Wednesday, January 27, 2010

Back to the future !

Hello, hello and welcome to 2010 !

Its nearly the end of the year's first month, so I will extend my apologies to my loyal blog followers for the desperately late first entry of the year. I spent pretty much all of December at work, which, apart from the normal separation from family anxiety, included much work related headaches.

Upon my return home in the first week of January, normal Christmas activities had to occur with my family. Follow that with a full on kitchen remodeling job, and a skeleton in the closet that came home to roost, and you have a typical seafarer month at home. Unfortunately these event conspire to take my maritime mind out of my daily activities at home, and thus today, the 27 of January, I take some time to post a small post, while my drywall mud dries, to say hello.

Over on The Common Rail, the forum at www.dieselduck.net, a question was posed as to where the jobs were in 2010. Although I am not an expert on the subject, I do like to keep abreast of what's going on in our industry, especially in Canada, so I posted a reply with my thoughts on the subject, which I expand on below.

The last few years, 2005-late 2008, have been pretty good years for marine engineer and seafarers in general. With a real worldwide shortage of experienced, and qualified seafarers, wages and opportunities were benefiting seafarers. However, in mid 2008, and in earnest in 2009, world markets suffered a significant "earthquake", which forced a consumer society to take a pause. Shipping is responsible for moving nearly all commodities and goods, and so we were hit with a major slowdown, pretty much right away. The St Lawrence Seaway just reported preliminary findings that it believes that 2009 will post the lowest tonnage numbers ever.

So where does that leave us in 2010. Right now, and subject to daily change, the consensus is that the Canadian economy, and the marine industry, has reached bottom some months back, and that the early part of 2010 growth would be name of the game, although slowing down in the second half of 2010. We saw indications of this in the Seaway's late season rally.

From my personal perspective, I see that, yes, things are improving, but I also see lots of people still out of work and trying to make ends meet. Luckily for us seafaring professionals, we have been somewhat less impacted, due to the previously short supply of "us" in the first place. Although I am worried that "fresh blood" into the industry is sure to be disappointed with their options right now, as I have seen a little meaningful action by shipowners, in way of addressing the shortage before the economic slowdown, and even less over the last year.

By regions...

I think in central Canada, we will see an improvement of the overall marine business, but it will not be super dramatic. The last few months of the season in the great lakes and seaway was considerably busy compared to the start of the season - mainly due to a bumper crop of grains, and the resurgence of the steel industry. Perhaps this will continue in the new season, I believe it will.

On the East Coast, oil prices are stable and slightly climbing, new PSV vessels are being built for Atlantic Towing to service the Deep Panuke project. New O&G projects, such as Amethyst and a additional significant discovery by Husky to the White Rose project, as sure to drive some maritime assets and jobs for seafarers.

The West Coast's Truck Logging Convention just wrapped up in Victoria over the weekend. The word there, at the smallest convention of their history, was that the industry was picking up, and looking up in 2010. Lumber exports to China is reportedly making 25% of BC lumber industry, and growing rapidly. The governments efforts to market lumber is to China is finally paying off, having being too dependent on the US market has played havoc with the industry, which impacts heavily the local maritime transport sector. So with this in mind I see the job front picking up for engineers with the bigger vessel coming back online. I suspect BC Ferries traffic will be back up to the their normal expectations this year, especially with the lingering effects of the Olympics, so we will see jobs once again becoming more frequent for engineers there, although the company is still dealing with a negative employer image.

Also on the west coast, Kitimat LNG export start-up was swallowed by Apache Corp, a significant oil and gas player in the area, which lends some serious credibility to the aspirations of the northern BC port of Kitimat being a energy exporting hub, and thus spurring more maritime asset involvement.

Arctic waters have garnered much publicity but I don't think you will see much changes in landscape, other than attitudes. Which such high capital cost involved in untested schemes, it will take some time for any real maritime impact to occur. On the other hand, arctic resupply has been reported to be increasing over the years with mining and O&G projects gaining traction. Canadian companies are well poised to see an increase there. With added traffic and an soon to be retiring workforce, I think seafaring opportunities will develop in this region, assuming they start offering work conditions that are more appealing to folks other than mushrooms and or prisoners.

Government is in "cost cutting" mode these days, yet again. So like usual, all forward thinking new build projects will be shelved, so I think they will be more or less the same. With other sectors coming back online, manpower will be drained from Coast Guard, in particular, and to some extend DND operations. I predict that most of the manpower issues, regarding qualified engineers will start creeping back to the forefront of agenda fairly quickly, but probably towards the mid and end of 2010.

I must say that the Canadian Coast Guard seem to be the only organization taking a personnel shortage seriously, and doing something about it through their Coast Guard College. DND (civilian national defense personnel) remain underpaid, and about to retire en mass, which I predict, will mean some major changes coming to that organization, on the seafarer front.

Other things to keep in mind, and ahead of in the marine industry in Canada, a lifting of import duties on foreign built ship and a review of the Coasting Trade Act (our cabotage rules, equivalent to the Jones Act in the US). Both these topics have the potential to seriously impact our life as seagoing Canadian.

The lifting of import duties means a real possibility for new ships, with up to date standards, plying our waters - which is great, and badly needed. This of course means a serious viability impediment to our floundering shipbuilding industry, sadly dying for quite some time, due to a lack of support from the ship owners, and passive government policies. I am ambivalent about the relaxing of the Coasting Trade Act, to which Canadian ship owners are starting to loudly object to; they want their cake and eat it too. Why should they be surprise when the tactics they use, be use on them, and they may end up like the Canadian shipbuilders. Sad indeed for our country, but greed is what it is.

In the end, seafarers and ship builders will most-likely be the major losers in the outcome of these two topics - they traditionally are. I doubt the government will have much balls to enforce a competitive atmosphere for us Canadians seafarers - as demonstrated in the shipbuilding sector. I personally have no problems competing with any other nation's seafarer for an engineering position, as long as they are paying the same taxes as I am, and getting the same salary. If you want to put foreign ships and crew in my backyard, fine, then give me the same tax break as their home countries give them - which makes them so much cheaper to hire.

In finishing, the large boxship fleet operators are reporting that in 2010, they will return to profitability, or increase in profits, which will bode well for port operators and port services across Canada and the world. Overall, I think this slow down has been good for our collective souls, maybe not so good for shipping in general. I don't think the "numbers" will be back up to pre- "meltdown", but nonetheless I would rather take stability over gambling mentality any day, and hopefully signs of stability will be evident in late 2010.

The above are my own observations of course, based on my limited perspective, but I don't see anyone else offering their opinion, so please, feel free to let me know what you think.