State shipping line a dead gull

Brian Ingpen|Published 2 years ago

The containership, SA Sederberg, in Cape Town in 1979. Although there were headwinds and rough waters at times, Safmarine was a highly respected and successful international shipowner that once had 30 ships on the South African register, with mainly South African crews. Careful long-term planning and management could see those good days return. Brian Ingpen

Cape Town - The proposal for a national shipping line that featured in the media last week should have lightened our hearts.

At least some folks were thinking about shipping.

Few care how crude oil arrives in Durban or Saldanha Bay for refining, how Korean TV sets appear in our shops, or how car assembly plants receive parts from Japan, Korea or Germany for those vehicles that carry folks to work or on their weekend jols.

Many are unaware that some breakfast cereals are made in local factories using maize from foreign fields or that some frozen chickens were fattened on feed brought from Argentina to Cape Town.

Unnecessarily, some frozen chickens came in reefer containers from Brazil. And daily, containerships discharge the interminable stream of umpteen containers packed with Chinese products, most of which can be made here.

South African minerals, fruit and other exports move in foreign-flagged vessels, paying the freight revenue into foreign banks, apart from the miniscule percentage carried in three locally flagged bulkers, operated by Vuka Shipping that is showing the way for wannabe shipowners. Revenue earned on imports also swells foreign bank accounts.

Despite its good intentions, inter alia, to counter the flight of revenue, the proposal for a national shipping line is a dead gull.

Operating along the coast – including moving important coastwise cargoes of petrol, diesel and liquid chemicals – and with several foreign services, Unicorn played an important role in boosting local shipping. It built 11 ships in Durban, including the containership Breede, shown here, and employed hundreds of seafarers. Brian Ingpen

Nowhere has such an entity survived without massive state subsidies (bailouts in South African parlance) and, given the track record of South African state enterprises, a national shipping line would be as successful as Titanic.

After World War II, several local shipping lines began, hoping to take advantage of high freight rates in the post-war shipping boom. Others were established later, but most collapsed within a year or were absorbed by larger operators. Those that survived for longer periods received financial injections at various stages, usually requiring changes in shareholding.

Models from successful private companies – each started by one person – could be used to formulate any South African venture into shipping. A young Danish immigrant to the US worked for a Norwegian tanker company in New York. “I can do this,” he reasoned after learning the intricacies of the business. After an initial failure in his own operation, he began again, slowly chartering tankers to bring oil from south-east Asia to Long Beach, California. His chartered fleet grew, and he bought his first tankers. When the Canadian government offered ship-operators tax and other incentives to establish their headquarters in that country, he moved to Vancouver. He nearly went bang again, but his personal integrity saved the day, and the company, Teekay Tankers, grew to become the largest operator of Aframax and Suezmax tankers.

With experience in shipping elsewhere, an immigrant to Canada began a small shipping company with chartered and owned tonnage, slowly building the company’s fleet that today has about 60 owned bulkers, including specialised ice-strengthened bulkers to move minerals from Arctic mines, and nearly 30 bulkers on charter. Fednav is Canada’s leading bulk carrier operator and one of the finest anywhere.

Last week, I shared the successful story of Gianluigi Aponte, an experienced seafarer, who built his massive shipping empire (MSC), initially using owned or chartered vessels, eventually becoming a world leader in containership operations.

Experience in the sector, including the ability to recognise, pre-empt and react to shipping trends, as well as loads of oomph, will be key to the successful operation of any local shipping company that, in its operation, must be competitive with international players. Prospective operators should understand that shipping requires deep pockets!

Any owned or chartered ship requires an excellent crew; otherwise the huge investment in the ship will depreciate rapidly, while breakdowns or accidents are extremely costly and potentially reputation-shattering.

Following the unfortunate demise of Safmarine and more recently of the local ship-owning arm of Grindrod, the country lost a large pool of seafarers, a tragic side effect of the disappearance of those ships from the South African register. That seafaring cohort will have to be reactivated, a slow process that needs to be carefully managed to ensure that energetic, enthusiastic and efficient officers and ratings emerge. The new officer-of-the-watch training programme to be launched next year by the SA Maritime Training Academy is a major step in the right direction: a carefully selected, small group of oomph-filled cadets will attend a focused, 27-week course with experienced lecturers.

State involvement in local shipping must be limited to legislating urgently in favour of ship owning and ship operating in terms of tax and other concessions, and applying labour law based on the International Maritime Organisation’s codes and conventions, rather than on inhibitive local labour law. In addition, a cabotage regime should be phased in gradually in respect of a percentage of shipments of minerals, oil imports and coastwise shipping.

Let’s see South Africa become a true maritime nation, but with those loyal cadres and politicians kept far from the helm. Shipping requires experienced, knowledgeable, reliable and respected leaders.

Ingpen is a freelance journalist and the author of 10 maritime books.

Cape Times