I well remember the master on my first trip as a watchkeeper telling me to regard all other ships as if they were being driven by somebody who was either drunk or incompetent.

Pretty good advice, really, although today that same old seaman would have probably added – “or a computer”.

There is quite an extensive library being compiled of accidents in which a reliance on sophisticated electronics led to somebody becoming unstuck through stranding or a collision.

At least one very near miss I heard of, when a ship which appeared to be passing well clear suddenly altered course and bore down on another vessel with the apparent precision of a cruise missile, was attributed to the “computer not having been reprogrammed from the previous voyage when an alter course position was scheduled for that exact spot on the passage”.

Ships have a long memory, evidently.
Even the current voyage can provide some surprises, if the navigational computer is able to execute alter course action at its preselected waypoints without any further intervention of the master or the OOW. I suppose there is some twisted logic that has told the designers that this is a positive safety device, in case the OOW is asleep and the ship runs up on the beach.

But when you think about it, such a device is darned dangerous, as the OOW might well be wanting to let the ship over-run the position because of other vessels in the vicinity, and may be unprepared by the sudden alteration of course at the wrong moment for navigational safety.

A number of clear weather, daylight, collisions have been caused by the failure of officers to remind the computer that it is not in charge. There are a lot of ignorant watch officers who would not dream of over-riding the electronics, even when the COLREGS should be dictating their actions.

The latest UK Marine Accident Investigation Branch Safety Digest – which has lessons on every page – features an ECDIS assisted grounding, with a watch officer, relying implicitly on his electronic chart, despite not having been trained in its use, running his ship aground at full speed in a separation zone.

He wouldn’t be the first person to make wrongful assumptions from half-understood evidence, but thought that two flashing lights, which were buoys helpfully placed to warn of the proximity of the sandbank, were fishing boats.

The inspector also noted that he wasn’t getting all the help he might have from the ECDIS as the contour and colour settings selected made it difficult to differentiate the deep from the shallow.

But it all goes to show, not that all this electronic help is to be deplored, but you should have some idea of how to work it.

My speech was an elaboration of my favourite topic over the last twelve months- risk management.

When there is an oil spill, the industry has been caught on the back foot by the cost of government intervention.

Those who say that the Deepwater Horizon episode was irrelevant to the tanker industry are incorrect, in that the greatly increased costs to the principal defendants – BP, Halliburton and Transocean – serve as a cautionary tale for tanker vessel operators as well.

The potential commercial impact of regulatory pressure on the shipping industry has become much greater in the past year. Last April 20th’s Deepwater Horizon oil release has shown that potential liability exposure, and therefore the need for more effective risk management have become more urgent. The approximately $40bn dollar cost to BP, regardless of the source of the oil released into the Gulf of Mexico, was greatly increased by the intervention of state, local and federal government with respect to liability, oil spill response and remediation.

Experienced observers wonder how a tanker owner or operator could sustain a far smaller cost burden, but one nevertheless comparable.

In 2011, most lawyers and bankers are aware of how the cost of liability has grown, and it is clear that there is no “holy grail”. Historically, liability has been channeled to the shipowner, and was subject to limitation, but that model doesn’t work in today’s environment.

It is time for a reallocation of liability burdens that are fairer to owners, and reduce the risk to those who finance them.

The potential for a major environmental incident, which would wipe out the security and equity interest of lenders is very clear. Therefore, there must be a broader and more sustainable distribution of the burden of risk, and therefore its management. This reallocation of risk would protect all parties, and reduce the unequal distribution of insurance cover that we see in the shipping industry today. In particular, charterers need to share in the risk of a ship-based accident.

To accomplish this, although there is, as I have said, no “holy grail”, it is necessary for not only publicly held shipping companies, but also privately held entities, to adopt clear and effective risk management practices.

Every shipping company should have a Chief Risk Management Officer, who should be empowered to audit and control the company’s liability and claims exposure policies.

Budgets and internal – as well as external – liability appraisals and audits need to reflect the fact that a single spill can wipe out not only an asset, but also an entire company

After all, it is not that long ago that plague was still not uncommon in some parts of the world, and the rat a popular vehicle for its intercontinental transmission.

Most seafarers would recognise a rat when they saw one, but some of the modern pests and plagues are rather less obvious.

Who for instance could tell a cockroach from a Khapra Beetle if one advanced purposefully out of a packing case? Could anyone determine the difference between the common fruit fly or a Gypsy Moth larvae, both of which can devastate orchards and forests respectively?

The spores of something horrible that causes “sudden oak death”, which is causing mayhem in US forests and establishing itself in Europe, is rather more of a challenge to the quarantine authorities and far beyond the competence of seafarers, but only one of the many intercontinental menaces that are out and about.

Nevertheless, such is the rash of pests and diseases that is now attributed to travel and transport that perhaps seafarers do need at least some basic knowledge of this subject.

It is a reminder that the natural world intrudes into the 21^st century technology of shipping, and that it cannot be ignored, or left to the experts.

It is also an indicator that quarantine services, which some people thought would disappear with the eradication of some of the dread diseases of yesteryear, have had to re-invent and upskill themselves.

The award was presented at a ceremony in New York by my long-time friend and now Coast Guard Commandant Admiral Robert Papp.

As many know I can speak with the best of them, but on this occasion I would just like to say a big heartfelt thanks to all at the USCG, there are so many people there who are doing such a fantastic job that I would be writing well into next week if I was to list all the individuals.

Once again, thank you to all at USCG, you will forever be ‘Semper Paratus’ in my eyes!

It was he who, when asked for a sound bite summarizing his outlook, replied: “All things change; nothing stays the same.” He would fit in well nowadays. Particularly in the shipping industry.

Now,   I know you don’t ever want to hear about oil spills again, sure, but: Deepwater Horizon has wounded limitation of liability in maritime law. Risk is the new word for liability. While we’re not all in the rig business, this means big headaches for the stuffy denizens of marine insurance.
Are you telling me that these increasingly grotesquely huge cruise ships do not also represent vast potential liabilities, in the event of a fire at sea?

No less a guru than the late Lester Rosenblatt told me so, and that was years ago. The myth of insurance market capacity is a huge Ponzi scheme, in which we all pretend to believe that such a. gargantuan loss could be absorbed. I don’t care what your friends at Lehman Brothers say. Thank God BP is self-insured.

Herakleitos would recognize that the executives at some of our largest companies, and indeed the companies themselves, are zombies. Zombies, he would say, are companies overtaken by change.

Change’s effects, he would point out, are when your company has an oil spill to contend with, generating (according to Credit Suisse’s guess) maybe as much as $40 billion in present and future liabilities, while it only has about $11 billion in cash and property on hand.
Guess it will have to borrow the rest. From Goldman Sachs?

While Barack Obama once promised us “change you can believe in”, the new slogan should be: “change that you couldn’t possibly believe.”

Herakleitos warns us that more change is on the way: “Next month’s big oil spill will be from a tanker. Is your Coast Guard ready, when it barely has enough oil-absorbent boom in the Gulf right now? Is the Coast Guard able to handle what’s environmentally coming, when for the last nine years, the big thing has been the war on terror? How does Homeland Security handle the war on sludge, huh?”

Let’s get back to liability. Lawyers, judges and the International Union of Marine Insurers love to say they believe in fixed principles of maritime law.

But Deepwater Horizon, and in particular its political fallout in the States, has subtly undermined “channelling”: the notion that upstream “players” like banks, charterers, cargo owners, or dealers like Glencore, Trafigura, Vitol and the like, because they aren’t shipowners, would enjoy some immunity in the event of a big, big oil spill.  Politics, not law, will always be a factor in a case like Deepwater;  the erosion of old-style liability barriers looms up before us like one of those berms in Louisiana. Ask Judge Obama.

Does Oberstar understand about oversight? That committee, and others on the Hill, has thrown buckets of money at the Highway Trust, but not shipping or the marine environment. Isn’t shipping, isn’t cleaner seas and lakes, isn’t the Coast Guard just as important. At least, we now have their attention.

Reputational risk now matters. That’s a big change in the maritime picture. Public opinion is back, as it hasn’t been since Torrey Canyon and Exxon Valdez. How quickly we forgot.

The complaints of the British Pensioners (is that what BP means?) availeth naught. They don’t vote in U. S. elections. That won’t change.

We’re going to hear a bit more about the oversight responsibility of corporate directors in the wake of Deepwater Horizon. How did the budgetary and accounts department fleas manage to walk off with the safety and technical research blanket at BP? Assuming, of course, that there was one.

My dad was an RAF pilot and the rest of us took some hits diring the Blitz, so I claim the right to observe the following about the complaints about “fairness” now seen and heard in the British media: you,  friends, have probably never encountered a shareholder derivative suit, but with about 40 per cent of BP shares in the hands of American stockholders, including institutional investors, the British pensioners may actually benefit from the fuss in the States.

You may well get your money back, with interest, if you live long enough. And that, by the way, is as good a reason as any to keep BP alive, and out of the clutches of, um, Shell.  I say that as a Shell shareholder.

Preventing casualties is a lot less expensive than paying for them afterward. There lieth the wisdom of all philosophers, ancient and modern.

When penny wise, pound foolish corporate bean-counters learn this wisdom, there will be far fewer Deepwater Horizons, pensioners will sleep more peacefully, we will have  cleaner (much cleaner) seas, and the jobs of the good people of BP, presently put at risk, will be safe.

My first meeting with Greek shipowner George Livanos resulted from a surprising telephone call to my hotel room in Geneva in 1982.

I had  heard of him, but we had never met. George had a plan, proposed to about 10 of us at dinner that evening: the Hellenic Marine Environment Protection Association.  His aim was to show that the shipping industry cared about the health and diversity of the world’s oceans; that commercial shipping, so long associated in the public mind with degradation of the seas, could do its part, and more, to collaborate with scientific and cultural constituencies to instruct its fellow mariners, and help prevent, clean up and remove oceanic pollution, from whatever source.

Today, 28 years and counting, there are some six “mepas”, including those in Turkey, Australia, Cyprus, Uruguay, Ukraine, and our own, encompassing all of North America.

Unfortunately, George Livanos did not live to attend the ceremony three years ago, at which more than twenty companies became NAMEPA founders. But George, who was born in the U. S. A., would I am sure applaud the eighty companies and individuals that are now committed to collaborating as NAMEPA members in a growing movement that brings what Americans and Canadians still call “private industry” into partnership with government administrators – notably the Canadian and U. S. coast guards, our environmental protection agencies, the academic and scientific communities, and environmentalists, in collective efforts aimed at developing programs that teach, in and outside of our schools, the values of respect, response and remediation of our maritime and coastal biospheres.

The lessons learned in this endeavor have not come easily. As visible pollution has diminished in recent years, so has public, and therefore business’, sense of commitment. According to a March Gallup survey, “Americans are now less worried about environmental problems than at any time in the past 20 years.”

But April 20, the date of the Deepwater Horizon oil well blowout, has changed that. For business, the concept of environmental risk — that failing to budget for adequate oil spill prevention could be really, really expensive — was made obvious again.

Just as it had been when the EXXON VALDEZ hit the rocks in 1989. When your company, regardless of how big it is, faces economic destruction, risk prevention begins to look like a sound financial policy. Corporate budget-balancers, please take note.

It might seem strange that in 2010 we have seen a sudden interest in the concept of a nuclear powered merchant ship.

But there again, with an environmentally conscious public that has been educated to believe that the emissions of CO2 are more threatening than radioactivity, perhaps such a viewpoint is at least understandable. A nuclear powered vessel would be the greenest practical solution to the demand for emission-free sustainability, and the possibilities of nuclear propulsion less improbable than they might have been even a few years ago.

It is a sobering thought that it is more than half a century since a nuclear reactor was first taken to sea, installed in the submarine USS Nautilus some 55 years ago. Although merchant ship experience has been severely limited, and mainly focussed on the Russian icebreaking fleet, nuclear propulsion at sea, in both submarines and surface craft, has been largely trouble-free, with a good safety record.

But it has been the twin spurs of environmental pressures on the shipping industry and the anticipated increase in the costs of whatever fuels future merchant ships are forced to use that has prompted a flurry of research into the feasibility of commercial nuclear power.

Both Lloyd’s Register and Germanischer Lloyd are known to have been undertaking research into the practicability of this form of propulsion, in a world where a squeeze on the use of fossil fuels seems inevitable, and green pressure seems likely only to increase.

And while there will always be “hard-core” objections to nuclear, it appears that the public perception might be altering, not least in the need for more nuclear power stations as one of the more sustainable methods of delivering electricity in advanced economies. It is argued that this more positive view might prove transferable to nuclear merchant shipping.

A thoughtful paper from LR suggests that a good analogy over public acceptance might be with the carriage of LNG by sea, where despite a perception of increased public risk, the employment of the highest operational standards have shown LNG transport to be exceptionally safe, and public perception might have been altered positively.

What sort of ships might be propelled in such a fashion? Lloyd’s Register research has focussed upon large tankers, container vessels and cruise ships as possibilities for extending nuclear power beyond the severely specialised units like icebreakers and other government-controlled ships. The research has looked at the power requirements and the type of nuclear plant that will be required to deliver this.

But it is absolutely clear that while the technical questions might be relatively easy to answer, it is the political and public doubts which will have to be assuaged before such a project can progress beyond the drawing board. Commercial questions intrude, of course, with the practicability of the operational patterns for each ship type.

With a large tanker, for instance, this might appear very attractive from the point of fuel cost savings during the lifetime of the ship, but VLCCs tend to operate in the tramp market, and a nuclear ship could be that much harder to employ. It might, of course be possible to engage in a very long-term charter (such as is found in the LNG market), but commercially it might appear to be a more risky proposition. Similarly a large cruise ship, although nuclear power might prove attractive to the passengers (as has been found with the passenger-carrying icebreakers), may well encounter trouble in trying to devise an itinerary that does not involve the passengers having to break through cordons of angry anti-nuclear protesters.

It is perhaps the large containership which would prove the best prospect for a nuclear power plant. Engaged long term between a very limited rotation of ports on either side of an oceanic voyage, the large nuclear containership could offer the high speed that is no longer fashionable in the present environmental and fuel saving regime.

As a truly “green” ship it could also prove attractive to big shippers which are sprucing up their own environmental credentials with sustainable corporate social responsibility policies.

Capital costs would be substantial, and the whole safety regime would have to be upgraded from that on a conventional merchant ship, but against this could be set the substantial savings from having to refuel the ship only every five to seven years. It has been suggested that refuelling could be operationally coincided with each Special Survey.

But who would take on the pioneering challenge of being the first to commission a nuclear powered container liner? Early efforts in the US, West Germany and Japan closely involved government agencies in the design, building and commissioning of the technically successful Savannah and Otto Hahn and the more troubled Japanese vessel Mutsu. Perhaps a more realistic pattern to replicate would be that of the Russian icebreaking nuclear barge carrier Sevmorput, which was built by the Russian government in 1988 and operated commercially in the north-western Pacific and Siberian trades with apparent success.

Looking around the world at possible combinations which might produce a commercially viable nuclear merchant ship, the smart money must be upon China, where there are exceedingly large shipping companies, close political connections and a shipbuilding industry looking for high status projects that will offer the chance of a truly spectacular technical leap forward. The world’s greenest container ship, nuclear propelled, could well prove an attractive step in this direction.

As far as the shipping sector goes, the shortage, or rather the lack, of capital (politely called liquidity) is now really striking home. Even prosperous and successful brands are being affected. The effect on the quality of much of the world fleet, over time, will be striking and very harmful.

Europe’s nearly 750 billion euro bailout package is intended to stabilise just about everything. While we hope that it will work for Greece and Portugal over the long run, it won’t help the shipping industry in the short one.

The reasons are simple: lending, on reasonable terms, to respectable medium-sized businesses, must be revived. This is definitely a tall order. It isn’t happening.

When the United States bailed out its banks with TARP funding, two years ago, easy credit conditions loosened capital restrictions.

This hasn’t occurred this week, in Europe, where banks are still reluctant to lend to one another, and certainly to shipowners.

Hopefully, an expanding sovereign debt crisis has been stopped. But shipping, like some other industries, faces a growing need for investment at a time of desperate, cheese-paring, cut-to-the-bone, in-the- short-run fiscal tightening.

For the shipping supply chain, regulatory pressures are however now placing a growing premium on quality.

Today’s horrific scenes from the Gulf of Mexico already show how regulatory pressure follows bad environmental news.

For a capital-intensive business, requiring long-term  investment in hardware and human resources, these are therefore hard times.

And there’s more. The junk now coming out of Asian yards is unlikely to meet environmental standards that will be set by the international community (the EU, IMO and the USA), for long.

Opening the “lending window” to small and medium-sized businesses, like most shipping companies, would require courageous action by governments. “Green” loan guarantees, for example, aimed at environmental or “green” designs, would be a modest but useful start.

But that sort of idea would not match well with the commitment, as expressed for example in the coalition agreement between Britain’s Conservative Party and Liberal Democrats, to “deficit reduction as a means of achieving economic recovery”.

So, not much hope there. The long and the short of it is that the wave of fairly horrible public spending cuts that is about to come down, while probably necessary to stave off national bankruptcy, will discourage just the sort of investment climate that we need, to renew and enhance the quality of the world fleet.

What we will probably be stuck with instead is a great deal of aging and shoddy stuff, built by shabby yards for shady asset players, for years to come.

I don’t need to draw a detailed picture of what that means for quality, for safety at sea, and for protection of the marine environment. In the short, as well as the long, run, it’s a shame.