Thursday, February 23, 2006

Ships passing in the night

Bob Krumm's take on the UAE company running the ports got me thinking.

If P&O had sold its American port operations to Maersk, a Danish shipping company, I’d have little objection. However, the proposed sale to a Middle Eastern company raises serious questions that the President hasn’t seriously addressed.

For the record, P&O is a British company. So what's missing? No one is talking about an American company running the ports. Why is that? Because we have regulated ourselves out of the maritime trade game.

I worked on cruise ships for several years as a musician. That does not make me a maritime law expert. I have done no research for this post, I am too busy. So, I guess my disclaimer is, I may get a detail or two wrong, but I spent several years living on the oceans, and this is what I learned.

You will rarely see a large ship flying an American flag. All the cruise ships that pull into Port Canaveral, Port Everglades, Long Beach, etc and fill up with Americans spending American dollars are registered elsewhere, even if the company is American. Carnival is based in Miami, but their ships are registered in places like the Bahamas and Monrovia, because those countries have made it attractive, tax-wise, to register there. On top of that, if the ships were registered in the US they would become US business entities, subject to US business regulations.

A typical cruise ship might have about 600 crew members. Of those there will be maybe a dozen Americans, and they will have jobs that interact with the passengers, like musicians and cruise staff. But from the officers down to the guys that sort the trash, there are no Americans. The cruise lines couldn't afford it. I don't know what a typical Filipino pipe-fitter makes, but I know it is a lot less than the American minimum wage. Sound like exploitation? Like a shoe factory in Bangla Desh? I didn't find that to be the case. These guys and gals from the Philipines and Pakistan and Chechnya are getting paid in American dollars. I heard many stories from the friends I made from around the world about how they were working on board for 10 months a year because the $200 a month they made, when exchanged back home, fed and clothed and schooled their wife, kids, parents, two sisters and a couple of cousins. So what was less than our minimum wage did quite nicely for them back in Manila.

There are also state regulations that keep things interesting. In Florida, once you get three miles off-shore, you can open the casinos -- a big money maker for the cruise industry. In California, at least when I was working out there, you couldn't open the Casinos until you were actually on your way out of the country. I did four month on a L.A./Catalina/San Diego/Ensenada itinerary. The ships were mostly filled with Southern Californians, who probably knew that Ensenada is a total dump that smells like they flush the toilets directly into the streets. But until the ship was leaving the country, they couldn't open the casinos, and three and four-day cruises are big time gambling trips for a lot of people.

Every once in a while, some Senator from Iowa or New Hampshire will get wind of all this money leaving the country, and they will propose, you guessed it, more legislation. They will say, "if you are going to use American ports and American passengers, you have to pay our taxes, even if your ship is registered outside of the country." And the cruise lines reply with, "we don't have to start our cruises in Ft. Lauderdale. We can just as easily start them in Nassau." Then the congressman from Florida takes the Senator from Iowa out to the woodshed for sticking his nose in Florida's tourism business, and the proposed legislation is dropped.

I don't know anything about container ships, but I know in my years of floating around the high seas, I never once noticed a container ship registered in the US. There may be plenty, I don't know. My guess is that if they only call on US ports, they have to register in the US. But they can always drop off a box of bananas in Ensenada once a year to get around that.

Maritime trade, passenger and cargo combined has got to be in the top five global industries. (That is just a guess, but think about it, it is huge.) America says, "if you want to be part of that game in our country, you have to do it our way." The rest of the world laughs, and carries on without us. It is a huge industry that we have completely regulated ourselves to death.

So back to the port thing. We don't have an infrastructure or culture here to manage sea-going activity. Other than the military (and me) when have you ever heard of someone who works or worked at sea? Maybe some crazy step-uncle who signed up for the Merchant Marine in the 50s, other than that, America has very little presence on the ocean. I met several Greek and Italian and Danish and British officers whose families have been working on the ocean for hundreds of years. America doesn't have any of that culture. That's is why we don't have any American companies lining up to take this operation over from P&O. Will the Government do anything about it? My guess is they'll try to tackle it the way they always do, with more regulations.


At 11:11 AM , Blogger Kat Coble said...

I worked for several years for an importer. I have NEVER liked having the ports managed by an outside firm. I don't care if they're British, UAE, Norwegian or Botswanan. In my view it always unnecessarily complicated things.

Up north there is quite a bit of a sea culture, especially in Michigan where there are still many in the Merchant Marine operating out of the Great Lakes. It's just something we can afford to be ignorant about because we have such a productive contiguous land mass. We're not forced to be aware of the sea as heavily.


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