Should foreign ships be allowed to sail in your local pond?
This article was first published in the Spring/Summer 2019 issue of Spring/Summer 2019 issue of International Cruise & Ferry Review. All information was correct at the time of printing, but may since have changed.
Should foreign ships be allowed to sail in your local pond? And, perhaps even more to the point, should cheap, foreign seamen be permitted to crew them? These are questions that never seem to go away, periodically arising whenever a ferry operator attempts to reduce costs or steal a march over the rivals.
There are some places where the answer to these questions is a foregone conclusion, such as the US, where short shrift will be given to anyone who challenges the sovereignty of the Jones Act that governs maritime commerce. It is suggested that the zeal with which the Jones Act is supported amounts to self-harm because it prevents operators from chartering foreign-built ferries that could be the key to both a prosperous coastwise trade and more employment opportunities for American mariners. However, US shipbuilders remain a force to be reckoned with and whoever rules the roost in the White House will resolutely seek to reinforce the ban on any imported ships.
Late last year there was great jubilation in the international trade union movement when the Norwegian Government refused to permit Color Line to operate its ferries under the Norwegian International Register, which would have enabled it to exchange Norwegian crews for foreign seafarers. Unions pointed out that as the ships operated in domestic waters and the company was profitable, there was no justification for such a cost-saving strategy. In doing so, they saved around 700 Norwegian jobs. Meanwhile, the International Transport Workers Federation seized the opportunity to publish a study that appeared to show that there still are many places around the world where cabotage – protecting domestic shipping and those who work in it – remains a fact of local maritime life.
Issues of protection are never as simple as those who would deny its advantages, or those supporting the very opposite, might say. Labour unions have frequently asserted that European waters could be effectively fenced off from foreign shipping, or that domestic jobs could be protected and that there is no justification for the sort of liberal attitudes that prevail, for instance, on the UK coast. But it is important to note that within the European ‘pond’ itself, there are countries that operate ferries according to very different cost structures. For example, the cost differences between ferries operated from the three Baltic states have made life in the shipping industries exceedingly difficult for their high-cost Scandinavian neighbours.
It is also important to realise that while the protection of a domestic ferry trade might appear eminently justified, it is rare to find ferries operating in regions where passengers do not have access to alternative transportation methods. There will be a limit to the elasticity of any ferry operator’s cost structure, so companies must constantly be alert to the risk of pricing their customers out of using ferry travel. Although all European ferry companies are facing steep costs related to environmental demands for more sustainable operations, they are limited in their ability to pass these on to their customers because they may elect to return to the long-haul road alternatives. This, of course, carries a nasty social cost in terms of road congestion, pollution and other undesirable consequences. The users of ships may well publicly voice their support for the most environmentally sound forms of transport, but when the chips are down and the costs of ferry transport go up, such good resolutions may well be forgotten.
The employment benefits of cabotage tend to be most regularly cited by those who wish to protect their domestic ferry operations from foreign interlopers. Just as the 18th-century coal trades on the UK’s east coast were described as “the nursery of the Royal Navy” owing to the significant number of capable seamen they produced, ferry operations probably provide domestic seafarers with their best job opportunities in the high-cost countries of the maritime world. This is important for maintaining the national maritime ‘infrastructure’ and the locally produced pilots, harbourmasters and the wide variety of marine and sea-trained professionals that every maritime nation needs.
A nation that depends upon foreign labour for all its maritime expertise afloat and ashore, would likely see its residual maritime competence severely eroded through demographics and replacement. Most European countries are already expressing a real concern about their ageing maritime expertise, both ashore and afloat, and the prospects for the future. Few are managing to recruit sufficient seafaring professionals. This is a phenomenon of all high-cost countries, with Japan, which retains a sizeable domestic and short-sea ferry fleet, notably suffering. To permit foreign manning onboard ferries would remove one of the remaining shipping sectors that is still offering domestic opportunities.
However, there is always another side to any picture. Ferry operators in these high-cost countries will invariably cite the problem of attracting recruits into their ships, the cost of training them and the difficulties of retaining them, especially when there are plenty of opportunities ashore. Young people, they will emphasise, don’t want the social exclusion of a job at sea, even on a ferry, and the price of employing them is too high. Flagging out to an accommodating register and employing people who are willing to take what is on offer is not just an alternative, but a survival strategy. And while they may be sympathetic to the national problems and the long-term future of maritime expertise, operators’ problems are those of survival, just as long as sea transport is under-valued by those who use it.
There is also something of a lack of compromise in addressing the problems of cabotage, with long-held and entrenched positions by labour unions and employers’ organisations. The unions operating in cabotage-supporting countries are often accused of abusing their position with demands that wreck the fragile economics of the ferry operators. Employers whose survival strategies involve the replacement of their domestic crews with cheaper foreign alternatives will be accused of ‘social dumping’. There are no easy answers to the problems that disturb the waters of the ferry pond.
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