Addressing The Impact Of The Ukrainian Crisis On Crewing & Shipping – Exacerbating The Global Crewing Shortage

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About the Event

Capital Link's 16th Annual International Shipping Forum will take place on Monday & Tuesday, March 28 - 29, 2022 as a digital event. The Forum is held in partnership with Citi and in cooperation with NYSE and Nasdaq.

Capitallink16th annual international shipping forum

The Forum will examine the macroeconomic issues that are shaping and transforming the international shipping markets today, featuring a comprehensive review and outlook of the various shipping markets, made more relevant by the release of companies’ annual results. Discussions will include topics of critical relevance to the industry such as environmental regulations, technology, Covid-19 and ship operations, geopolitics, sanctions and tariffs, access to capital and more!

1×1 meetings will be scheduled between institutional investors and senior executives of shipping companies in parallel to the Forum. Registration is Complimentary.

Watch the video coverage:

Question #01

Ongoing supply chain disruption is compounded by crew change complications arising from the invasion of Ukraine. Can you give us an overview of the situation?

The immediate, profound, and documented figures

Ukrainian and Russian seafarers make up 14.5% of the global shipping workforce, with 198,123 Russian seafarers and 76,442 Ukrainians. These nationalities follow the Filipino crew supply global dominance, and the crew of these nationalities is specialized across the board, including LPG, LNG, Containers, Bulkers, and MPPs in high proportion.

Restrictions are not limited to COVID Pandemic but to sanctions too

The profession has also suffered from COVID-19 travel restrictions and regulations. Due to sanctions, travel restrictions became worse, and crew changes’ logistics have become more challenging. 

These geopolitical tensions will test the sustainability of shipping operations

Operating expenses of the vessels will increase due to the shortage of seafarers and geographic logistical alternations due to sanctions.

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These geopolitical tensions have triggered imminent demand for higher wages, especially from Filipino Seafarers, and I am afraid this could bring a chain reaction to other nationalities in the nearest future.
Last but not least, ticketing prices have seen a price appreciation, and the cost of ticketing and crew changes overall is going to increase dramatically.
Inflation and global markets instability forecast the scenario that vessels’ operating expenses will also increase if we connect all the dots.

We thought we were sailing in uncharted waters with COVID, but it seems “these geopolitical tensions will test the sustainability of shipping operations” to the most considerable extent.

Question #02

European Union, NATO, and some Asian countries like Singapore have placed sanctions on major Russian oil companies, even shipping companies. How will this affect the seafarers and the shipping market, in your opinion?

Risk of global trade and its sustainability:

This creates a significant challenge and complication to shipping companies and the global supply chain. It could develop into a considerable threat.

We have a humanitarian crisis, and we should study the implications of these sanctions on seafarers.

Many may think that this will boost charter rates, but we have an oxymoron case in today’s scenario. It is estimated that 40% of the Grain is exported from Russia and Ukraine together, including other bulk cargoes and precious metals like palladium and steal; many analysts expect a “shortage of cargo” due to the boycotting and sanctions.

Western Economy: Are the sanctions reasonable?

As it has been widely discussed, the sanctions could backfire on the Western Shipping Trade, and I am afraid of worse times to come that could reverse the current bullish sentiment of the dry bulk and container markets.

Humanitarian crisis: What risk could the current situation create for ordinary civilians who are Russian Seafarers?

The event here is that Russian seafarers are ordinary people and professionals, and they were not involved in this invasion; this is purely political. With these sanctions, they cannot be paid or changed within the western world with ease. So, sanctions will create a difficult situation not only for the political leadership in Russia but also for ordinary citizens.

Due to various reasons, we have a tremendous influx of new Principals requesting our services and replacing stranded seafarers from Ukraine and Russia. The fear and reflexes are seen clearly and are imminent.

The most important reasons are seafarers wanting to go and fight, going to neighboring countries to find their families that left their country, or due to unpleasant events that happened to their family members.

The most unfortunate scenario is when many new Principals have to change both nationalities. This creates the risk of interruption of ship operations, as guided and requested by Oil Majors and Charterers.

We have a humanitarian crisis, and we should study the implications of these sanctions on seafarers.

Question #03

What abnormalities have you identified during these weeks of these geopolitical tensions in the crew recruitment course of work?

Finding 1 - Rising of seafarer applications

Due to our technology and cloud systems, we have a live overview of the market demand and supply. We have seen a rise of online applications by over 35% compared to pre-invasion days and have identified some facts that “are forming bad forecast indicators.”

Finding 2 - The loyalty of the crew is being tested.

The so-called loyal crew members of well-known ship managers who have invested enormous amounts in building their seafarers’ career paths are now applying to other competitors and seeking to get 300 USD up to 500 USD above the current market wages. These seafarers exploit the current situation, and there is no reason to doubt it.

Finding 3 - An influx of Ship Managers to countries they exited in the past.

An influx of Ship Managers that used Eastern European Seafarers is shifting to the Philippines’ market and other Asian ones, mainly from the bulker and container sector.

The pressure is shifted to the crew managers and manning agents that try to bring equilibrium on both sides' demands and requirements.

Finding 4 - Change of application habits and extreme demands

The most qualified seafarers, especially the top 4, are not visiting the manning offices and insist on online and email exchange until they have finalized negotiations and have been guaranteed employment under their conditions with a potential Ship Manager.
They request Benefits on their application before any negotiation or proposal of their CVs to potential Ship Managers.
Remote applications and remote negotiations are a fact in the current environment.

Finding 5 - Principals resistant to changes of seafarers' demands

Lastly, as the conditions I described are accelerating, most Ship Managers are striving not to increase their crew budget, but they will face a new reality sooner than expected. Under these geopolitical tensions and conditions, Seafarers today are the price makers and not the price takers. The pressure is shifted to the crew managers and manning agents that try to bring equilibrium on both sides’ demands and requirements.

Question 4

How would you describe the current situation of the maritime business to a non-familiar reader or listener?

The shipping industry faces continued turmoil—because the world is splitting into two spheres.
Shipping is experiencing historical uncertainty in sustainability, logistics, and daily operations.
Shipping faces a “humanitarian crisis” and “unchartered waters” resulting from the pandemic restrictions, geopolitical tensions, and war sanctions.
The collateral damages are the seafarers of Ukraine and Russia and can extend to the shipping industry in general.

Shipping faces a "humanitarian crisis" and "unchartered waters" resulting from the pandemic restrictions, geopolitical tensions, and war sanctions.

Question 5

What is the situation with current Ukrainian and Russian Seafarers that you recruit?

Currently, 50% of our crew that is onboard have extended contracts. 10% wanted to repatriate for the previously mentioned reasons. 40% of our Ukrainian and Russian tanker crew changed with Georgian seafarers -forming the last resort of Eastern European Seafarers-focusing closely on the mentality, budgetary and logistical determinants, and requirements set by our existing and new customers.

Until the war ends, many of our potential Ukrainian seafarers are backed up by our Georgian establishment, and coordination and communication are done mutually from our Ukrainian and Georgian officers.

We have identified more than 150 Ukrainian seafarers who will not work again because they assist in their country’s philanthropic cause. Some have suffered family and financial losses, and some have lost their entire fortune, or their lives have been destroyed at all levels.

Concerning Russian seafarers, we are monitoring the sanctions and waiting for the future to see if we shall be allowed to recruit them or not, based on the sanctions mentioned above.

Question 6

What controversies do you believe you should highlight in today's situation?

Charterers, especially Oil Majors, should “revise” and “amend” their officer matrix criteria and requirements.

Large and well-established tanker companies are in the middle of the chaos, trying to find solutions to sustain the Oil Major’s requirement “years with operator” and nationalities mix up to three nationalities.

There are Tanker companies that have Russians or Ukrainians or both nationalities exclusively. On the one hand, Oil Majors require these nationalities to be repatriated either due to sanctions or potentially high risk of disrupting operations.

Nobody can handle an imminent shifting to other nationalities due to the historical gap in sourcing that affects recruiting process – let’s remember that Ukrainian and Russian crews represent 14.5% of the global crewing supply.

If not amended in due time, there would be significant logistical gaps arising from such Charterers’ requirements.

Regulations, guidelines, and restrictions are increasing in the maritime industry. They emanate from various organizations, providing an additional headache to the ship operators, amending their quality manuals and procedures, leaving no room for sustaining a proper and mainstream operational flow environment.

Question 7

What risks do you see in your line of business, and what do you recommend to Ship Managers?

Since 2001 we have been the early adopters of digitalization, and we have in-house developed systems. Online applications, digitalized operations, and interactive negotiations through the web are daily tasks and routines for us.

There is a new outlook for the crewing market following the invasion of Ukraine. We all have to identify the risks and predict where the market is heading. 

I recommend proactive scheduling, building new pools with more nationalities, cadetship, progressive and aggressive promotion schedules, benefits and incentives, and faster response and focus to the crew matters and dedication with a high focus on crew welfare.

Shipping is not like it used to be; speed and technology are of higher need and are the ammunition of today’s management. Decisions must be based on accurate data and information. Act proactively and fast.

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