if the newly eligible groups are excluded the overall decrease since 1997 is 26 per cent (DFT, 2010). According to Drewry/PAL Global Manpower Model the global officer requirement in 2008 is 498,000 which is 34,000 more than the number of officers available. The report also estimated that if the world commercial fleet continues to grow at 17% in ship numbers then the officer shortfall could reach 84,000 by 2012 if nothing is done to change this (Drewry, 2008).

Factors affecting Demand & Supply

Factors that have impacted on the demand and supply of officers can help in understanding the problems faced by the industry which in turn can help in increasing the recruitment and retention. It is believed that the problem faced by the maritime industry today is the shortage of qualified seafarers particularly officers rather than the shortage of seafarers. Even though these situations exist, there is an untapped supply of seafarers in non-traditional maritime countries, due to the greater availability of human resources at a lower cost to operators, and this could provide a potential supply of seafarers to the industry. This growth may lead to a balance between supply and demand but the shortages in supply in some countries cannot be filled by the oversupply in others. This is mainly due to language, cultural difference or standards in qualification or restrictions of foreign nationals in various nations (BIMCO/ISF 2010).

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The shortage of skilled labour in the maritime industry stems from a number of sources mainly because of the financial and operational decision (ILO,2001).In the case of officers this can be attributed to a number of incidences occurred in the history of shipping industry. After the oil crisis happened in 1970 a lot of factors like over tonnage, low freight rate, execution of new technologies to reduce the cost ,flagging out of vessel have all affected on the supply of seafarers(Lane,2000).These factors also had larger impact on reducing the awareness of the employment prospects offered by the industry, long lead times between the recruitment and qualification of officers, as well as the changing nature of career choices among potential new recruits (ILO,2001). There is a general belief in people that seafaring is not a rewarding career and is considered to be unattractive when compared to the other professions this is mainly due to the perceived limited career prospects in seafaring, as well as high training costs, which may have to be paid by the trainee itself. Lack of availability of the training berths for officers also contributes to the officer shortage.Generally there is lack of awareness about the shipping industry in public and there is not much attention attained by the industry unless an accident or environmental damage occurs. Awareness and image of the industry has got great influence on recruitment of personnel into the industry (Mitropoulos,2004). Other factor influencing the officer supply is the difficulty faced in recruiting process. Recruiting can be affected by external factors such as recessions, higher operating costs, environmental concerns such as pollution, the criminalisation of seafarers, industry exposure and the industry's management of these situations .(Higginbottom, 2005). Maritime industry has one of the toughest work environments with excessive hours, periods of isolation, involving a lot of physically demanding work in a potentially dangerous atmosphere and being surrounded by a culture that is considered to be macho and male-dominated. It is very hard to attract or influence new recruits with conditions like these and most of the time the newly recruited candidates consider these carrier as an interim one until they find a suitable job(Joshi,2005).Another important fact that is leading to officer shortage is the growth in the number of vessels in the world fleet along with the lack of recruits entering the industry .Highly attractive salary from abroad in oil and gas sector on

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shore based sector has also contributed in loosing qualified officers (Thompson Clarke Shipping,2002) The mismatch between the demand and supply of the officers has some impact on shipping mainly on the operating costs of the vessel particularly specialist vessels. Oil and gas careers are most affected by this shortage and this is driving up the operating cost ,in some case as much as 40 percent of the total operating costs.(Mathews,2006).Shortage of quality officers from traditional maritime countries has resulted in a shift towards Asia and the Indian sub-continent where labour pools are larger and cheaper Shifts away from traditional maritime countries where standards are high and remuneration and conditions are much better, are likely to increase as supply falls and demand increases(BIMCO/ISF 2005). The existence of all these factors explains the depth and complexity of the issues faced by the maritime industry in shortage of seafarers especially officers and hence to solve these issues there is a need to improve recruitment by attracting new officers to the industry and retaining the qualified and experienced officers.

Attracting new officers

Creating an attraction to a career especially in a marine industry is not an easy task but still following actions can be considered to alter and improve the preconceived notions of the potential recruits. Highlighting and creating an awareness of the following advantages can be helpful in attracting new officers to the industry Advantages of an Officer: Even though there are negative aspects to an officer career but there are some advantages too. Receiving good remuneration Global travel Long holidays Career flexibility and security Early responsibility Career opportunities at sea and in shore-based positions Satisfaction in knowing that you are doing something useful and exciting(ISF ,2011)

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New entrants to this career are often given individual responsibilities and thus can experience increased responsibilities in the early stages of their career with fast promotion as they gain experience in the

sea.(ISF,2011).Shipping industry can provide employment opportunities around the world because of its global nature. Developing a career in through the industry is relatively easy for those have gained experience and skill and, various shipping industry all over the world are looking to employ officers with experience due to the specific and unique knowledge they have acquired while at sea. (Precious Associates Limited 2003).One of the main advantage of this career is the long break given to the officers between sea going periods, some organisation gives equal proportion between sea and shore based time Strategies followed to attract and retain officers in the industry might not always goes in right direction. Current practices involves increased remuneration packages, providing tax benefits to operators to promote training program, and employer programs to encourage employee development and satisfaction (Gardner et al.,2001).Even though some of these schemes have small successes ,it is possible that they have targeted the wrong group of people and thus may have failed to lead an significant increase in recruitment. Some European countries rather than trying to change the perceptions or increasing maritime career awareness and attracting new recruits to the industry, government has given more importance in providing tax benefits to ship owners who train their new recruits (Leggate 2004). Organisations such as Sea Vision set up by the UK Chamber of Shipping have been introduced to help raise the profile of the maritime industry in order to attract young recruits. This is imperative if the shipping industry is to meet its needs in the future (Lloyds List, 2007). There is a need for explaining career options an early stage because career choice made by the new generation depends on the choices that provide most opportunities Involvement of government in the increasing the supply of officers in some countries has helped in providing effective measures to combat the problem. In India for example it is estimated by the Indian National Ship owners Association (INSA) that there is a shortfall of about 834 officers in Indian flag vessels, as of June, 2007. The Indian government implemented certain procedures to overcome the shortage of qualified staff which would in hand expand the facilities

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for marine education & training by allowing private colleges to be opened. These facilities provided by the Government provide a viable solution to Indias problem and could be followed by other countries. These measures have helped in the way of:

(i) Ensuring quality training at the maritime institutes as per international standards and introducing several new courses for pre and post sea training. (ii) Action has been initiated for facilitating induction of retired naval officers into the merchant navy. (iii) Introduction of tonnage tax obligation on shipping companies to give onboard training to cadets. (iv) Permitting two years age relaxation and fee concession to encourage girl candidates to join maritime sector. (v) The training and examination systems have been reviewed to minimize the avoidable delays for obtaining certificate of competency. (Sabha, 2007) Treating crews with respect and dignity is the first building block towards improving the image of shipping followed by providing better service. Therefore, improving the conditions of employment and living standards on vessels appear to be factors important to increase the recruitment and retention of human resources, particularly in times of shortages.( Joishi,2005) The new generation is an inter-connected generation and social networks like face book and my space are considered as their platform for their self expression and their inter connectivity. For new generation to consider life at sea these will be their minimum requirement and Information communication technology in onboard is one area requiring vast improvements .Including job rotation between ship and shore in the early stages of the career can help the new recruits to sustain in the industry for a longer period. Organisations have to change their traditional strategies and should find new policies like flexible work hours, and replacing authoritarian style management with a mentoring approach . The shipping industry need to attract applicants by marketing how the experience being a seafarer will enable them to increase their market value. Job satisfaction levels of officers must be protected by the shipping companies for a long term rather than for a short term. (Cahoon and Haugstetter,2008).

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One of the main problems in the shipping industry is the lack of awareness of the availability of jobs and training and the attractiveness of the industry. Use of advertising and marketing in all type of medias can put some come contribution in solving this issue. Employees themselves can become 'brand ambassadors' of their industry and can communicate the values of their organisations with other people and can thus can refer people to their organisation.(Sabha,2007).

Conclusions
The aim of this paper was to find ways to attract and recruit officers into marine industry. Attention was initially given to the present demand and supply of the officers and factors causing the mismatch between them. Throughout the paper it is noticed that there are not enough skilled officers to replace these retirements, leading to a deficit in the supply.The ship owners, Governments and maritime organisations, need to make the industry more attractive in order to entice and increase the number of people entering the industry.. Training centres and Maritime Institutions should be created worldwide to recruit and train to the standards and qualifications needed. Furthermore I am concluding that there is a necessity to recruitment of new officers to the industry which is imperative for future manning requirements. To meet the anticipated demand, recruitment and training levels need to be increased and efforts must be put to retain the experienced officers in the industry.

Word Count: 2590

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Reference:
Alderton, P. M( 2004) Reeds Sea Transport: Operation and Economics, 5th edn., Adlard Coles Nautical, London.

BIMCO/ISF (2005) The Worldwide Demand for and Supply of Seafarers: BIMCO/ISF Manpower 2005 Update [online] United Kingdom, published by BIMCO/ISF Available from : http://www.marisec.org/Manpower2005UpdateSUMMARY.pdf 2005 [Accessed on 1st February 2011]

BIMCO/ISF (2010) The Worldwide Demand for and Supply of Seafarers: BIMCO/ISF Manpower 2010 Update [online] United Kingdom, published by BIMCO/ISF Available from: http://www.marisec.org/Manpower%20Study.pdf [Accessed on 1st February 2011]

Cahoon,S and Haugstette,H (2009) Shipping,Shortage and Generation Y [online] Australian Maritime College Available from: http://www.healert.org/documents/published/HE00760.pdf [Accessed on 5th February 2011]

DFT (2006) UK Seafarer Statistics 2006. [online] Department for Transport. London. Available from: http://webarchive.nationalarchives.gov.uk/+/http://www.dft.gov.uk/pgr/statistics/datata blespublications/maritime/seafarer/ukseafarerstatistics2006 [Accessed 3rd February 2011]

DFT (2010) UK Seafarer Statistics 2010. [online] Department for Transport. London. Available from: http://www.dft.gov.uk/pgr/statistics/datatablespublications/maritime/sfarer/latest/sfare r2010.pdf [Accessed 3rd February 2011]

Drewry (2007) Ship Operating Costs Annual Review and Forecast. London. Drewry Shipping Consultants Ltd.

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Gardner, B., Naim, M., Obando-Rojas, B. and Pettit, S.( 2001).Maintaining the maritime skills base: does the Government have a realistic strategy?. Maritime Policy and Management, vol. 28, no. 4, pp. 347-360.

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Leggate, H.( 2004)The future shortage of seafarers: will it become a reality?, Maritime Policy and Management, vol. 31, no. 1, pp. 3-13.

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