Published on 27 Jul 2022
The war in Ukraine is the dominant topic. A statement from Ian Beveridge, CEO of the Schulte Group, about the extensive implications for the shipping industry.
Published on 27 Jul 2022
Over the past two years, the coronavirus has clearly shown us how correlative and fragile global trade and supply chains are. Anyone who would have thought that, despite the ongoing effects of the pandemic, something like normality is on the horizon, was proven wrong on 24 February. With the Russian attack on Ukraine, ignoring and violating international law, a new crisis of global dimension followed seamlessly.
The human tragedy of this war can hardly be imagined. And from a merchant shipping perspective, it is once again the seafarers who are facing the full brunt. This was already the case during the pandemic. While borders were closed and many of us were able to continue working in a protected environment, they kept the global supply chains running and were often unable to return home after being employed on board due to travel and quarantine restrictions, some of which still exist. Nevertheless, they have done their job professionally and deserve our full support.
Therefore, with the beginning of the attacks on the Ukraine, BSM’s full attention was focused on the well-being and safety of our seafarers and their families, as well as our local employees. BSM immediately launched a programme to offer care, temporary accommodation and support to family members who fled to neighbouring countries under the guidance of local BSM offices in Poland, Romania and other locations. A company-wide relief fund was set up in which the companies of the Schulte Group, the shareholders and the employees participated to provide fast and unbureaucratic help. Measures were taken to enable seafarers to extend their employment on board or to return home as far as feasible. I would like to thank all our employees who participated and worked day and night to alleviate the human suffering.
But of course, such a crisis has many facets. The impact on our day-to-day business can hardly be assessed in its entirety and scope. Nevertheless, we must react quickly and consistently.
The company is committed to adhere to and operate at the highest levels of diligence and transparency in connection with all sanction regulations by the EU, US, UK and UN authorities applicable to the company and its activities. BSM has formed a dedicated sanctions team to track and review the multitudinous and ever-changing trade and economic restrictions. Very precise sanctions checks are carried out, for which we also use special tracking software. Furthermore, we seek advice from governments and industry associations as well as specialised lawyers to ensure that our operations are in full compliance with all restrictions. The impact on payments is a particular challenge. Our wages account departments work relentlessly on ensuring that seafarers receive their pay in a compliant way, despite limited access and restricted payment systems.
It is obvious that the changing global political order – or disorder – is bringing about significant upheaval in trade relations and thus routes. Liquefied natural gas (LNG) is just one example: the demand is growing rapidly, especially in Europe. But many coastal countries still lack import facilities, which in turn drives up demand for floating storage regasification units (FSRU) available at short notice. However, it is doubtful whether global production facilities will be able to meet the increasing demand, even though countries such as Qatar, the US or Mozambique have announced their intention to expand the capacities of their liquefaction plants, but this will take years.
To an even greater extent, routes for traditional energy products are facing realignment. Due to the EU embargo on Russian oil, which has so far entered the European Union by sea, tanker trade routes will further reconfigure, for example towards India and Turkey, which have already significantly increased their oil purchases from Russia. At the same time, Europe must find new oil sources. On coal, the EU has already banned Russian imports that will come into effect in August. Europe will need to increase seaborne imports from other countries, like the Americas, South Africa and even non-traditional sources in Australia and Indonesia. These examples show how much movement and uncertainty is in the market. Against this background, investment decisions must be carefully considered.
The war in Ukraine also has an impact on the availability of qualified seafarers. I took a closer look at the already tight situation in the maritime labour market in the last BSM Highlights issue. The Ukraine conflict further increases the pressure. After all, Ukrainian and Russian seafarers represent over 14% of the workforce in the global merchant fleet. They are mostly highly qualified nautical and technical professionals. If international owners have reservations about Russian seafarers, and Ukrainian seafarers cannot leave their country to work abroad, the vessels must be manned by other nationalities.
BSM is well-positioned in the market with access to a large pool of 20,000 seafarers from 80 different countries. Our worldwide network of 25 Crew Service Centres have taken all necessary measures to mitigate the impact on crewing supply and crew changes. These include actions to ensure the availability of crew for manning and the mobility of seafarers which is affected by flight and travel restrictions related to the Ukraine conflict. Nevertheless, a sustainable solution must be found.
Therefore, I support the efforts of the International Transport Workers` Federation (ITF), the Ukrainian Maritime Transport Workers' Union and international shipping companies` associations to advance a solution to the travel restrictions on Ukrainian seafarers. The Ministry of Infrastructure of Ukraine has prepared an initial draft for amended legislations, according to which sailors would be able to cross the border on their way to work on ships, which has not been adopted. We would highly appreciate this decision.
The security situation in the Black Sea is unbearable. The closure of all Ukrainian commercial seaports is still in effect. Merchant ships and their crews are stuck have not been able to leave for months, and regularly come under fire. At the same time, uncontrolled floating mines endanger vessel traffic in the Black Sea. Shipping is always exposed to risks. Every day, ships sail through areas designated as High-Risk Areas, just think of the threat of piracy. These risks are manageable, by appropriate safety procedures, technical precautions, voyage preparations and crew trainings. However, it is unacceptable that uninvolved seafarers become pawns in a major political conflict. Merchant shipping needs safe corridors and open ports!
The negotiations between the UN, Turkey, Ukraine and Russia, which have been ongoing for weeks, and the agreement about humanitarian maritime corridors signed last week give cause for some optimism but are still fraught with many uncertainties. This was demonstrated by the attacks on the Port of Odessa the following day. Safe passage for ships and their crews – from Ukrainian ports and throughout the Black Sea - is the only way to protect our crews and vessels. This is the only way shipping can fulfil its important supply mandate by delivering essential cargo, especially foodstuffs, to communities around the world and ensuring that less privileged and developed regions can participate in world trade. And only in this way can merchant shipping contribute to prevent an impending famine.
I take up the statement of IMO Secretary-General Kitack Lim of 26 February in which he expressed his grave concern about the spill over effects of the war in Ukraine on global shipping, and logistics and supply chains. He highlighted that shipping, particularly seafarers, cannot be collateral victims in a larger political and military crisis – they must be safe and secure. I can only agree with that.
Yours, Ian Beveridge
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