For some, time to abandon ship Freighters: The economic crisis in Asia has eroded profits of dry-bulk shipping, bankrupting some owners of older vessels and leaving crews stranded in ports far from home.

Sun Journal

December 26, 1998|By Thomas S. Mulligan | Thomas S. Mulligan,LOS ANGELES TIMES

NEW YORK -- The wreckage of the Asian economy is washing up on American shores.

Two days before Thanksgiving, the Pakistani freighter Delta Pride limped into Brownsville, Texas, abandoned by its bankrupt owners, its 22-member crew beset by lice and scabies and subsisting on rainwater and whatever small fish could be caught from the deck.

The people of Brownsville, in the spirit of the holidays, have rallied around the crewmen with donations of food, fuel and clothing. Nevertheless, the Pakistani mariners remain stranded on the ship half a world away from home.

International shipping experts say an increasing number of dry-bulk freighters and their crews are in the same boat. The economic crisis that has swept Asia for the last year has beaten down demand for the raw materials carried by the ships, which transport such cargoes as coal, grain and iron ore.

Some of the pain that dry-bulk firms are feeling stems from the nature of the business. Dry-bulk shipping is a different creature from container shipping.

Container ships sail on routes and timetables plotted months in advance to meet manufacturers' schedules for delivering cars in time for the new model year or toys for the holiday season. The vessels are standardized, and the trade is dominated by a

handful of huge companies, such as Denmark's Maersk Line, Taiwan's Evergreen Marine and South Korea's Hanjin Shipping Co.

Vulnerable to business cycle

The dry-bulk business, by contrast, is more entrepreneurial and more improvisational. It is also more prone to boom-and-bust cycles because the relatively low cost of getting into the business makes price wars and overcapacity recurrent problems.

"It's really the scruffy end of the shipping market," says Mark Dickinson, an official of the British-based maritime union, International Transport Workers Federation.

The ships range widely in size, configuration and age. Only about half operate under long-term charters. The rest zigzag around the globe taking cargoes where they find them, fertilizer one trip, grain or mineral ore the next.

Ahmed Maqsood took the helm of the Delta Pride 18 months ago in Rotterdam, Netherlands, where the vessel was discharging animal feed. He then picked up scrap iron in Liverpool and took it to South Korea, loaded coal in China and dropped it off in Bulgaria, and hauled bauxite from West Africa to Port Comfort, Texas.

After discharging its load, a ship may hover offshore for weeks, waiting to swoop into port for a new cargo, like a taxicab cutting across traffic to grab a fare. Flexibility pays.

"We have all the world's charts. We can go anywhere," Maqsood says.

The Asian turmoil, along with a global oversupply of ships, has constricted freight rates to the point that marginal operators are unable to cover crew wages and bunker oil -- let alone keep up with their loan payments.

The 738-foot Delta Pride had fled the Gulf Coast port of Tampico, Mexico, under cover of darkness after running up thousands of dollars in bills. Maqsood, 36, had been forced to surrender the freighter's documents, including the crew members' identification papers, to a Mexican shipping agent as collateral for credit to buy food.

Now the Delta Pride and its crew lie at anchor off the southern tip of Texas while banks, courts, insurers and diplomats debate their fate.

"Many of my crew have not been paid in two years; many have not been home in 18 to 20 months," Maqsood says in a telephone interview. "We have been living like prisoners at sea."

Logic of abandonment

In cases such as that of the Delta Pride, the owners either cannot afford to bring their vessels home from distant ports or don't see a profit in doing so. In fact, the Delta Pride's four sister ships of Pakistan's once-pre-eminent Tristar Shipping Lines were similarly stranded in Panama, Bangladesh, China and South Africa.

And in Long Beach, Calif., this month, the decrepit bulk freighter Fotini, seized by the Coast Guard on Oct. 1, was sold for $250,000 scrap value -- apparently less than the amount of claims against it for back wages, maritime supplies and medical assistance for its mistreated crew.

Douglas Stevenson of the Seamen's Church Institute in New York City says his organization has been asked for humanitarian and legal aid in no fewer than 14 freighter abandonments around the world this year -- more than twice as many as in any previous year this decade.

The International Transport Workers Federation has counted 200 abandonments worldwide since 1996, including about 70 so far this year.

Before the Asian crisis hit last year, trade worldwide had been growing at an annual clip of better than 6 percent in the 1990s. In such a healthy environment, credit flows freely, encouraging newcomers into the shipping business, often in aging secondhand vessels such as the 26-year-old Delta Pride.

No relief in sight

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