Select Committee on Environment, Transport and Regional Affairs Appendices to the Minutes of Evidence


Memorandum submitted by the Department of Maritime Studies and International Transport of Cardiff University (FUS 16)

THE FUTURE OF THE UK SHIPPING INDUSTRY

1. INTRODUCTION

  A study undertaken by Cardiff University during 1995 and 1996[74] investigated the UK economy's requirements for people with seafaring experience to fill shore based jobs. This memorandum updates some of the findings of that study. In doing so, it takes account of subsequent research at Cardiff[75] and the findings of a recently published study by London Guildhall University.[76] The memorandum thus only addresses one of the terms of reference on which the Transport Sub-Committee has invited written memoranda, namely that related to the issue of the maritime skills base. In particular, it discusses the consequences and implications of a shortfall in supply of ships' officers to fill vacancies in land based jobs where seafaring experience is considered to be essential by employers.

2. THE REQUIREMENT FOR SEAFARERS TO FILL SHORE BASED JOBS

  Using data gathered in a survey of firms and other institutions identified as belonging to the maritime related sector, Cardiff's initial study estimated that the number of shore based jobs which employers would prefer to fill with people with seafaring experience as 16,825 (see Table 1).
TABLE 1
Estimated number of jobs which employers would prefer to fill with former seafarers

NumberPercentage

Jobs where seafaring skills are considered essential 11,77870.0
Jobs where seafaring skills are considered an advantage 5,04730.0

Total jobs16,825100.0
Jobs filled by:
UK ex-MN deck and engineer officers10,988 65.3
UK ex-MN other personnel2,044 12.1
Ex-RN officers8845.3
Ex-RN petty officers and ratings715 4.2
Foreign ex-seafarers (mostly former deck and engineer officers) 1,4228.5
Non seafarers7724.6

Total jobs16,825100.0

Source: Gardner and Pettit (1996).


  Of the 11,778 jobs estimated to be in the essential category, 87.5 per cent are filled by former merchant navy officers. Jobs in the essential category tend to be highly technical in nature and may require additional training. These types of jobs are usually filled by officers holding at least a Class 1 certificate. Former naval officers, apart from those who are engineers, are seldom employed in such jobs; they are usually employed either as general or personnel managers by shore based businesses in the sector. Foreign ex-seafarers within this category are predominantly engineers and are largely employed in posts abroad by overseas branches of UK companies. The principal employers of such foreign ex-seafarers are insurance companies and classification societies.

3. ANNUAL DEMAND PROJECTIONS

  An estimate of the likely annual demand for seafarers to fill vacancies in shore based jobs in the UK economy is given in Table 2, and an estimate of the likely annual demand for ships' officers to fill vacancies in such jobs in the essential category is given in Table 3. These estimates are central projections and were derived from data gathered in the initial Cardiff study.
TABLE 2
Estimated mean annual demand for seafarers to fill vacancies in shore based jobs

Jobs filled currently byAnnual demand

UK ex-MN deck and engineer officers529
UK ex-MN other personnel99
Ex-RN officers43
Ex-RN petty officers and ratings34
Foreign ex-seafarers (officers)68
Non-seafarers37
All jobs810

Source: Gardner and Pettit (1998)—"Delivering for Britain" conference presentation.


TABLE 3
Estimated mean annual demand for ships' officers to fill vacancies
in shore based jobs in the essential category

Jobs filled byAnnual demand

Ex-MN personnel (officers)421
Ex-RN personnel20
Foreign ex-officers56
All jobs497

Source: Gardner and Pettit (1998).


  Estimates of the likely annual demand for British merchant navy officers to fill vacancies in shore based jobs in the essential category are given in Tables 4 and 5. Table 4 shows the composition of the central demand projection on a sectoral basis.
TABLE 4
Estimated mean annual demand for British officers to fill shore
based jobs in the essential category by sector

SectorAnnual demand

Maritime Operations Land Based74
Maritime Operations Water Based112
Financial and other services73
Shipbuilding and Marine equipment20
British Shipping88
Miscellaneous54

Total421

Source: Gardner and Obando-Rojas (1998)—"Greenwich Forum" conference paper.


  Table 5, on the other hand, shows how the mean demand estimate is affected by attaching a 95 per cent confidence interval to the central projection. By attaching a confidence interval to the central projection we can say, therefore, there is a 95 per cent probability that actual mean annual demand for British merchant navy officers to fill vacancies in jobs in the essential category lies somewhere between a lower limit of 319 and an upper limit of 523. Employers, moreover, will be normally looking for Class 1 certificate holders to fill such vacancies.
TABLE 5
Estimated mean annual demand for British merchant navy ships' officers
to fill vacancies in shore based jobs in the essential category

Lower confidence
limit projection
Central
projection
Upper confidence
limit projection

319421523

Source: Gardner and Pettit (1998).


4. THE SUPPLY OF SEAGOING SHIPS' OFFICERS TO FILL SHORE BASED JOB VACANCIES

  As the main source of supply for jobs in the essential category has traditionally been wastage from the British shipping industry, projections about the future annual supply of British ships' officers with Class 1 certificates to fill such jobs may be derived from past cadet and junior engineer intake numbers if the natural wastage rate is known. This was the method used to calculate the number of active seagoing officers in the Cardiff University projection shown in Table 6; it assumes a 6.5 per cent natural annual wastage rate. Since a British seafarer is unlikely to obtain a Class 1 certificate before the age of 25 years and evidence suggests that employers in the shore based sector do not normally recruit seafarers who come ashore after they have reached the age of 45 years, intake figures for the past 28 years are required to make such projections. Figure 1 shows the intake numbers on which the subsequent supply projections in this memorandum are based.


  An alternative estimate for the total number of active seagoing officers in 1997 within the relevant age range comes from the recently published study by the London Guildhall University. These projections were derived from an analysis of records relating to the certification of officers over a period of five and a half years from January 1992 to July 1997. The five and a half year timescale was necessary to ensure all revalidations of certificates were captured in the analysis.

  Table 6 provides a comparison between the results of the Guildhall study and the projection made by Cardiff for 1997.
TABLE 6
The number of seagoing ships' officers (25-45 years) in 1997

Age rangeUK seafarers
analysis
Cardiff University
projection
Net
difference

25-301,089418 +671
30-351,2381,876 -638
35-401,9752,400 -425
40-452,8762,398 +478

Total7,1787,092 +86

Sources: McConville et al. (1998); Gardner and Obando-Rojas (1998).


  Both estimates are similar for the total number of officers in the 25-45 age range, thus apparently providing support for the 6.5 per cent annual natural wastage assumption made by Cardiff in its projections.

  Although the estimates for the total number of officers within this 20 year age range are similar, a comparison at a more disaggregated level, where the 20 year age range is broken down into four five-year sub-categories, shows that there are significant differences between the two estimates in terms of the number of officers in each sub-category. An explanation for the additional 478 officers in the 40-45 age range in the Guildhall study may be that it includes as active seagoing officers some former seafarers who are now employed in the shore-based sector, such as pilots and other professionals, who are required to revalidate their certificates. On the other hand, Cardiff's projection may overestimate the number of officers in the 30-35 and 35-40 age ranges and underestimate those in the 25-30 age range because it assumes that all ships' officers have obtained their Class 1 certificates by the age of 25 and thus will be eligible for recruitment by employers in the shore based sector seeking to fill vacancies in the essential category.[77] Clearly, this is not likely to be so because, as the Guildhall study shows (see Table 7), only 5.4 per cent of officers in the 25 to 30 age range hold Class I certificates. So, the pool of officers from which shore based employers can recruit seafarers with Class 1 certificates in the 25 to 45 age range is considerably smaller than that indicated by Cardiff's projection.

  On the basis of the findings of the Guildhall study, therefore, it is more realistic to assume an age range of between 30 and 45 years for recruitment to the shore-based sector if employers seek to fill posts with Class 1 certificate holders.
TABLE 7
Proportion of seagoing Class 1 certificate holders in the 25-45 age range

Age rangeClass 1
certificate
holders
Proportion
in age group
Per cent

25-30595.4
30-355-240.5
35-401,08855.1
40-451,75060.8

Total3,39947.6

Source: McConville et al (1998).


5. THE INTERACTION OF SHORE AND SEA BASED EMPLOYMENT

  The present pool of seagoing British officers within the 30-45 age range is estimated as being less than 6,000. This reflects the low level of cadet intake prevalent during most of the 1980s, and the pool has now shrunk to the level where it cannot satisfy shore based demand by natural wastage alone. Thus, the most likely solution to the problem posed by the shortfall in officer supply is that it will be resolved by the market, and the salaries of former seafarers employed in jobs where their experience is considered essential will rise relative to people of similar professional status in the shore-based sector because replacements are in short supply. Moreover, such rises in salaries will induce higher wastage rates among British officers at sea in the relevant age range causing a rapid depletion in the present pool of seagoing ships officers and also job switching among former officers already in the shore based sector.

  The dynamics of the interaction process can best be visualised by simulating it. The controllable variables of the model are recruitment intake, natural wastage rate per year, recruitment age range and shore based demand. For different scenarios the time series of the simulation depends on whether the actual wastage rate reaches 100 per cent per year, or whether the seagoing pool recovers and reaches a steady state condition. The output from the model shows the size of the pool of seagoing officers and the actual wastage rate at yearly intervals. The former is dependent on the latter. The effects of controlling any of the variables are readily apparent in the output.

  In the real world, the value of variables may be changed by the adoption of appropriate policies. For example, a measure that could be taken to boost cadet intake is increasing current training funding, either through government support or industry-based initiatives. Demand from the shore based sector, on the other hand, could be reduced by tapping alternative sources of supply such as training non-seafarers in the appropriate skills or by the recruitment of qualified foreign seafarers.

  The following scenarios will analyse the effect of different policies on the size of the pool of seagoing officers and on actual wastage rates. In all the scenarios it is assumed that the natural wastage rate from the seagoing pool of officers is 6.5 per cent per annum and that the age range over which such officers are recruited to fill shore based job vacancies is 30 to 45 years.

Scenario 1: Maintaining current governmental policy

  Figure 2 shows what is likely to happen if present policy is maintained and interaction between shore and sea based employment occurs. The scenario assumes that mean annual shore based demand is 421 (central demand projection) and that cadet intake is maintained at the level of 650 cadets per annum. Under these conditions the pool of seagoing officers is virtually depleted by 2007 and the actual wastage rate from the seagoing pool has increased to over 90 per cent.


Scenario 2: Raising the recruitment level of cadets

  Figure 3 shows what is likely to happen if the recruitment level of cadets is miraculously raised during 1998 and interaction occurs. The scenario assumes that mean annual shore based demand is 319 (lower confidence limit demand projection) and that cadet intake is raised to 2,000 cadets in 1998 and maintained at that level. Under these conditions the pool of seagoing officers is virtually depleted by 2009 and the actual wastage rate from the seagoing pool has increased to around 70 per cent. Raising cadet intake numbers only thus is not a viable solution to the pending manpower crisis.


Scenarios 3 and 4: Shortening the training period and reducing shore based demand

  Figure 4 and 5 show two possible alternative outcomes if a fast track junior officer training programme is introduced for graduates and programmes are also developed to train non-seafarers to fill some of the job vacancies in the shore based sector currently filled by Class 1 certificate holders, thereby reducing shore based demand. In both scenarios it is assumed that cadet intake is maintained at 650 cadets per annum, that the fast track graduate intake is 800 and the training period necessary for them to obtain Class 1 certificate can be shortened to four years and that training programmes developed for non-seafarers to fill job vacancies in jobs currently filled by Class 1 certificate holders will, from 2004 onwards, reduce shore based demand by least 160 persons per annum. In the scenario depicted in figure 4, however, shore based demand is assumed to be 421 (central demand projection) over the period 1998-2003, whereas in the scenario depicted in figure 5 it is assumed to be 319 (the lower confidence limit projection).

  These scenarios both show that there is a possibility that the maritime skills base may yet be saved if appropriate policy measures are adopted, since the pool of seagoing officers after declining from its present level eventually begins to recover. Of course, if the lower confidence limit demand projection reflects the real world situation the prospects of saving the skills based are significantly improved.




6. CONCLUSION

  It is clear that the UK is in grave danger of losing its maritime skill base within the next decade. The present situation is, in fact, much worse than previously feared. This is partly because, as the London Guildhall study shows, the pool of British seagoing ships' officers from which employers can recruit to fill vacancies in shore based jobs is much smaller than previously thought, as less than 50 per cent of the relevant age range hold Class 1 certificates; and partly because, as our modelling work demonstrates, the situation will rapidly deteriorate as a consequence of the failure to recruit a sufficient number of cadets in the past to satisfy shore based demand without increasing wastage rates from the sea based pool beyond the level which shipowners can reasonably be expected to tolerate. Hence, unless decisive action is taken now to remedy the situation, there is little prospect of saving the skills base.

  Because of the lead time involved in cadet entrants to the shipping industry becoming fully qualified professionally (i.e., obtain their Class 1 certificate) any viable solution to the problem requires now radical measures to be taken which tackle both the demand and supply side aspects of the problem. We suggest, therefore, that immediate action is taken to develop a fast track junior officer training programme for graduates and training programmes for non-seafarers to fill some of the posts currently filled by former ships' officers with Class 1 certificates when they become vacant. To resolve the problem the former programme needs to be based on an intake of 800 university graduates per annum and the latter programmes should collectively seek to reduce shore based demand for Class 1 certificate holders by at least 160 persons per annum by the year 2003.

  The consequences of failing to act now and adopt the proposed measures are likely to be:

    —  UK shipping companies will cease to train British cadets and junior officers.

    —  Firms that are footloose will move their maritime related business offshore to other maritime centres abroad where the required seafaring expertise can be found with a consequential loss of employment in the UK far greater than the number of former ships' officers currently employed by such firms.

    —  Other firms will have no alternative but to recruit foreign seafarers unless they diversify into non-maritime related business activities.

Mr Bernard Gardner

Dr Mohamed Naim

Mr Bernardo Obando-Rojas

Dr Stephen Pettit

2 December 1998


74   Gardner B M, Pettit S J, (1996) The UK economy's requirements for people with experience of working at sea. Report to the Department of Transport, Chamber of Shipping and Marine Society. University of Wales Cardiff. pp. 123. Back

75   The research team has presented results of the work at various conferences: Is the European Union Seafarer An Endangered Species? Dublin (1996); International Association of Maritime Economists, London (1997); Delivering for Britain, London (1998); and the Greenwich Forum Conference on Manpower Shortages in the Maritime Industries, London (1998). A number of academic articles will appear in 1999: Gardner B M, Pettit S J, Seafarers and the land-based jobs market-The present UK situation, Marine Policy, Vol. 23, No. 1. pp. 103-115; Gardner B M, Pettit S J, The land-based jobs market for seafarers-Consequences of market imbalance and policy implications, Marine Policy, Vol. 23, No. 2, pp. 161-175; Obando-Rojas B, Gardner B M, Naim M, A system dynamic analysis of officer manpower in the merchant marine, Maritime Policy and Management, Vol. 26, No. 1, pp. 39-60. Back

76   McConville J, Glen D, Dowden J (1998), "1997 UK seafarers Analysis", The Centre for International Transport Management, London Guildhall University. Back

77   Another reason why Cardiff projections may underestimate the number of officers in the 25-30 age range is that they assume all recruitment of cadets takes place at the age of 16. However, the Guildhall study may overestimate the number of officers in this age range, to some extent, as the estimates are likely to include former seafarers who have come ashore after gaining their Class 3/ 4 certificate because they could not find employment at junior officer level. Back


 
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