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Friday, April 19, 2019

Maritime Logistics Professional

Pilot to Co-Pilot: “We’re going down!”

Posted to Global Maritime Analysis with Joseph Keefe (by on August 21, 2014

Cruise interests in Sunshine State petition to cut pilotage charges for cruise vessels. The impact to other stakeholders, if the petition is upheld, is unknown. The move, if approved, has national implications.

Whenever I hear about cruise line issues and especially those that emanate from south Florida, I always wax nostalgic about my former life as a seafarer and then, later, as a cargo surveyor and tanker expeditor. In the early to mid-1980’s, I sailed on a coastwise chemical and refined products tanker running from the Sabine Pass area to destinations up and down the East Coast of the United States. One of those ports happened to be Port Everglades. We were in there once every two weeks, discharging gasoline and diesel to local storage tanks.


  • Then

In those days, the majority of the docks were little more than spartan berths with mooring bollards and a simple manifold arrangement. Port Everglades was a grimy little place where you could walk down the gangway and go for a run along the beach, or perhaps get a sandwich and a beer (this was pre-OPA 90, mind you) at a popular little place that you could get to on a brisk walk in about 20 minutes. Still other mariners would opt for a shorter walk to the * ahem * “gentlemen’s” club located conveniently within spitting distance of the docks. I never went there myself, but people talk; you hear things.


These days, things are just a little different down there. The gentlemen’s club is long gone and the security at the gleaming, modern port is as tight as any other in the United States. I assure you, nobody is going jogging off watch anymore and the proliferation of cruise traffic in the area has transformed the port significantly. In my day, there was some cruise traffic but the port seemed to be primarily a tanker destination. On a given day, you might see four or five tank vessels, all moored ‘head out’ as was the custom there, pumping, tank cleaning (they let you do that alongside in those days) or even loading. More than once, I met up with academy classmates who had arrived on other vessels. It was a fun stop, in a bygone era. But, I’m getting off message here.


A typical port stay was about 17 hours – unless of course, there was a cruise vessel getting ready to get underway. And in that event, your tanker would sit while the pilots and tugs took care of the “more important” vessels. Operating on strict in-and-out schedules, absolutely nothing was allowed to delay their operations. This also could involve allocation of harbor tugs. In Port Everglades, and since pilotage there involves about ten minutes of actual work (especially for the tanker moored ‘head out’ directly in front of the very short channel), the delays didn’t amount to much but I remember cooling my jets sitting on a bollard on the stern in the hot sun more than once, awaiting permission from the port to single up.


Fast forward a few years. I’d long since been laid off when they scrapped my ship out from under me and sent it to Bangladesh for dismantling. By the late 1980’s and into the mid-1990’s, I was traveling the world expediting tankers, surveying cargo and vetting ships for clients, among other things. Occasionally, I’d get sent to the port of Miami where, at Fisher Island, a client might be discharging a cargo of number six fuel oil to the storage tanks located there.


Attendance would include getting the vessel moving along as quickly as possible, ensuring accurate cargo measurement to maximize outturn during the custody transfer and making sure the ship stripped out as much cargo as was reachable by ship’s equipment. Typically, this involved being up at 3 AM (a.) to ensure that the shady vessel that my client had chartered for pennies on the dollar wasn’t stealing the fuel oil to make up for the voyage losses, (b.) that they were pumping to maximum extent of their equipment and complying with the C/P terms and (c.) exhorting them to strip and restrip to get all the cargo. All in all; it could be miserable work. But, I’m straying off course again …


On one such occasion, I checked in with my client at the dock’s dirty little phone booth (younger readers can see one of these devices if they Google it on the Internet) and the trader told me in no uncertain terms, “They gotta be done and out of there by 1600 hours. Don’t spend too much time stripping. The demurrage is killing me.” So, I advised him, “Look, the ship’s a dog [he knew this, of course], they’ve got generator problems and they’re only moving bulk at half rate. Stripping will be the least of your problems.” Slightly animated now (I had to hold the phone away from my ear because he was screaming so loudly), he shot back, “Listen to ME! Get that boat out of there. I don’t care how much is left on board. If they start moving cruise ships before you take last line, we’re doomed. Doomed!” … Geez, okay, okay, I thought. What a grouch.


As it turned out (this was entirely MY fault, of course), we didn’t make the cut-off. The hapless tanker missed its next ‘laycan,’ the trader ate some hefty demurrage and afterwards, for good measure, I suppose, he yelled at me a little more before heading off in a huff to his afternoon squash match. As it also turned out, awaiting our turn to leave (and watching the pretty parade of gleaming white hulls go by), we had plenty of time to strip tanks. We had a slight gain in outturn versus the bill of lading and very little measurable ROB. I was enormously pleased with myself. And, the trader could’ve cared less.


  • Now

The point of all of that dialogue is that back then, as now, the cruise industry in Florida carried a big stick. That became only too apparent in late July as cruise interests in the state pushed forward a petition with the local pilot rate board to reduce pilotage charges to cruise vessels by about 25 percent in the port of Miami. According to sources familiar with the petition and who had also attended the last meeting of the rate board, the issue stems from the calculation of pilot rates for cruise vessels, possibly a function of draft and gross tonnage. Hence, as I understand it, the proposed cuts aren’t related to pilotage rates as much as they are targeted to how those rates are determined.

And, the cuts could cost plenty. The new rates, if approved, would amount to a drop of as much as $1.6 million in revenues to the local pilot’s association. But, that’s just one part of the equation, say local and national stakeholders. The drop in pilotage fees only would apply to the cruise vessels. Reportedly, local cargo interests – who won’t get any relief – aren’t necessarily thrilled with the proposal, either. Beyond this, real concerns remain about what the loss in revenue might mean to safety, the number of pilots in rotation, and the upkeep of critical infrastructure and equipment – like the pilot boat, for example. Fair questions to ask, I would imagine.


According to the American Pilot Association’s Executive Director-General Counsel, Paul G. Kirchner, the petition is pending, but it has been approved by the Florida pilot commission. A final edict has not yet been issued. He told MarPro, “The Committee voted to accept the proposal,” adding, “We are disappointed with the decision. Inadequate consideration was given to what impact it [the rate reduction] will have on total service. Most stakeholders expect that the decision, if upheld, will be appealed.” Needless to add, APA is watching the wrangling closely. So, too, is the Florida-Caribbean Cruise Association (FCCA).


Michele Paige is the President of FCCA. Reached at her offices yesterday morning, she outlined the position of her cruise line stakeholders succinctly. Unapologetically, she says, “Today, we amount to just 35 percent of total ship traffic, but pay 70 percent of fees.” She added quickly, “The cargo interests don’t pay too little. That’s not what we are saying.” At the same time, says Paige, the cruise lines are in business to make money in an increasingly competitive field where their rates are not going up and operational costs certainly are. Beyond this, she added, “Pilot rates are out of control.”


  • Local Actions: National Implications

According to FCCA’s Paige, it certainly looks like the petition to reduce local pilot rates for cruise vessels will be made official. And, if you believe the APA, the decision will certainly be appealed. The pilots, like FCCA members, are also in business to make money – a lot of it. What happens next is anyone’s guess. But, as the old adage goes, ‘acting locally can sometimes lead to global implications.’ And, in an age where a typical U.S. state pilot can make upwards of $500,000 annually (not quite that much in Miami, apparently), there is often little sympathy for pilots during a rate increase request. And, yet they happen regularly. Which is why this particular situation in Miami is especially intriguing.


Cruise operators, according to the documents that I sighted, paid a whopping $6,551,866 in pilotage fees in that one area alone last year. That’s a lot of boat driving expertise, but is that too much to pay for it? That’s not for me to say. Would the application affect local safety? Again, that’s a matter for someone with more expertise to decide. But, those are the issues – and others like them – that are on the table. Arguably, the cruise industry asks a lot of local pilots. After all, nobody delays a cruise ship in port. Nobody.


I have been covering nationwide pilotage rate issues for more than fifteen years and I follow every story closely. But, this is a situation like no other that I have ever seen. Imagine, for example, trying to ram through a rate reduction in Louisiana or, for that matter, the Port of Houston. The collective peals of laughter would be loud enough to be heard all the way from the mighty Mississippi River, through Lake Charles and on to the Rio Grande. Or, maybe not. Actually, I don’t think there is too much laughter going on anywhere, as this particular scenario plays out.


In typical practice, rate changes usually follow a familiar pattern: a local state pilot association puts together the numbers on how much everybody else is making and then insists that they are underpaid. More often than not, a compromise rate increase is approved. This one is different. It is also playing out in Florida where the cruise industry is a big part of the local economy and, some would say, the proverbial 600-pound gorilla in the room. Well organized and well funded, they know how to push an agenda and get things done, especially in Florida. But, that’s just not possible for others – who organize in similar ways – to do the same thing, somewhere else. Or, is it? – MarPro.

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Joseph Keefe is the lead commentator of MaritimeProfessional.com. Additionally, he is Editor of both Maritime Professional and MarineNews print magazines. He can be reached at jkeefe@maritimeprofessional.com or at Keefe@marinelink.com. MaritimeProfessional.com is the largest business networking site devoted to the marine industry. Each day thousands of industry professionals around the world log on to network, connect, and communicate.