Sunday, June 12, 2016
Adieu NOL: Sale of national shipping line will have implications for Civil Resource drawer plans
The sale of national shipping line, Neptune Orient Lines (NOL), to CMA CGM of France will have significant, long-term implications for Singapore's sealift capabilities using civil resources (CR) provided by NOL's fleet of merchant hulls.
With the 88 ships on NOL's books now controlled by the French shipping giant, Singapore will have to reassess the type, number and availability of sealift assets that can be called upon to serve the Lion City in times of need.
As we rethink what's available for carrying cargo by sea, CR drawer plans will need to be reassessed.
We should also weigh the implications of the loss of skilled professionals that constitute a national shipping line.
Merchant vessels from many shipping firms ply the world's sea lanes.
A national shipping line is different not just from its ownership, but the company's ethos and its raison d'etre. A company branded with the "national" moniker is hard-wired towards serving and supporting national causes for the benefit of its citizenry - even at the expense of the company's coffers should the occasion demand it.
To be blunt, if there is a war and the Singapore Armed Forces (SAF) needs to enlist the support of NOL, one would expect the national shipping line to step forward and contribute to the pool of CR assets available to the Republic of Singapore Navy (RSN) - even at the risk of losing some hulls to enemy action.
One cannot expect the same once NOL is privatised. Such is the reality of the hurly burly of the commercial world.
The loss of shipping professionals is perhaps harder to replace than lost hulls. The latter can be filled, to some degree, by time charter.
A parallel already exists in the aviation world. For example, the Singapore Ministry of Defence (MINDEF) regularly charters foreign airlines to fly SAF personnel to Exercise Wallaby in Queensland, Australia, and does not rely solely on Singapore Airlines to do so.
The know-how and expertise needed to operate a shipping line with a global reach is invaluable. Alongside the operational skill sets, the exposure to the latest trends in cargo management and ship designs contribute immeasurably to Singapore's ability to marshal and deploy CR assets at sea.
Throughout NOL's long and distinguished history, NOL's shipping operations team would have witnessed the gradual transition from break bulk to container ships. Along the way, they would have gained immense experience in the fast turnaround of cargo ships and the handling of cargo manifests.
What would be commonsense to shipping executives was learned the hard way by military forces. For instance, the failure to combat load ships - last in, first out - for the Gallipoli landings during the First World War resulted in the botched delivery of war materiel when equipment that should have hit the beach first was stowed away at the lower decks of cargo ships.
It will be obvious that such skill sets are especially relevant to naval logistics too.
Indeed, Republic of Air Force (RSAF) air warfare professionals are known to have visited a certain global logistics company to see firsthand how the hub and spoke concept and efficient logistics management can turnaround cargo freighters quickly. Click here for more.
We should be mindful that NOL's sale does not eventually erode our national ability to count on Singaporeans with the experience, exposure and commitment to serve in the specialised domain of maritime logistics. The RSN's partnership with the next in line, PIL, should therefore be carefully nurtured.
Logistics matters aside, NOL's new ownership would also mean one less career option for SAF regulars looking to transition to civvie street by serving government-linked entities. It is a pity, more so because the synergy that has been forged over the years between MINDEF/SAF and NOL will eventually fade away.
We won't feel the impact of what's been flagged out above immediately.
Neither will the quality of life for you and I be adversely affected now that NOL has come under French control.
We don't feel it as individuals because many Singaporeans don't give a hoot about sea trade and how the city-state depends so heavily on the free and unrestricted movement of cargo by sea.
Had Singapore Airlines been sold, one would imagine a far more robust response from Singaporeans than the sale of NOL - which has resulted in hardly a squeak in the Lion City.
Seen with a wider aperture, the sale of NOL is yet another a reminder of how our rice bowl is never guaranteed nor easy.
Amid growing competition, NOL lacked the critical mass to compete with bigger players who can do the job more efficiently. NOL's stakeholders therefore charted a different course for what was once Singapore's largest shipping line.
The narrative of seeing a national jewel bow out after mounting losses from a failure to achieve better productivity and work excellence is not new.
Neither will it be unique to NOL.
Posted by David Boey at 9:00 AM