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Sept. 18, 2020 - Freedomain Radio - Stefan Molyneux
01:02:24
A WORLD WITHOUT SHIPS?
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Okay, so in North America, 80% of everything comes by sea at some point.
But it's the wrong way to think of it.
Look at one object in your house, right?
So even if your laptop is manufactured in USA, 80% of the metals and plastics and the energy to produce it came from somewhere else by sea, right?
Anything you look at in your house, and what people don't understand is how dependent we are on each other.
Now you think, here's an analogy, there's seven billion people in the world who depend on 60,000 ships for 80% of everything.
And it's often said in shipping that without shipping, half the world would starve and half the world would freeze.
Hi, everybody.
This is Sven Molling from Freedom Main.
So I'm here with a fellow named Scott who has been emailing me relentlessly and informatively because there's something going on in the world that he really wants you to be aware of because it's going to have a big impact on all of us over time.
And it's something I didn't really know anything about and always being fascinated by new knowledge.
I was really appreciative of Scott emailing me.
So I guess I'll let you get the story going about what the heck is happening in the 80% of trade involved in shipping, shipping this big invisible over the horizon kind of stuff.
Well, I guess every now and then with Exxon Valdez, we get a sense of how precarious all this stuff is.
You've been involved in the industry for a long time.
And I think you want to sort of, dare I use a maritime metaphor, send up a flare.
There's me showing my knowledge.
Don't go there. No, but you want people to be aware of all that's going on.
So let's get going with the backstory and where things are.
Yeah, so as you know, basically, it's been coming up in the news recently because of COVID lockdowns.
And I know on your show you focus, like you had the chap on a couple of days ago having a discussion about his COVID symptoms, but what really is the focus is the seen versus the unseen, right?
And so in the UK here, we're a historic maritime nation.
We're an island. We're completely dependent on the sea still to this day.
95% of all food and energy and commodities and everything come by sea.
So This is something we all depend on, but in the UK, in the maritime industry, we call it sea blindness.
People have no clue.
They think that when they buy a car, it came on an airplane from Japan.
No, no, I thought it was a catapult, but okay, apparently there's some ships involved.
Yeah, so it's not just island nations like the UK. I mean, it's the entire world.
So for people who are interested in sort of free markets and history and sort of volunteerism and things like that, it's a fascinating thing and it's a terrifying thing and it's one of those areas where there's a lot of tension that's unresolved at the moment.
But it's coming up in the news, particularly in June and again now because of COVID. So there's a lot of backstory and a lot of history we can get into if you like.
Oh yeah, no, I'm all about the deep dives and the backstory, so take us on a journey.
I had a feeling. So yeah, I mean, basically, just to give you a flavour of the ending before we go to the beginning is, you know, We've got a crisis now where there are basically 60,000 ships in the world that complete all international trade.
There's about 95,000 ships in the world globally, but a third of those are sort of coastal fleet.
So that, you know, the big giant mega container ship comes in and then the containers go to the domestic fleet and they're sort of spread to local ports.
The precariousness of that sort of understanding of globalism is, you know, hard to explain about history because, you know, shipping technology has changed so much in the last three to four decades that ships are almost unrecognizable shipping technology has changed so much in the last three to four decades that ships are almost
Ships in the last 20 years, okay, the number has grown a little bit, but the capacity, the cargo carrying capacity of the world fleet has doubled in the last 20 years.
And at the same time, because of automation, the number of personnel on each ship is reducing all the time.
So you see now in Europe, ships that are sort of 400 and plus meters long, carrying 22,000, 23,000 shipping containers.
And what would the manpower, I dare say mostly man, what would the manpower be in the past as opposed to now with that size ship?
So the numbers are hard but in the UK I know for example in World War I we could ship, we had the largest merchant navy in the world in the UK in World War I. That fleet was almost entirely conscripted for the war effort so that's why after World War I and World War II Merchant ships were just destroyed left, right and centre. Everything was manual.
Nothing was automated. So we lost more personnel than the Navy.
And it was a civilian occupation until the ships were seized by the state.
So in the UK now, we have something like 10% of the number of ships that we had in World War I. But the cargo carrying capacity is the same.
It's funny how efficient things can get when you can't force your labour on board at gunpoint.
Then you have a big incentive. Yeah, press ganging.
It went out of fashion, thankfully.
But the manning issue, we probably had about a million people at sea back in 1914, and today the UK has 40,000 seafarers to run the equivalent.
But to add to the complication, what's happened since World War II in the 50s, we obviously got away from the League of Nations.
So I know your degree's in history.
So you know all about mercantilism in the sort of 16th, 17th, 18th centuries.
You know, maritime basically created the modern world.
You know, we couldn't go through North Africa as Silk Road closed off for...
Reasons we can get into another time, but then people had to go around to get to the Far East, and that spurred the sort of development of maritime technology in the sort of 1500s onwards.
I guess the point is that there is no modern world without maritime.
The maritime technology is...
Linked inextricably with Sorry to interrupt, but the maritime technology and the closest equivalent, I think, would be airplane technology, but given the cost and relatively small number of people who use airplanes relative to the fact that 80% of global trade is ship-borne, I think airplanes have had even less of an impact in sort of world history than ships in the past or even in the present, because 80% of global trade is a huge deal.
So much of the modern economy is wired into those propellers under the ocean.
Well, you look at the last six months, aviation has ceased.
The lights are still on, there's still food in the supermarket.
That little surge at the start of the lockdown, we had six weeks in the UK where we had a lockdown and there was panic buying.
uh the shelves were empty people were freaking out you know i had a friend in edinburgh she didn't have eggs for like three months and you know uh people were really scared what's going to happen now that feeling of fear right um the ships never stopped that was just a little spike in demand right what happens if the ships stop right the airplanes all stopped it didn't matter now one of the consequences though of airlines uh stopping was that the the crew who are stranded on ships around the world Basically,
in Europe, there's sort of two tiers here.
So there's the sort of high-tech shipping, and then there's the boring trudging across the Pacific eight miles an hour for three weeks with a ship full of cement and timber.
So that's actually the backbone of the whole world.
And that is basically...
A different tier of seafarer.
Now, what has happened in the last six months, tankers haven't really been affected that much.
Oil and gas is pretty steady demand.
We're back to a sort of recession level that we had five years ago when I left the oil industry.
But that's something that the tanker industry is used to.
They're used to cycles, right?
You can't have fixed costs when the cost of the commodity is cyclical.
The container ships and passenger ships that people sort of think of, that's like the retail sector, right?
Cruise ships, people are worried about cruise ships.
That's like 1% of shipping, right?
Container shipping has sort of been dying a death for the last 10 years as well.
Because of the improvements in technology, China came into the market of shipbuilding sort of 20 years ago.
So your Samsung And your Hyundai's and all your heavy industries and all that, these guys are all shipbuilders originally.
I'm sorry to interrupt you. Are your cameras wobbling a little bit?
If you could, just when you gesture.
Sorry, go ahead. Yeah, so digressing slightly, but basically because of the revolutions in computing, machine welding, and the huge...
Because there's so much extra human beings sort of in the economy now that China's in the economy and so on steel became very very cheap 20 years ago at the same time design and engineering capacity increased and you've got economies of scale because of electronics so the ships just grew in size so rapidly they could build a ship In sort of three months, where it used to take three to five years, right?
So they're churning out ships faster than they can train a captain now.
At the same time, you've got a massive increase in regulation because, to get back to my World War II point, in the 50s, basically there was only two or three maritime treaties that sort of governed everything.
There were five or six sort of traditional maritime nations, UK, US, Norway, Italy, and they sort of did everything.
After that, we had the UN. We have to get everyone involved, the Constitution and the Law of the Sea.
Now there's over 50 maritime treaties that people have to deal with.
They have to deal with these international treaties at the same time as their flag state, so that's like the home country of the ship, as well as every coastal state that they operate in and whose waters they pass through.
You know, you've seen this increased capacity, but also regulation has just massively increased and along with the liabilities and so on.
So let's move over a little bit to this issue of sailors.
Oh, they call them seafarers, right?
I guess it's a combination, not just sailors, right?
But the mechanics and medics and you name it, right?
So 300,000 sailors are trapped at the moment?
This is one of the most surprising things because I can understand the sort of global slowdown and all that kind of stuff.
But how are these guys trapped?
What is happening? How are they getting access to dental care, health care?
How about prescription renewals?
You name it. Like what is going on that these guys are trapped on their ships?
Yeah, so these are my friends and colleagues.
I met my wife on a cruise ship.
You know, it's...
Let's go back to February.
So what happened in February?
Okay, there's this virus from China.
Everyone's freaking out.
You know, we got the 3.5% figure from wherever.
Okay, we don't know.
Let's lock everything down.
Fine. Everyone who was at sea at that time in Europe, Northern Europe, North America, basically did what they call a double header.
You do a double trip. So in these developed countries, a typical officer might do...
Between four weeks on board, four weeks at home or up to three months if they're on a big ship and then three months at home.
Sounds pretty cushy but when you're working 24-7 and there's no time off, there's no days off, you know, the ship never stops.
It's very fatiguing so people sort of, if you stay on too long, You know, you get fatigued, you start having accidents, and so they send you home to refresh you.
So there's two tiers. Like I said, the people in these high-tech, high-end industries, you know, oil and gas, cable layers, et cetera, in wealthy countries, they didn't see much change.
They did a double trip. So maybe you did 12 weeks instead of six, or you did six months instead of three.
Now, I've done a six-month trip.
I'm not going to say it...
you know destroys you but you'll you'll be different after six months now there's the other end of the market there's the vast majority of the merchant navy is crewed by regardless of the nation states ships they are uh basically crewed by foreign nationals regardless of what the ship is so in the uk there are twice as many uh indian and foreign nationals with a uk license As British nationals,
so the 40,000 seafarers in Britain figure that I gave you before, of that, only 11,000 are British nationals.
The qualifications are issued to foreign nationals to work on various ships, because the UK is seen as a sort of trusted qualification provider.
What's the driver behind that?
So back to history, obviously Merchant Navy after World War II was pretty hammered and you know people came back and they wanted better conditions so all over the traditional maritime countries people started going on strike and this was sort of deemed as unacceptable by governments at the time so they brought in something called Standards of training and certification for watchkeepers.
So it's an international convention.
All the maritime nations signed up to it.
What they said is, we are going to accept qualifications from any country who meets this minimum standard.
Now, it was a very low bar.
For example, they stopped teaching navigators geometry, right?
So, you know, they then brought in this foreign labour into the sort of Western market to sort of, you know, it's a double-edged sword.
They needed labour after the war, so it's fair enough, right?
But when you invite everyone in you sort of have no control and it wasn't so bad for a few decades but the 70s again there was a lot of strikes in Europe these people said what the conditions are unacceptable people are dying at work we need more money etc And then they just flooded the market with what were known as cheap crews, which was Indians, Filipinos and ex-Soviet nationalities who now make up 90 to 95% of all crew.
And the reason is they speak English.
Philippines' relationship with the USA, India's relationship with the UK and Soviet Union had heavily subsidised maritime education for decades, so they had a massive oversupply of labour and flooded the market.
Right. I mean, so it wasn't that they needed labor.
It's that they needed labor that they wanted to pay less for.
Because that's kind of the old thing.
And it's not your formulation, but it's a general formulation, of course, that people say, well, we need labor.
And it's like, no, you'll get labor.
I mean, you might. You know, it's like, I need a Maserati.
And yeah, well, you can get a Maserati.
You just got to, you know, auction your kidneys to do it.
So because there's always this thing about, you know, foreign nationals, well, we need the labor.
And there's this kind of illusion that if you don't get those foreign nationals, well, the job just won't get done.
And it's like, no, you'll just end up paying, you know, 20 pence more for your jam buddies.
Right, right. And the operating costs for a ship, okay, let's say, okay, they do have thin margins, right?
Some companies operate at a sort of 2% profit.
And that's an increasingly chronic problem because back to the World War I history, when the ships were tiny, you know, they might have been 60 meters long, 7,000 ton ship, right?
A qualified captain like myself could go to the bank, get a loan and purchase a ship and you'd be in business, and the profit from the first ship paid for the next ship and it was a family business, right?
So people think of these massive multinational carriers, they've got money, etc.
Okay, those are the high profile, that's maybe 10% of the market, but the average shipping company owns three ships, right?
They've been set up in this last 20-30 years of easy money, bailouts, state subsidies all over the world, cheap crews, and they're operating on a maybe 2-3% profit margin because they're in a sort of false economy in a way.
But now the cost of the ships to get the barrier to entry, you're talking, you know, I think I was on a new build, it was a small S ship, Not remarkable.
And it was 50 million dollars.
New build, 150 million, 200 million is not unheard of.
Pretty common. So the concept of a free market in the maritime labor sense is, okay, there's elements of freedom in the sense that you're trying to bring all these nation states to a level playing field.
Fine with that, but it's not really You know, a free market in any real sense.
Well, other than a little bit on the internet, it's kind of hard to find these days as a whole.
So let's get back to these 300,000 seafarers.
So, I mean, I hate to ask such a basic question, but why the hell can't they get off their damn ships?
So it's the polytheism of the state.
There's 180 plus countries now that are signed up to the the laws of the sea in these conventions.
In February there was a sort of okay we'll accept this everybody signed an extension the people in the better companies they're getting paid double time they're happy I'll do an extra three months.
You get to June you've got 150 000 people stuck Airlines are stuck.
These companies that are making 2% profit margin, they cannot afford to stop the ship, right?
Okay, so sorry to interrupt.
Let's go back a little bit. So is it fear of contagion?
Is it fear that they've got COVID on the ship, that they can't disembark?
I mean, what's going on? Why can't they just get off the ship?
I hate to sort of say it. I get the flights and all that, but...
So from the commercial side, you're talking at the bottom segment of the market, the container ship analogy, you think of UPS or FedEx or something, I'm going to send a package, here you go, postman Pat, I pay you my money, you go do your thing, I don't care.
But you try to send 500,000 tonnes of stone to a different country, that's how these people make their money, or cement or aluminium or something like that.
They have these things called time chart involved in the commercial aspects of the shipping.
They just say to the ship owner, you make your best speed between here and there, and then the stock markets do their thing, the traders make millions, the guy on the boat is getting $800, whatever.
But the owner has no legal right to stop the ship and say, look, I need to get my crew off because he will bear the cost of that.
He cannot afford the downtime because he'll have to pay a fortune in sort of insurance claims and so on for the missed cargo at the other end.
Also, you've got the other side.
That's the commercial aspect for these low-end operators.
The other side is the sort of lockdowns.
It varies so much by country.
I'm going to try really hard not to name countries particularly, but you can look all these things up.
If you just type in shipping global updates, you can go through each country, right?
And you talk about Byzantine, some of these countries will say, okay, we'll allow a crew change if the ship has been at sea for 14 days and everyone tests negative on arrival and blah, blah, blah, these other criteria.
But that's the maritime authority of X country.
Then, the other government department, visas?
No, we're not issuing visas at this time, especially for seafarers.
People hate seafarers generally for issuing visas.
Is that because of the cliché of the sailor on leave or something else?
You know, no comment.
I had a cruise ship captain and the passengers used to ask him...
Captain, is it true that the captain has a girl in every port?
And he sort of looked thoughtfully out the window and said, I don't know, I haven't been to every port.
Right, okay. So, yeah, I mean, you know, it's because, you know, places like USA, for example, you get a special Siemens visa.
My wife's American, so, you know, I would sort of work in Scotland, fly back to the States.
regularly because I'm getting a month on a month off that shows up as like suspicious activity to them because they think you're working illegally in the country so they say okay we don't want we don't like people with a Siemens visa because let's say you're from you know Bangladesh Sri Lanka somewhere some third world you know some poor village in the Philippines or something like that you get a ticket from your company that you could never afford by yourself I'm joining a ship in Florida Oh, there's the door at the airport.
I think I'm just going to walk out the door and go off the radar.
So that's a risk with seafarers.
They've got these undocumented people.
Customs and so on are very suspicious of seafarers anyway.
Secondly, yeah, it's just politics of country.
So in June, when it started getting really bad and people were saying, okay, this could get very bad in terms of safety and in terms of people are psychologically really suffering at sea.
And this was half what it is now.
In June, they were saying, right, We need to crack down on this and encourage.
So they had a conference and of the 180 countries, they managed to get 17 to designate these people as key workers so that they could join and leave the ship.
But the airlines have cancelled.
So you're having to now pay for a private jet to get 15 guys home from the Emirates to Manila or from UK to India.
So the cost is...
More than 10 times what it was, what your whole business plan was based on, right?
So the average cost of repatriation went from $300 to $3,000 per head, right?
Well, and this is all in a 2% profit margin industry, which is brutal, right?
Yeah. So that's the other aspect, right?
But then you add onto that the cost of all these...
So...
These...
I forget what you call it, but basically when the government changes its mind, so you get, okay, we've got orders, we're going to go to Singapore, we're going to get off.
They've agreed that we're going to go through quarantine, we're going to spend two weeks.
Now the ship owner then has to pay the cost of board in an expensive city for these guys to get off and a charter flight but then at the last minute they say oh no there's no there's no space or there's no berth or we've changed the rules or yeah one person tested positive on the ship so the whole ship has to go away for another two weeks etc right This is not baked into anyone's projections.
I mean, it's the old thing in business.
It's not what you know that gets you.
It's what you, A, can't know, and B, don't anticipate for as a result.
And it's these kinds of sudden costs that can eat into a year's profits, you know, in a week.
Yeah, and the last five years, you know, the thing that really scared me, so now we're at, okay, so June came and went, there was a series of arrests, so the flag states, basically, so part of the maritime labour general problem that happened,
as I described before, we started saying, okay, we're going to bring in these, we're going to lower the standards, we're going to bring in cheap, cheap crews, but now the thing is, they've set a new standard, and these people meet the standards, so they start to expect a little bit more money, These Filipino guys, and these guys are absolute heroes.
I've spent most of my career working with Filipinos.
Fantastic people, hardworking, smart, amazing people.
But they're working like 11 months for $800 a month.
They don't see their family, they don't see their kids.
And they're just getting ground into dust by this.
And 11 months is the max, isn't it?
I mean, that you can legally work on a ship, which seems to me entirely too long, but...
Yeah so I mean it really should be three months is the maximum but the the so when when they say okay we're going to have a convention we're going to raise these minimum standards and in the UK we were like how is this a minimum standard so basically this was trying to bring likes of your your china and and so on up to the sort of global minimum and that's what slows down progress in the maritime industry because you you know the rising tide you have to get all the countries you can't just do it so they they said 11 months on board is the limit after that if a seafarer doesn't have a signed thing to say that he consents to the extension of his contract and there is a airplane ticket or something waiting for him so this is meant to be emergencies only that this guy's staying on for longer than 11 months you've now got people 17 months on board 10,000 of these people every day are being Not coerced,
but basically made to sign a contract extending...
Okay, so I'm sorry.
17 months. Now, I've only had one or two jobs in my life where you're on, like when I was gold panning prospecting in northern Ontario, northern Manitoba, northern...
Saskatchewan, I mean, you're in a tent.
Like, what are you going to do with the day off?
Like, watch the bugs? I mean, so you're in there, and it wears you down.
It's hard physical labor, because your body also needs time to rest as well.
So you've got hard physical labor.
You've got psychological isolation.
You may not be getting along with everyone on the boat.
Of course, that's never going to happen.
You miss... The comforts of home, your wife, your kids, or whatever, or just a normal life.
How on earth could it be possible that people are on there for 17 months plus?
I mean, that is unbelievably risky to my mind.
I mean, not just for their mental health and sanity, but also just for basic safety.
Right, so now we're getting to the...
Okay, I'm just going to give you a list of...
Stories that I've heard in the last month, right?
There was a case where the one that stuck in my mind, there was two sailors.
So here's the thing as well.
Another part of my job is I analyze accident reports.
The problem is you don't get this information until sort of years later because the ship's at sea.
There's no witnesses. Nobody sees it.
There's no CCTV or anything like that.
Mysterious things happen.
And it's a very dangerous occupation.
Always has been, right?
Now, you know, the sort of COVID death rate, okay, compared to just being at sea, it's dangerous anyway.
You've probably got a 0.1% fatality rate from your job.
Right? And there's not a single seafarer I know who doesn't have at least five or six stories of where they were nearly killed on a normal good day, right?
Oh, I mean, I'd have that even just working with the drills in the middle of nowhere.
And of course, should you get into trouble, it's not like you're skipping or jumping away from an expert ER. No, so I mean, I'm medically trained to the sort of level of a sort of nurse, right?
But you get like a two-week medical course and that's meant to be good enough for everything so I can do stitches, right?
And then anything else, you radio a doctor ashore and they give radio medical advice.
Now that's free, but I've heard literally of, you know, guys, they had a pressure injury to their head, you know, a crushing injury or something.
And, you know, I've heard captains having to do sort of trepanning with a black and decker drill that they've just...
Boiled up in the kitchen.
Oh, you mean just like relieving pressure on the brain kind of thing?
Yeah, just drill into his head and you get sort of an exemption of, you know, well, you know, the doctor told you to do it over the radio, so you're not liable.
Well, I mean, to be fair, though, sometimes when I do a long show, I also get a crick in my neck, so, you know, obviously I can completely identify with what these guys are doing.
No, that's brutal stuff.
That's brutal stuff. So there was two guys recently.
They, you know, I don't know what happened.
They fell or something, but they broke both their arms.
Two guys, right? And they radioed to shore in a certain country in the Middle East.
And all of these countries, so you talk about breaking treaties and Brexit, it's nothing, right?
160 plus of these countries have a legal obligation to provide medical evacuation to seafarers in their waters, all ignoring it.
These guys broke their arms and they were told, oh no, you haven't done your 14 days, take ibuprofen.
And they were four and a half days on board the ship with broken arms.
Before they were allowed to come ashore and get treatment.
Well, and again, I'm no doctor, but you've got to get broken bones seen to pretty quickly, otherwise they start to quasi-heal in all kinds of weird, end-dimensional ways.
It's not a good day. The types of injuries that are being caused by fatigue, but just heart attacks, you know, things happen.
A lot of these guys are older.
You can't get ashore for exercise as well.
You know, it used to be you go ashore in the port.
Since 9-11, you couldn't even get ashore in most places.
But basically, you're not even allowed to walk alongside your ship if it's in harbour for a little bit of exercise, right?
So obviously, you're getting heart conditions.
The captain died in his cabin recently.
That was it. Stick him in the freezer.
There is, you know, I'm sorry, did you say put them in the freezer?
Yeah, that's what they do. Is it a specialized freezer for onboard deaths or is it just in there with your fish sticks?
Yeah, I mean, don't grab the sausages, but yeah, it's just your normal freezer.
Well, and I've got to imagine too, mental health issues, just suicidality.
I mean, the carelessness that comes along as well with people who are just frustrated and exhausted with their life.
Yeah, so these accident reports that I do, you know, they're all sort of done by government agencies.
You get the sort of report three years later after the fact, oh, it was human error or machinery failure, right?
But you're seeing this spate of incidents now, and this is, you know, oil tankers exploding, ships capsizing and sinking, and it's literally, if you're on the wheel and it's a storm and you have to turn, Something as simple as that if you are fatigued and the guy says left and you go right you capsize the ship and we just had that case I sent you the livestock carrier 42 guys died last week and for that reason the ship just turned over bad weather just nobody knows what happened and and the worst thing the thing that really sickened me about that was the the greenies the environmentalists reported it as a Oh,
6,000 cows died, so we have to ban livestock trading.
That's as much, as I mentioned, as that got in the news.
Oh, nothing about the 42 guys, just the cows.
You know, one man survived.
Let's not go on the greenies.
That's probably a whole other show with a huge amount more spittle on the camera.
So what's the status of shipping and its effects?
Because, you know, a lot of people are going to be listening to this like, yeah, yeah, but we're still pretty much okay.
But, you know, in some of the links that you sent me, you know, we've got freight tonnage moving through UK ports, fell by nearly a fifth.
Just in the second quarter, I imagine it's even worse now.
And you've got, I mean, is it the same issue with people just not being able to get funding, not being able to get insurance, payback?
People wanted to quit the entire business because of the uncertainties about when they're ever going to get something that's not swaying under their feet.
I mean, what's happening to the industry as a whole?
And, you know, I guess to the audience's effect, what effect is that going to have on the supply chain?
So, it'll be, you know, all these problems are solvable.
The solutions have been there.
But, you know, there's CEOs now who are starting to speak out.
I saw an article the other day on a very, you know, respected industry publication.
It's now gone. There's a well-respected CEO who was saying governments will only respond when the supermarket shelves are empty.
And we're coming up in winter now, so it's accident season.
People need fuel for their homes, etc.
So it's going to get worse before it gets better.
And as I said before, you think you had shortages when there was some panic buying.
Let's take for one example, just to be silly and not scare anyone, but all the bananas in the UK come through one single terminal.
There's one port with one berth and they bring the bananas from South America and they don't ripen unless you put them in a special chamber and gas them so there's a whole connected thing.
So let's say what happened in June happens again.
So in June there were six ships basically came to the UK and they were cruise ships and the beneficial owner of the ship couldn't be tracked down.
They ran out of money, couldn't pay for repatriation of the crew.
These six ships were arrested for failure to pay wages, these safety violations etc.
now you've got the ships on the berth right they're stuck there no other ship can use that berth right in australia they had three ships um they they lost all communications power the owner went disappeared they stopped paying for the internet they had they had no phones or nothing they painted on the side of the ship no food no money help right the australian authorities came this happened three three occasions in australia with some coal carriers or something like that We've got the guys off.
They've basically given them to charity.
But there's a problem here. The crew cannot leave the ship and maintain a claim on their lost earnings if they haven't been paid.
And they can't afford to fly home a lot of the time out of their own pocket.
They're just working class guys.
So you've got this possible cascade that could happen in many places.
And remember what I said before.
The ships now are double the size they were 20 years ago with half the crew.
So the The tiny little effect of, oh, let's say one shipping register, one flag state, those people decide to go on strike, so 5,000 people.
You could be talking literally on strike, you could be talking about 10% of world GDP just being stopped within days like literally days and it could happen like and the unions the trade unions have have been telling this has been happening people have been going on strike so there and and there's this question is it mutiny or not so the the uh it's a pseudo military organization uh mercenavia in most countries right because uh when when this all started it was literally they just went down to the beach and they were trying to press gang people and they say okay We need seafarers to fight France or whatever.
And they made a list, right? That's called the register.
So when a flag state, when you get your license, you're registered, right?
So a lot of your sovereign citizens, guys, they'll know all about this stuff.
But that's what it is. It's a ship registry.
So the nation state reserves the right to seize you, seize your labor and seize the ships, right?
But there's a transition.
If any state tries to do that, there's some very, very, very uncomfortable periods of time.
for people and it's going to be in these developing countries in africa south america asia some of these places could really hurt bad and the who has even said this that they estimate tens of millions of of the world's poorest could easily starve to death uh this winter because of the economic problems um my numbers are probably wrong i'm not good with that one but go on who and and and their website is very clear about this Well,
we've got, I mean, there's one question I wanted to ask before I get to the next one is, how the hell is it possible that they're chained on the ship, like they're going to end up as Jack Sparrow's adversaries in some Pirates of the Caribbean zombie movie?
How are they chained to the ship in order to get back pay for non-contract fulfillment?
It's a lien, right?
So if the ship, for example, or let's say if I've got an oil tanker and I go to an oil terminal and there's some dispute about the cargo and I refuse to pay, Well, then they'll just close the port and they'll keep your ship until they pay the debt.
What's the same? The captain can basically say to the owner, I'm not moving your ship and I'm keeping your ship until you pay me.
Right? So it's property lien.
But the case is that I was just watching a video on YouTube just shortly before this call.
I should give it to you.
You should put it in the show notes because there's a captain who, I think he was a Pakistani national, He was going somewhere and basically they had fears of okay we're going to this terminal I'm supposed to have 80 uh stevedores so people to come on board my ship that I'm responsible for legally criminally strictly liable for as the ship captain none of these workers are tested and this is a high infection area what mitigation do you have to protect my crew if these people are going to come unload my ship they said unload the ship And this captain said,
I refuse. He lifted up the gangway and he refused any access to the vessel.
The dirty tactics, the ship owners of that particular case tried to get him tried for a mutiny, which is punishable by death in Pakistan.
The crew, the management company telephoned the wives and next of kin Of the sailors on board and threatened them with mutiny charges, threatened them with, we will stop paying your husband, you know, et cetera, et cetera, et cetera.
I mean, real dirty stuff, right?
So he just went on strike.
He ended up going somewhere else and sort of getting a place of refuge and they calmed down because they have no legal right to say that he's mutinying because the responsibility for the safety of the ship still rests with the captain.
Now, the International Trade Union and the ITF have been saying for three months now that if any captain believes that his crew is at risk for COVID or at risk of injury due to fatigue, he has the legal right as the master to stop the vessel, go to anchor and go on strike and stop work.
and the fear is that ceos are really talking about this because they they're being asked to to sort of get these people to sign these extensions extensions extensions months beyond the legal sort of thing uh legal limit and the guy on board he doesn't really have a choice like he's he's making 600 a month he's he's maybe got four or five kids at home who depend on this money if he says no i'm not signing an extension Well, it's not like they fly him home business class the next day, right?
He's got to sit on the ship until God knows when they can get him off.
So he might as well work, right? Right.
Otherwise, he's there for no reason off pay and he'll incur a debt.
He'll have to pay for his food, right?
So you've got this situation where it's just a complete stalemate.
I don't want to be too cynical about governments because the international effort is...
This is the one show where you can be entirely too cynical about governments?
Just wanted to mention it. It's hate the game, not the players.
I mean, people really care about this and the sort of heads of the International Maritime Organization, it's the UN agency that governs all of this.
They have for months been calling this a humanitarian crisis.
They've really, really tried, but they have no power.
And the nation states that are doing these things, they are completely out for themselves, right?
And this kumbaya, you know, everything is fine when times are good.
But when times are hard, everyone's out for themselves.
And they don't care if they grind these people into the dust because they are not voters or taxpayers in the home nation.
They're all foreign labor.
There's something else that troubles me too, Scott, which is every industry, like if you've never been a manager, you don't realize just how important it is for people to want to work in your industry.
Because you need a conveyor belt of new people coming in because people quit, they get old, they get injured, they decide to just do something different.
They go join the Peace Corps or something like that.
So you constantly need this conveyor belt of new people coming into the industry.
Otherwise, the industry goes into kind of a death spiral.
And if the working conditions are getting so unpleasant, so difficult, so dangerous, where are – like who's going to sit there and say, oh, I can't wait to ship off to sea and join this merry crew?
I mean, that seems to me it's one of these things.
And once people are out, it's really tough to lure them back in.
Yeah, I mean...
In the European nations, this has been a big crisis, you know.
And this is the other division, because...
If you read the Maritime Press, okay, all these things are happening, right?
I could just share a window right now and I could scroll, you know, if anyone just types, you know, marine fleet accidents, right?
And you just go through the news, it's every two days, there's a complete disaster, right?
There's a ship completely destroyed or lost on average.
Once every two and a half days.
Is that up this year?
That's 2019. That's last year.
That's the safest year we've had in shipping ever.
The people I really listen to are the insurance companies.
If you type in big marine insurance companies, I don't want to name names, obviously, on your show, but they do these annual safety audits.
Now, the marine insurance industry The ships have been doubling in size every year but the premiums are based on historical data so they've been underfunded and unprofitable for the last five years.
They're bricking themselves right now.
They're really afraid and they have published public documents saying we believe that the claims resulting from this year And the resulting safety decline next year could wipe out the safety gains of the last 20 years.
And then we're going to go back to when I started at sea, you're losing a ship every day, not every three days, right?
Well, and what's going to happen to the financial viability of these insurance companies with this level of claims?
If you can't insure, what do you do?
There's no – I'm sorry.
I assume that there are requirements for ship insurance in the same way that there are for car insurance.
And so if the insurance companies, well, they're going to need a big bailout or they're going to have to radically adjust their rates based upon increased risks and dangers.
And of course, also, if you've got a lot of people cycling out of the industry, you've got people cycling in who have less experience, less If you can't insure the ships, the ships can't really sail, right?
Potentially. It will vary nation state by nation state.
You're like me. I'm Scottish all the way back to the flipping Mesolithic era, so I've got that amygdala that you have where we sort of extrapolate to the worst possible case.
But I don't think that will happen because, as you say, you just adjust your prices, people pay more.
So all of these problems are solvable, every single one of them, and it's known how to solve them.
And it's never been better.
But all you get in the marine press now is we have to decarbonize everything by 2030.
We're not allowed to pour a cup of water in the sea.
We need to get 50-50 women in maritime.
Why? That's what they're pushing for.
And you get these long articles, how do we get millennials to go to sea?
And you're like, so out of touch.
It's not even millennials anymore.
You know what I mean? It's like, what are you on about?
And I've had this argument my entire career because when I went to sea, there was no internet, there was no electronics, there was nothing.
You didn't phone home. There's no telephone.
I'll see you in a few months, right? Fine.
But what people don't understand, right, these old guys who've been at sea, they grew up in that time, they are not fussed about these people who are suffering because they, well, back in my day, I would sign up for two years and we'd be gone and it's like yeah but you could have your wife and family on board and you had half the duties because there were less regulation and you could drink alcohol that's gone when you went to port you were there for three weeks not three hours and you could go ashore you know it's a different ball game and the stress was already bad for a lot of people you know and because they've got these international standards it's a race to the bottom for the living standards on many places and again the dirty-handed tactics as soon as the union spoke about okay you're legally entitled as the ship captain to go on strike etc some less reputable owners started cutting off the one lifeline people had telephone and internet And just saying,
you're not allowed to phone home or you're not allowed to phone other ships, you're not allowed to post on social media.
So if they can't call to say they're going on strike, they can't go on strike.
Wow. Now, just before we close off, and I really, really appreciate this information, there's two sort of topics for me.
So one is this very, very big picture topic, which I sort of wanted to submit to your expertise.
So if there is some sort of clawback in international shipping, I mean, other than, you know, obviously you can't grow bananas in the UK or anything like that, but I can see that being some real benefit to this because then you get more localized manufacturing.
The rust belt begins to get all polished up with new jobs and all that.
I can see some real benefits because this general international race to the bottom for price and labor and all of that has been pretty...
Pretty rough on a lot of first world manufacturing jobs and so on.
So I am ambivalent.
You know, I get the whole economy is set up this way and changing it is really, really tough.
But I can see some real benefits, particularly in Western countries, to there being some reduction in this, you know, international shipping stuff and get more local manufacturing.
What are your thoughts on that? That's what makes me feel sick to my stomach every day is which way is it going to go.
Because historically, yeah, okay, we need a correction, but that hasn't happened since the 1800s, where they just let things happen.
What's happened in the 20th century is they seize everyone's property, and people like me, who it's a reserved occupation, you're conscripted, you're now in the military, on you go.
and so it but it depends you know when you're going to get into philosophy it's this thing of we've tried to treat every country the same we've tried and this is one of my questions for you Steph was uh you know there's this tension between universalism and consent right and i'm all for free markets but i don't understand the shipping because you've got this dichotomy where um ships can change their flag right so Statists hate this.
They call it a flag of convenience.
But free market people love it because I'm an American ship owner.
Let's say I own property.
I own a ship. It's just like any other piece of property and I just want to do business.
I will go to the country that charges me the least tax to fly their flag, right?
And I will not raise my standards.
I will go for the country that doesn't care about greenhouse gas emissions.
Now, the people who hate that, they're trying to drag everyone up to this very high European standards, not caring about the opportunity cost for people who can't meet the barrier to entry.
But at the same time, it's the only thing keeping the world going.
For example, you might have 20% now of the container fleet of the world.
The beneficial owners of those ships are Greek nationals.
They live in Singapore.
The company's registered in India.
They've got an office in the UK. And it's all sort of, they're very smart people because, for example, if you have an incident on one ship and it's a safety incident, then any government could say, right, you stop this class of ship, this company stops trading until we sort out the thing.
But because each ship was sort of run as an individual corporation and you have to go 15 steps to find a beneficial owner, they can actually keep trading.
People hate it, but this is actually what the globalist modern economy is based on, and it's self-defense in my opinion.
These people are just desperately trying to protect an industry that is brilliant, and it has built the modern world, and there's no doubt that there are 7 billion people alive today because of it.
I mean, the maritime industry is the global economy, and people talk about the real economy versus the fake economy.
That's why people go to sea.
They love it because it's real, right?
There's no nonsense, you know, and it's, you know, like you say, it's 3% female officers or something like that, and even the women who are at sea, they're the kind of people that love it.
Because it's away from this.
You just think, you mean I don't have to go to university for seven years and then sit in an office for the rest of my life?
Thank God I can actually go drive a boat.
I can play with a chainsaw.
I can drive a crane. You know, it's like it appeals to a certain type of person so that there's always going to be those people who are willing to sort of sacrifice time and so on, especially when they're young.
The owners and so on, and the people who want to destroy all this, they're so far removed from these people, these 300,000 people now, who are being ground into the dust.
And the other thing is that the people who are at home, so every one of these 300,000 who's at sea now suffering, you know, suicides are through the roof, self-harm is through the roof, depressions through the roof, accidents are through the roof.
These all have a counterpart at home.
Who has not been paid since February and they have been unable to join a ship.
So this is your skilled labor force.
There's only 1.8 million people qualified to do these jobs in the world, right?
You got 600,000.
That's a third of the people.
Half of them are either suffering right now and 300,000 counterparts, do you think they're going to sit and wait till this all shakes out?
No, they have to work.
They're going to find something else to do.
They're going to get a steady job somewhere else.
And part of the reason I think that a lot of nation states are scared to deal with this topic, and why I'm so grateful to bring it to your audience, is because if they just look under that lid, they don't know what's going to happen.
And yes, it'll adjust.
Every cloud has a silver lining, but those are days and months and years to live through.
Well, okay. So let's go, I guess, to the final topic, which is, I guess we can put on our dour Anglo-Saxon disaster helmets.
I'm Scottish. How do you think it could shake out negatively?
And what do you suggest to my audience?
yeah i mean so the first step then i i'm really glad we've had this conversation and and i didn't know how it was going to go i was nervous i really wanted to do this justice because outside of the maritime world nobody knows about this even though the new york times has covered this you know this is in on msnbc the story but they are not really going for the human component you know people with tumors uh people with you know they can't get off and and Talking about it,
I hope, is the first step because it's a really difficult thing.
It's such a specialised thing.
A lot of your free market guys, they've read books about economic history.
They know all about the mercantile trade and so on, but they don't know anything about shipping today.
So how do you spread that message?
The other side, the positive side, is tech, blockchain.
So a lot of the problems of the maritime industry is because it's regulatory capture, And so I'm really hopeful that blockchain is, you know, that's been heavily adopted by the container industry and it's massively revolutionized things there already.
And I think once we bring that into credentialing and qualifying people and sort of making information not a scarce resource and removing bottlenecks, and you've only got the physical bottlenecks to deal with, So maybe you've got some smart people who know more than I do, but I think I just want people to talk about it because when I read these stories of ships blowing up every day, people just getting killed and it's not on the news.
And people are saying, well, you know, I can't get my hair cut because of the lockdown or something.
You know, I feel sick to my stomach just You know, and I don't know what the answer is, but...
Alright, first case scenario, hit me.
It's going to happen in some places.
This is going to happen as, you know, people forget like the Arab-Israeli war, for example.
So there's physical choke points around the world, right?
Ships are bigger now, so they're deeper, right?
the waterways haven't changed size so if you the arab israeli war there was a few uh ships sunk in the suez canal bang the eastern mediterranean is now cut off from asia and that was for like 12 years they couldn't unblock it you know um you've got sort of 10 of these choke points around the world Let's say one country that's maybe unstable.
What's the one that had the explosions in the port?
Beirut. That was in the news again today.
Another chemical fire broke out there.
That's a prime example of one accident.
In a harbour. 800,000 people are homeless now.
God knows what sort of cancer and stuff we're going to get from the fumes and businesses gone, right?
That's just one port in one country.
But you think that port's been out of action for weeks now.
The economic ripples, right?
Let's think of another country.
Let's say, you know, what's a good example?
Russia, right?
Half of their ports are icebound for most of the year.
If they get one port that's sort of free in the winter, let's say, and some seafarers are there, maybe they're from Bangladesh, Indonesia, somewhere like that, they're paid $200 a month, and they haven't been paid for six months, and they just say, no, we're down in tools, and the ship is blocking the berth, and you've got backed up traffic all the way through Istanbul, through the Turkish Straits, like...
I mean, it's incalculable what could happen.
I don't think I'll ever get to that because we know that people don't hesitate to use force in these situations and they'll do things like that.
But there's this divide between the people who are in charge of these things and there's a wide gulf that separates them from having any sympathy for what has been described as a humanitarian crisis that's happening now.
Pray to God we don't get to what could happen.
But there are potentials for significant interruptions in the food chain.
And I would recommend...
We'll put all the links in the show notes and send me anything that you haven't sent me that you'd like me to add.
But... We don't know.
And why should we?
You know, I mean, we don't know where our electricity comes from in any fundamental way.
We don't know where our water comes from in any fundamental way.
We only kind of notice when it's not there.
And the amount of life-saving, life-sustaining, as you point out, the world population has largely increased as a result of the efficiencies or predatory aspects of the shipping industry.
And so if there is – and it all runs on people.
We can say automation all we want.
You still need some people on there.
And if people don't want to work there, if people get sick, if it becomes too dangerous and so on, then there is more of a race to the bottom, getting more unskilled people, getting more people, just stuffing them into – it becomes a sort of spiral, a literal death spiral at that point.
Or it begins to diminish.
Now, if it begins to diminish, there's going to be a lot of economic dislocations.
And that's a nice way of saying people are going to go through some really rough economic times as things adjust.
I mean, yeah, you can say it's good in the long run, but it's not something that people want to go through in the short run.
I do have concerns when you look around your house.
Look at the number of things that are made, you know, in truck driving distance.
Look at the number of things, especially with borders now closed.
I know that trade borders in the U.S. Sorry, U.K. and sorry, U.S. and Canada are still open.
But, you know, we're all hanging by a thread and that thread runs over the sea.
And when that gets threatened, things can get pretty bad.
So I've got an analogy for you.
So let's say there's...
Okay, so in North America, 80% of everything comes by sea at some point.
But it's the wrong way to think of it.
Look at one object in your house, right?
So even if your laptop is manufactured in USA, 80% of the metals and plastics and the energy to produce it came from somewhere else by sea, right?
Anything you look at in your house, and what people don't understand is how dependent we are on each other.
Now you think, here's an analogy, there's seven billion people in the world who depend on 60,000 ships for 80% of everything.
And it's often said in shipping that without shipping, half the world would starve and half the world would freeze.
And the reason they say half, people don't understand that, you know, everyone's so worried about sea levels rising.
The reason is because 50% of all human beings live within 5 miles of the coast.
The reason that is, is because it makes trade more efficient.
The tons per mile of carbon of shipping is more efficient than any other form of transport because the buoyancy does most of the work for you, right?
Now, people don't live in the woods and the mountains in Mongolia, right?
They live near the coast because that's where you can live because of trade, right?
My town, I live in a small sort of working class town in Scotland.
There's 60,000 people in this town.
Now, just to illustrate how vulnerable, imagine that 7 billion people on earth depended 100% on every person in my town personally driving things to them in their car.
Right. And that's the level of sort of bottleneck that we're talking about, you know, and all your theories about, oh, the stock market's up, oh, the stock market's down and all that, it depends on reality being fulfilled.
Right. Okay. Well, listen, I really, really appreciate the conversation.
I really, really appreciate the information.
I will put links That you suggest and the ones that you've emailed me below.
Keep your eyes peeled, man.
If there's more that comes up, please let me know.
Thank you so much for your time today.
Fascinating stuff. Thank you.
If you get any advice on how to expand the message and so on, I'd love to hear it sometime.
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