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IMPACT OF MAN POWER ISSUES FROM AN INDIAN OWNER PERSPECTIVE by

IMPACT OF MAN POWER ISSUES FROM AN INDIAN OWNER PERSPECTIVE by. Capt. Pradeep Correa General Manager Great Eastern Shipping Co. Ltd DECEMBER 19, 2008. Presentation Structure. Growth in India’s Economy Overall Skilled-Manpower Situation in India Shipboard Manning Scenario

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IMPACT OF MAN POWER ISSUES FROM AN INDIAN OWNER PERSPECTIVE by

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  1. IMPACT OF MAN POWER ISSUES FROM AN INDIAN OWNER PERSPECTIVEby Capt. Pradeep Correa General Manager Great Eastern Shipping Co. Ltd DECEMBER 19, 2008

  2. Presentation Structure • Growth in India’s Economy • Overall Skilled-Manpower Situation in India • Shipboard Manning Scenario • What needs to be done • Steps taken by Indian Shipping Companies • Concluding Remarks

  3. India’s Economic Scenario • Seventh largest, second most populous and world’s fourth largest economy in terms of purchasing power parity. • The real GDP growth has averaged about 6% per annum since 1997. • FY08 GDP growth rate of 8.5% - Second only to China.

  4. Indian Maritime Industry • India’s Exim trade for 2007-08 stood at $391.30 billion, an increase of 25.5% for the year • India’s share in global merchandise trade in 2007-08 is 1.5% and expected to be 5% by 2020. • Growth rate of Indian logistics industry is around 7- 8% per annum. Container trade growth expected to be 2-2.5 times of GDP growth. • As per NMDP projections, traffic at ports is expected to grow at a rate of 13.58% till 2012. • India has the largest merchant shipping fleet among the developing countries • Shipping tonnage under the Indian flag has notched a record of 9.0 mn GT as on Jan. 08

  5. Indian Maritime IndustryContd…. • Present Tonnage • 9.03 Million Gross Tonnage • 14.99 Million DWT • About 1.16% of world fleet • Ageing Indian Fleet -Average age of fleet is 18.7 years • Needs over $20 billion in next 5 years for replacement/ augmentation of fleet so as to maintain existing share of Indian ships in overseas trade.

  6. Growth of Indian Fleet

  7. Other: Includes Container,Multipurpose,Ro-Ro,Reefer,Offshore and others

  8. Age Profile of Indian Fleet as on 01-01-2008 Average Age of Indian Fleet is 18.7 years Fleet size 850 % GT vs Age

  9. India’s Overall Skilled Manpower Situation • Tremendous requirement of skilled man power by the growing Indian industrial sector for sustaining the growth rate. • Generated 11.3 million net new jobs annually between 2000 and 2005 - over 60% more than the 7 million new jobs created in China. • However, the industry is facing a shortage of Specialized manpower to meet its present and future requirements. • Ironically, still high level of unemployment

  10. India’s Overall Skilled Manpower Situation(cont) • Present State of University Education – • Second highest number of engineering graduates after China - 401,791 engineers in 2003-04 and 464,743 engineers in 2004-05. • Fast catching up with China with about 600,000 engineering graduates last year. • The United States produces only 70,000 engineering graduates every year. All of Europe produces just 100,000.

  11. Seafarers – Global Scenario • Worldwide shortage • By 2015, shortage of marine officers projected to nearly treble to 27,000 from the present 10,000. • As predicted by BIMCO current shortage will aggravate unless urgent steps are taken. • Aging OECD Officers.

  12. Seafarers – Global Scenario(cont) • Difficulties in attracting the manpower • Lesser number of young people opting for seafaring as a career. • Physically demanding onboard job profile. • Availability of well-remunerative shore-based jobs. • Glamour and Fun associated with traditional seafaring has waned.

  13. Seafarers – Global Scenario(cont) • Increase in casualties • Navigational accidents are on rise. • Rise coincided with the start of the recent shipping boom. • Number of accidents per ship close to mid-1980s; when safety record was regarded as poor. • 90% accidents can be traced to human error. • With the current labour crisis and fleet growth, shipping’s safety record is in danger (Source: DNV as quoted in TradeWinds)

  14. Seafarers – Indian Scenario • Indian shipping industry is facing an acute shortage of Officers in the nautical side – more critical in the ranks of Mate and Second Mate. • Indian Ship Owners are unable to meet Matrix Requirements of Oil Majors with respect to experience of senior Nautical and Engineer officers, thereby losing lucrative business opportunities. • Indian seafarers are much sought after all over the world for their skill, knowledge, integrity and reliability. • Drift of Indian seafarers from Indian flag ships to foreign flag under the lure of ‘tax-free’ pay packet arising out of differential tax treatment. • Tonnage acquisition programme of the Indian shipping companies in jeopardy due to shortage of quality manpower.

  15. Indian Tonnage Acquisition – Seafaring Officers Shortage • Most of the Indian companies have launched ambitious tonnage expansion programme • Companies are also diversifying into new areas like container, offshore, LPG/LNG etc. • With such ambitious expansion program in India’s tonnage, manpower (officers) shortage will worsen.

  16. Reasons for Shortage • Wages/cost to Indian companies is similar compared with foreign flag – Indian companies lose skilled manpower due to differential “Personal Income Tax” • Recruitment of foreign nationals on Indian ships permitted selectively by Administration. However, feasibility almost NIL due to various clearances • Indian Nationals holding Foreign Certificates from Australia, Singapore, Canada, Hongkong, NewZealand, Sri Lanka NOT RECOGNIZED by Indian Government • Lengthy Fatigue prodded Exam process forces them to go to other countries or even make a career change.

  17. Dangers of Inadequacy in Manpower • Increased onboard accidents/incidents • Higher detentions by PSC authorities • Oil major approval failures on account of non-compliance of experience/age matrix • Reflection on reputation of company/flag administration

  18. Working Indian Seafarers • India is the 6th largest manpower supplying country in the world • The estimated seafaring population is as under: • India is constantly widening the base to sustain its position as one of the largest manpower supplying country.

  19. Seafarers – Indian Scenario • Safe Manning Requirement • Govt support sought for: • Faster and easier clearance procedure for recruitment of foreign officers • Officers holding COC issued by Singapore, Australia, etc be permitted to sail on Indian ships. • Reduction of sailing time for cadets • Reduction in Safe Manning Requirement in line with other Flags. Presently short term dispensation for reduction in MSMD permitted.

  20. Basic Changes that need to be introduced • Promote shipping as a long term career. • Tap the length and breadth of the Country. • Create more awareness about seafaring • Resolving Shipping’s Image Crisis. • Rationalization of seafarers’ taxation. • SMD in line with the international norms. • Sympathetic view of industry demands

  21. Measures to address shortage of officers • Allow Indian ship owners to recruit Indian Nationals holding Foreign Certificates • Compulsory Service for Indian officers for 3 years on Indian ships who have received on-board training on our ships. • Under Tonnage Tax Regime, trainees trained on Indian Flag Vessel obliged to serve tonnage tax company for 3 years Sea Time after certification. Administration under Gazette Notification obliged to devise mechanism to ensure compliance by trainees. No procedure yet in place. • Rationalisation of manning scales in line with international norms • Increase on-board training slots on foreign flag ships employing Indian officers • Stem the drift of officers from Indian ships to foreign ships by removing Tax discrimination

  22. Steps taken by Indian Companies • Wages at par with foreign companies • Grossing up salaries to take care of the tax burden • Net result – Higher CTC for Indian companies • Indian Shipping Companies have increased ship board training berths. A leading Indian shipping company has converted five vessels as cadet training vessels. • Social security benefits at par with foreign cos. • Extra resource allocation towards training • Publicity campaigns • Incorporating latest HRM techniques for better understanding of the needs and problems

  23. SHIPPING’S IMAGE • What is it ? • Why is it important ? • How is it created ? • Who is responsible ? • What can we do about it ? • ??

  24. A FEW PERSONAL OBSERVATIONS: • “Image” like beauty is in the eye of the beholder; thus there exist a spectrum of images of shipping • The image of the industry shapes the business and legislative environment, and our ability to attract resources

  25. SHIPPING’S IMAGE • The image of the industry is created by the performance of the industry players (environmental, social responsibility, customer satisfaction,..….) • The image of the industry may also be influenced (or reinforced) by the approach, actions and comments of the media (specialised and general), politicians, regulators and ……………

  26. SHIP STAFF Frequently: • Treated as second class citizens • Criminalised after accidents • Pressured by terminals, charterers and others • Subjected to unnecessary number of ship inspections • Provided with inadequate manuals, equipment and cargo information • Flooded by a tsunami of paperwork • Suffer from regulations developed without recognition of the ramifications • Suffer excessive fatigue • More……………… • Owners actions include: • 􀂄􀂄 Better accommodation standards, and home communications • 􀂄􀂄 Commitments to (lifetime) education and training • 􀂄􀂄 Welfare packages

  27. SHIP STAFF Owners actions include: • Better accommodation standards, and home communications • Commitments to (lifetime) education and training • Welfare packages

  28. SHIP STAFF • In recent times the attitude of the Ratings are seen to be more positive than those of the Officers on board Indian flag ships.

  29. Maritime Administration We appreciate and are grateful to our Govt. for • Granting short term dispensations to SMD on bulk carriers. • Permitting NWKO(NCV) officers to sail on coastal vessels including tankers. • Revising SMD, thereby rationalizing manning on NCV/Off – Shore Fleet. • Reducing sea time requirements of cadets on cadet training ships and introduction of graduate and NCV cadet schemes for ratings. • Tirelessly assisting us sail our vessels without any hesitation at even odd hours of the day

  30. Maritime Administration • Areas of Concern: - • Administration could not keep pace with the growth of Indian Shipping and also could not adapt with the changing scenario of the requirement of customers of the industry. • Examination process – long and lengthy. It is observed that around 2000 TNOCs have joined every year since introduction of IGNOU – DGS Scheme in 2004. However, passing rate of second mate COC holders less than 25% per annum.

  31. Maritime Administration • Actions Requested: - • Full sea time for TNOCs for a period of Six months while serving on Off – Shore / Research vessels. • Outsourcing Junior level competency examinations such as 2M FG, Class IV etc. • Review process time for issuance of certificates after completion of examinations. • Expedite documentation for endorsements and revalidations • MMD Sight test may be conducted by a qualified ophthalmologist. • Overcome shortage of Surveyors. It is understood 50% of the vacancies are lying vacant or are on ad hoc appointments.

  32. Concluding Remarks • With changing aspirations of the young population in a growing economy, seafaring is not the most sought after career choice, particularly for the urban youth. • Indian shipping industry’s grand plans to acquire tonnage faces severe shortage problem. • Short term solution – rationalization in taxation, SMD, allowing foreign officers, etc. • Long term solution – As listed in earlier slides

  33. THANK YOU

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