URSABLOG: Adding Value

It was a beautiful English early summer afternoon, and we were sitting in chairs on the green abundant grass of a well-tended lawn around a table laden with empty plates and full glasses, digesting the meal just eaten, and chatting openly and freely, pampered by the peaceful weather, lulled by the good humour and congeniality of the company, and lubricated by the excellent wine served. Young children ran around playing with each other, the older children were listlessly talking amongst themselves, wondering when they would be released from this enforced tedium and set free to hang out with their friends or watch television; this was in the time before the ubiquitous smartphone.

I was one of the older, older children, in my mid-twenties, able to join in the conversation of the more learned adults, freshly employed in Liverpool and about to embark on the long road of a career in ship sale and purchase shipbroking. I didn’t think much of the road ahead right then however; I was simply full of the enthusiasm of an explorer finding new worlds, and new ways of doing things.

Out of politeness I expect, I was asked by one of the company what I was doing now. I explained and this response brought curious enquiries of what that meant, what types of ships I bought and sold, who were the buyers and sellers, and so on. It was a time when the word ‘shipping’ was not confused with DHL deliveries, and phrases like ‘supply chain bottlenecks’ had not entered the common language. Shipping meant ships, as generally understood by all, and it was enough to spark reminiscences, anecdotes and opinions that have stayed with me.

My uncle told me of the time when as a teenager he joined what was known then as the merchant navy, as a cadet on a worldwide trading tanker owned by Shell. This was in the mid 50s, when the size of these tankers was miniscule compared with what we have become used to: 18,000 deadweight, when the biggest in the fleet were around 45,000 deadweight, what we would now call an MR, a medium range tanker. It traded on a round the world route, loading and discharging parcels of petroleum products in various ports, setting off from the UK, and going east through the Suez, stopping off at various ports – colonial or ex-colonial possessions, friendly countries and not so friendly ones (this was before the Suez crisis) – and then along and around the Indian coast, through Singapore, South East Asia an then across the Pacific, through the Panama Canal, around the Caribbean islands and back to the UK.

He did not last as a seafarer: he was (and remains it must be said) a devout evangelical Christian, and found the life on board less than congenial to people with strong, moral beliefs like his. In any case, even in the days when you could sail on a British flag ship where all the crew were of the same nationality, and with British maritime traditions still strong, he found the work disorienting and hard, and chose a life ashore instead. Nonetheless he had fond memories of certain parts of the work and the voyage, and even if he didn’t sample the tastes of the fleshpots of exotic ports, he did get to see a great deal more of the world than many of his age at the time. He eventually became an evangelical missionary sent by his church, as he said later, “to convert Catholics to Christianity” and if the consequences of those missions were not what he expected at the time, that is another story for another time.

Other members of the company shared their own anecdotes and stories of their contact with the sea, some simple memories such as being “sick as a dog” on a channel crossing, others more complicated tales of struggling to get back to England from the Middle East as a child before the Second World War broke out. All of them were listened to with polite interest as the subject of the sea and shipping provided a new focus to the conversation, even if it had little to do with the business of shipping itself.

Then one of us interrupted the gentle flow of conversation with the comment: “I don’t really like shipping as a business. It doesn’t create anything, like manufacturing, or agriculture, it’s just a tool in the service of imperialists and capitalists intent on the exploitation of the poor. It doesn’t add anything of value to the world.” It may surprise you to learn that this statement did not come from a student, or even from what used to be called an angry young man. It came from a Catholic priest, a long and dear friend of the family. He was a rather strange mixture of a scholar of St Thomas Aquinas with a strong line in Marxist critical theory. I suspect too that his bias towards manufacturing was because he was a child of Manchester, and looked down on the more mercantile dealings of its great rival Liverpool. An intellectual giant certainly, but nonetheless great fun and a great drinker too.

This contribution to the conversation rather disturbed the lazy flow of the afternoon, and the others tried to guide it back to safer waters or to suggest that this was rather extreme thinking. In any case a new, lighter subject of discussion was found, and laughter, story-telling and gentle teasing once again dominated the afternoon as the sun slipped slowly down, the shadows on the lawns lengthened until tea was brought out to refresh us.

Of course at that age and time I was in no place to argue with our Marxist friend. Such was the respect and affection our family had for him, that to openly disagree or challenge him intellectually would have not only been the height of impoliteness, but also the height of folly, so sharp was his mind, honed on the whetstone of dialectical rhetoric. I should have course replied with the fact that shipping is a service industry, and as it is dependent on the demand derived from trade it can hardly be blamed for the sins of imperialist capitalism, or the exploitation of the world proletariat, but I did not have either that knowledge or even those opinions back then, although perhaps I should have. I certainly didn’t have the courage. In any case I was too enthralled with learning about ships, contracts and trying to make deals to delve too deeply into the knowledge and understanding that I have acquired since.

That afternoon came to mind recently – maybe because last weekend I was in the same garden drinking wine with my family – when someone else half-jokingly remarked that shipbrokers add little value to the shipping industry and just take large commissions simply for hanging out with the right people. It was the phrase “add little value” that really irritated me, as if brokers are just there to extract a little bit of the money that passes from one party to another, or exist to exploit poor innocent shipowners.

The simple reply I gave was the usual:

– in a fragmented global market brokers are needed to make sure the right opportunities for buyers and sellers are made available to as many interested parties as possible to ensure the right value has been allocated

– in the nearest practical model that exists of the theory of ‘perfect competition’ in the work to create deals – and earn a commission of course – brokers as a necessary side-effect make sure that accurate information is disseminated efficiently

– compared to the fees commanded by financial professions in multi-million dollar transactions, commissions for our professional services are tiny

– we not only find buyers and sellers for our clients’ needs, but we arrange inspections, negotiate contracts, make sure everything is in place for delivery of the ships, i.e. the successful fulfilment of the contracts themselves, and if we don’t succeed, we don’t get paid.

– therefore, we are not just middlemen and women looking for money for nothing.

Ah, my heart bleeds, I can hear you say. Well, I’m not asking for sympathy either for myself or my brother and sister brokers, but those of us in the business know it is not always, if ever, an easy ride.

But to go back to shipping itself, it strikes me how much the world has changed since that afternoon thirty years ago, and in fact how much shipping played a part in that change. I appreciate that many readers were not even on the planet back then, and probably therefore can’t conceive of a time when things like the internet, mobile phones – not just being able to call anyone wherever you are, but living your life though it – Amazon, Google, social media did not exist. Imagine a time without easy, quick and cheap delivery of whatever you want, when research meant sitting in libraries and trying to find books rather than looking at computer screens. Imagine a time without all of the benefits of world trade, whilst even now our political masters try and turn back the clock in search for votes and legitimacy from those angry, disoriented or confused about what has come about, not just because of trade, but in spite of trade too.

Shipping is cheap – despite all the warnings, higher freight rates do not, and have not, influenced price rises and therefore inflation – and convenient, and ultimately flexible as despite what the last five years has thrown at the world (Covid, war, the closure of the Suez Canal and attacks on ships in the Red Sea and the Gulf of Aden to name but a few) the only places where there have been ‘supply chain bottle necks’ have been on land.

Shipping adds value, and it creates connections, meaning and wealth for those that use its services, far more in fact than those that provide the services. Despite this shipping remains a target for those that have other axes to grind. Let them grind, shipping isn’t going away any time soon; it is far too valuable for the world as a whole to do otherwise.

Simon Ward