Terence Tsai began to hear about the growing labor crisis in shipping in a roundabout way. First, in March, an official at a ship management company in Hong Kong blurted out that a captain had deliberately hijacked a ship under his control in the middle of the ocean to protest the treatment of him- even and his crew.
Then, from the head of a major Asian shipping company, Tsai heard about a captain who wanted to attend his son’s funeral in Eastern Europe. It took over two months and a mountain of paperwork to overcome Covid-era port restrictions and travel complications to get him home.
As the stories began to pile up, Tsai, shipping industry analyst at London-based Fidelity International, began to realize he was beginning to see one of the pandemic’s most hidden horrors: how cargo ships turned away from the engines of world trade almost overnight. in floating prisons. There are hundreds of thousands of seafarers who have long awaited relief, a situation that the United Nations has called a humanitarian crisis and has consequences, Tsai realized, well beyond the shipping industry. .
“There are hardly any shipping analysts to shed light on this issue, as you would child labor in consumer industries or deforestation, or carbon,” said Tsai, 34 years. “At the end of the day, if I knew about this issue and didn’t raise it, what’s the point of having a shipping analyst?”
Tsai realized that the plight of stranded sailors had major implications for global trade and the health and safety of maritime workers. He shared his findings with some Fidelity fund managers as well as the ESG team at the company led by Jenn-Hui Tan, sparking a campaign to push portfolio companies to tackle the seafarer crisis.
Fidelity International, which oversees around $ 610 billion and is independent from Boston-based Fidelity Investments, wrote to more than 30 companies in the shipping and charter industries last year, asking them to fix the problem. The company was a single voice among investors pressing the issue until it assembled a coalition of peers managing more than $ 2 trillion in assets that recently sent a letter to the UN calling for action.
Fidelity wants seafarers to be officially designated as ‘key workers’ and has called for ‘the establishment of systematic processes to allow safe crew changes’, including the establishment of Covid-testing procedures. 19 which would allow for orderly crew changes and repatriation.
Tan, who has overseen Fidelity’s management and sustainable investment team since 2019, said the company is seeking “a broader structural resolution,” which will involve government intervention and international coordination. At the same time, Fidelity will use its influence with ship owners and individual charterers to “influence crew changes on a more micro level,” he said.
Tsai declined to identify the shipping companies that informed him of the crisis. Fidelity does not intend to disengage from companies that ignore the issue or refuse to help resolve the crisis, instead preferring to actively engage with their portfolio companies in the transportation, freight, transportation industries. airline and retail, Tan said.
“It was important to us when we made our commitment, that we didn’t try to portray this as a fault issue for any part of the value chain, in part because it is not.” said Tan, 42. . “If you think about it, this is something that is caused by many people defending their legitimate interests. This is because everyone acts within the system they have.
Shipping is a highly fragmented industry subject to a patchwork of regulations that dilute the responsibility for the welfare of ship workers. For example, Tan said port operators want to reduce the spread of Covid-19 to local communities, while charterers have contractual obligations and delivery dates to meet.
This has created a logistical nightmare for shipowners trying to bring the crew home or bring in replacements. Some ports require long quarantines for inbound sailors. Others block or restrict incoming ships that have recently changed crew. Meanwhile, travel schedules and border restrictions keep changing.
The Maritime Labor Convention, which has been ratified by more than 80 countries and underlies everything from insurance policies to shipping contracts, sets minimum working conditions for seafarers. But a Bloomberg survey in September revealed numerous examples of labor violations and abuses, including instances where seafarers had not been paid for months or had no open contracts.
Seafarers have become what the International Maritime Organization calls “collateral victims” of the Covid crisis. The IMO, which oversees global shipping, has called on all parties to prioritize crew changes for the health and safety of workers and industry.
While it is widely believed that this is indeed a crisis and that something needs to be done, there has been little action. Fidelity’s diplomatic approach and its reluctance to label certain parties as bad actors open the firm to a common criticism of investors who take social or political positions: that their rhetoric prevail over their actions.
Still, Fidelity’s shares contrast with those of other institutional investors, including BlackRock Inc., who have yet to comment publicly on the matter. Tan said he was not opposed, in general, to “denounce and shame,” citing commitments related to deforestation and the palm oil sector, where the company has taken a more assertive stance. However, he insists that such tactics would yield little result in the seafarer crisis.
“What we’re trying to do is highlight a huge risk that could happen,” such as a disastrous marine accident, Tan said. “It’s already a humanitarian crisis. It must not turn into an ecological crisis or an ocean crisis. “