After the Cosco Busan, everyone is playing Pass the Parcel
Nautical eyebrows have risen a fraction because the Long Beach company that provides pilot services, Jacobsen, asked – and got -- a 15 percent increase in fees to make up for the 9 percent drop in ship calls over 2008 and 15 percent fall on 2007. (Jacobsen wanted it immediately, but the Harbor Commissioners served up two helpings of 8 percent and 7 percent over two years.)
Most observers assumed that the principles of the world economic crash would apply across the board in the shipping world and prices would come down, just as they have in container rates. The difference is that the pilots are an essential service and even if they lose money, training, safety and security have to stay at the maximum.
Jacobsen hammered this home when they asked for more money. A three-year training program, the longest in the US, is one of the reasons for more money that Jacobsen puts forward, plus rigorous physical exams and regular performance assessments. The company said it pared its costs to the bone and safety was at risk.
Rates per ship call are about the lowest in the US and Mexico, according to the company's own figures. Container ship rates vary between $2,600 and $5,400, compared with a maximum of $25,000 for the most expensive port, Oakland and $12,000 for New York. Rates at other ports vary around these figures.
However, next door Los Angeles is cheaper still – between 10 and 20 percent. There is a crucial difference in that LA pilots are part of the city government and are guaranteed an annual increase. The big B for Benefits also kicks in as LA pilot rates include benefits – Jacobsen at Long Beach has to pay the benefits itself.
Nonetheless, some of the rates comparisons are simplistic. Oakland is the most expensive because of a geographical and geological factor called the Golden Gate entrance channel and the San Francisco Bay. The winds are treacherous and the current moves with vicious force, which is why so many Olympic gold medalist and America's Cup yachtsmen learnt their trade in the bay.
To say nothing of the fog danger. The Cosco Busan incident in 2007 underlined that permanently.
That oil spill also played a part in Long Beach agreeing with such unanimity to Jacobsen's price rise. The request for a price increase was shrewdly timed, coming just after the unfortunate pilot was handed a jail sentence and the ship operator burdened with a $10 million fine.
The raised eyebrows would have shot up even higher if there had been no Cosco Busan incident as background to Jacobsen's request.
No port in the country wants a repeat of the Cosco Busan and if a pilot service says money is needed to keep up with safety, the extra will be forthcoming swiftly.