Oil Rises After Suez Canal Blockage, Strong European Data

Fight Between Commodities Giants, and Shippers Leaves Seafarers Stuck

(Bloomberg) — A standoff between commodities giants and shipping companies is prolonging the labor crisis at sea, with an estimated 200,000 seafarers still stuck on their vessels beyond the expiration of their contracts and past the requirements of globally accepted safety standards. To keep deliveries of food, fuel, and other raw materials on schedule, some big commodities firms avoid hiring certain vessels or imposing conditions that may block relief for exhausted seafarers.

The companies are trying to avoid crew changes, which have become far more expensive and time-consuming during the coronavirus outbreak. To keep shipments on schedule, some firms have asked their shipping partners to guarantee that no change will take place, according to emails and contracts reviewed by Bloomberg. According to ship owners, labor unions, and the United Nations, those requirements risk worsening a labor crisis in its 12th month. Hundreds of thousands of mariners are long overdue for shore leave more than a year into the pandemic.

Some have been working without pay or a firm plan for repatriation. Many have taken desperate measures: in one instance, a captain diverted his ship to the middle of the ocean and refused to return to the course without guaranteeing relief. Before the pandemic, a shipowner could bring a new crew during routine port stops. That common practice has become a logistical nightmare with Covid border curbs. Some ports require lengthy quarantines for incoming and outgoing workers. Others turn away vessels that have changed crews within 10 to 14 days, fearing seafarers could spread the virus.

In January, around 300 companies, including Vitol Group, the world’s biggest independent oil trader, and Australian mining behemoth Rio Tinto Group, signed a pledge to take action to resolve the crisis for seafarers. Signatories called “the Neptune Declaration” recognized a “shared responsibility” and promised increased collaboration between ship operators and charterers to facilitate crew changes. As of now, though, some ship owners and labor advocates say little has changed, and not all of the biggest charterers signed on. “We chose not to sign because we believe that our current practices in respect of crew changes are fair and fully respect the need for regular crew changes,” said a spokesperson for Equinor ASA, a major oil, gas, and energy company based in Stavanger, Norway.

“We do not know charter vessels for any voyage if a crew cha needle will be required that cannot be accommodated in our delivery schedule.” Exxon Mobil Corp., the largest U.S. oil and gas producer, has declined to sign. A spokesperson said the company is “considering the next steps.” The pact is “a work in progress,” said Rajesh Unni, a captain and chief executive officer of Synergy Marine, which manages more than 375 ships, including container vessels and commodity carriers. He said that shipping has always had competing interests, but companies that sign the Neptune Declaration “at least commit that they will follow the standard protocol, which should give you a lot more comfort that now we’re all on the same page.” What you need to know: Tracking the Labor Crisis at SeaThe fight over who should pay for the higher costs of crew changes is most acute for commodities companies and their shipping partners, which carry out what are called spot charters. Crewed vessels are available on-demand from a few days to several months.

Spot charters make up 85% to 90% of dry bulk and tanker shipments in the commodities industry, according to industry group BIMCO. According to emails and contracts reviewed by Bloomberg, some companies have stipulated no crew changes or asked for verbal guarantees before hiring a charter. Charterers have also used questionnaires to learn whether ships are planning crew swaps, according to ship owners. In one instance, a shipowner told Bloomberg to secure a charter with Rio Tinto; he had to extend workers’ contracts, pay an additional salary, and promise to relieve them when the voyage e was complete. He also had to confirm that no crew change was planned for the duration. “Rio Tinto does not use ‘no crew change’ clauses in chartering contracts,” the company said in a statement.

“Rio Tinto aims to support the shipping industry and the human rights of the seafarers on which it depends. This requires collaboration between ship owners, who employ the seafarers, charterers, and regional port authorities around transport, an agency of information and flexibility on schedule.” Labor advocates and seafarers say the problem is that the workers don’t choose either way. Ship captains often hold the passports of their crew – a convenience for port stops, they say – and ports are tightly controlled borders. Even if a worker wanted to walk away from his vessel, he wouldn’t get far without a passport, a visa, or a plane ticket home. The International T Transport Workers’ Federation, or ITF, represents seafarers and calls on the industry to alleviate the crisis.

“There are still charterers rejecting charters unless they are given assurances that crew changes don’t take place,” said Stephen Cotton, ITF general secretary. “It might not be as blatant as putting it in writing, but it’s still going on. As long as seafarers’ lives remain secondary to companies’ profits, this crisis will continue to unfold.” Read more: What Happens When Tycoons Abandon Their Own Giant Cargo ShipsThe industry says it is the responsibility of ship owners to arrange crew changes and ensure the safety and wellbeing of the seafarers on their vessels. BIMCO has encouraged charterers to share the costs of crew changes and developed contract language that requires companies that hire containers for a fixed period — called a time charter — to do just that. Owners of ships are available for spot charter, the group said, and should change crews when the boat isn’t out for hire.

Labor and industry groups want companies to be more flexible and allow tankers and dry bulk vessels to divert or delay deliveries to help alleviate the crisis in stranded mariners. Shareholders, too: A group of 85 investors managing more than $2 trillion of assets, including Fidelity International, said in January that frequent charterers should be flexible about enabling crew changes and should consider providing financial support for mariners who must be repatriated. “Charterers, at this point, need to share costs and assume the delays they might face,” said Laura Carballo, head of maritime law and policy at World Maritime University in Malmo, Sweden. “That’s their biggest argument: it’s about the delays. Sorry, we’re all facing delays right now.

The world is only running because seafarers are doing their job.” Wichita, Kansas-based Koch Industries, which has interests spanning petroleum and agriculture, has instructed ship owners not to conduct crew changes. At the same time, under the charter, according to a person with direct knowledge of the terms and who asked not to be identified because the conversations were private. The requests were delivered verbally, not in writing. In response to questions about the stipulation, the company responded: “Koch works closely with vessel owners to ensure the safety and wellbeing of crew members. We are watching this issue closely and looking for ways to resolve it.”

Rotterdam-based Vitol has required ship owners not to make crew changes on some spot charters, according to people familiar with the company’s contract terms who asked not to be identified because they weren’t authorized to speak publicly. Vitol says it has “sought to manage our shipping business in line with the standards outlined in the Neptune declaration.”  “Wherever commercially and operationally possible, we facilitate crew changes,” company spokesperson Andrea Schlaepfer said in a statement. “As a vessel owner and manager, Vitol appreciates the challenges of the current situation but believes that with good management, owners can maintain high standards of seafarer welfare.”

The Neptune Declaration also calls on world leaders to change their port and border policies to ease the burdens on seafarers, following a September statement from consumer companies, including Unilever Plc and Procter & Gamble Co., to do the same. Last month, the IMO recognized 55 countries that agreed to consider seafarers “essential workers” and encouraged nations that hadn’t yet to do so. That designation has no official definition, and the countries weren’t specific about what, if any, change it would bring to the port procedures. On Friday, the shipping industry raised concerns that, while the number of seafarers stranded has dropped since its peak, the improvements could be short-lived as governments and port authorities respond to the threat of new COVID-19 variants with stricter restrictions.

Seafarers, many of whom are from developing countries, may also miss out on the ongoing vaccination drives, risking further delays and supply chain disruption. “The crisis is ongoing,” said Guy Platten, secretary-general of the International Chamber of Shipping, representing more than 80% of the world’s merchant fleet. “Governments will not be able to vaccinate their citizens without the shipping industry or, most importantly, our seafarers.” (Updates with recent statements from the shipping industry on the threat of new COVID-19 variants to efforts to relieve seafarers. )For more articles like this, please visit us at Bloomberg.com. Subscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.