Tug companies in the Far East might be expected to recoil in horror at a recent report published by the US National Bureau of Economic Research. Written by academics at the University of Virginia, the study concludes that a military conflict in the South China Sea would force most shipping heading for Asia and the US west coast from the Middle East and Europe to divert around the south of Australia. The massive additional shipping costs would lead to a significant decrease in economic activity around the world, but with, "dire effects on countries at the epicentre."
Bad news for tug companies, in other words, although the report does not mention us specifically.
Somewhere between 20 per cent and 33 per cent of world trade is thought to pass through the area, but the study assumes a conflict would close the Malacca Straits and the South China Sea. Ships could not pass through the Torres Strait north of Australia because it is shallow and hazardous for large vessels.
Faced with a rapid reduction in trade, Taiwan's economy would contract by one third and Singapore's by 22 per cent, while Hong Kong, Vietnam, Malaysia and the Philippines would all see trade decline by between 10 per cent and 15 per cent. China would see a contraction of only 0.7 per cent because it has large ports outside the potential conflict zone.
The economists emphasise that they only looked at the impact of raised shipping costs, so the real impacts could be much greater. So why has the study not been disseminated more widely, and why are tug companies not panicking?
Dare I suggest it is because they recognise a pile of old bull droppings when they see it. The authors lost me right at the beginning when they sent ships round the south of Australia. They seem never to have heard of the Lombok Strait, which is already used by some large vessels as an alternative to Malacca, and we can all work out that shipowners would simply send their vessels that way, then up the east side of Borneo and the Philippines. It would add a few miles, but would not quite have the impact of a voyage around Australia.Tai
They might be very clever academics, but they really should have looked at a map. Hong Kong is part of China (and it is hard to imagine a conflict in the region which would not involve China) and sits within 200 nautical miles of Taiwan, yet the academics think our trade would reduce by less than 15 per cent. Very nice of them, but I suspect if a conflict erupts we will all be off to join the choir invisible, so we might as well not worry.
In my jaundiced view, this is another sign that expertise is no longer seen as a necessary attribute in any business or institution. There seems to be a feeling that any reasonably bright person can learn all they need to know from the internet and can master any business, however complex. I disagree, and would argue that the US Bureau of Economic Research would benefit from having somebody with map reading skills.
The other side of the coin is that we, as an industry, need to tailor our message for those who will read it. It is no longer safe to assume the man on the Clapham omnibus will know his Madras from his Elba.
Kimmo Lehto has obviously learned this lesson. As chairman of the European Tugowners Association (ETA) he knows the business inside and out, as a master mariner with command of passenger vessels under his belt, plus ten years as a pilot and eleven years with Alfons Håkans. So I was initially horrified when he was quoted as telling his members that, "safety remains at the heart of our business. Our job is to ensure the assets of shipping companies and ports are protected, and ships are assisted safely and efficiently in European ports."
Kimmo's members are among the most experienced tug people on the planet, so why did he feel it necessary to spout such basic and, frankly, insulting information to his audience of experts? The answer must be that the message was not for his members but for their customers, so he couched his remarks in language even the meanest landlubber could understand. This is the sad reality of the modern world.
One man who never bothered explaining anything to me is Albert Lenting, who knew at a glance that I would not understand anything technical and to give me a little knowledge would be a dangerous thing. Yet his company, Siri Marine, has played a vital role in major salvage and wreck removal jobs for almost 20 years. I will not try to explain how they do it, because I have no idea, but if you want to know if your casualty's hull is deforming, or about to collapse, or whether your wreck is moving, Albert's equipment is what you need.
In addition to providing information which is invaluable to salvage masters, Albert is a humourous and laid-back companion and great company. He hides his technical brilliance and never lets you know you will never be his intellectual equal. The new owner of Siri Marine is Ed Nobel, but Albert will stay on as an advisor whilst having more time to pursue his other passions. I wish him well.
Whilst on the topic of things I do not understand, somebody recently said (of the bulk carrier market), "All-in-all given the circumstances amidst a tail-risk regime, the market avoided some of the worst-case scenarios and experienced some period of good performance, albeit asymmetrically distributed. Functioning under a black swan event is a demanding task….Looking at the FFAs (as a forward sentiment metric), the movement in closing figures varies…"
If he is not careful, with reasoning like that, he may end up working for a government bureau of economic research.
My brain hurts.