We in maritime South Africa are geographically blessed. We have one of the longest coastlines of the African continent.  And more particularly, we occupy the prime spot at the intersection of maritime east and maritime west. Ours is one of the best ship supply and repair locations in the world â€" our ports should be the Corner Cafés of the African coast.

We have good basic port facilities, raw materials, good labour and sound expertise.  Our communications are world class, our commercial and legal infrastructure is well-developed; our banking system is one of the best â€" everything is punting for us.

So why is it that an estimated 4 000 ships of the total 18 000 ships that pass us by each year don’t call in and sample our wares?  Why do ships take bunker fuel off the coast of Angola and Mozambique? Why do they do their ship repairs and maintenance in the Gulf? Why do they stretch their voyages and take on victuals in Mauritius? And why do they avoid crew changes in our ports? Why do foreign ships have to carry
our own cargoes between our own ports?  Why did only 4 of the reported 134 rigs that passed the Cape in 2010 put into port for essential repairs and maintenance? And why do foreign shipbuilders have to build most of the region’s tugs and oilrigs?

Perhaps what we need is a fundamental change of attitude, from top to bottom.  Perhaps we need to accept that you can’t just sit on a busy corner and expect traffic to stop and hand you dollars for your
goods and services. You have to build a convenience store and make it attractive, welcoming, ompetent, easy to do business with â€" and you have to offer a full range of one-stop products needed by your market
at a competitive price for good quality and value. Ask any successful 24/7 retailer.  But you need to get the customer into your shop first. No-one will buy from outside.

There are signs that we are at last starting to re-grasp our maritime uniqueness and drive it with passion for the benefit of all South Africans. In the wake of SAMSA’s recent indefatigable efforts to steer this industry out of the doldrums, let us look at some ways in which we could re-tool and re-focus. Let’s start with some general principles.

• This is not new territory to be conquered: SA has more than one and a half million kilometres squared of EEZ (With another 1,8 km² area of continental shelf extension off our coast and around our deep S Atlantic Islands under claim.) and a coastline of 3 000 km, both of which are exclusively ours.
• But we have both obligations and rights over our coast and our seas: the zone is there to be protected and exploited.  Neither should be neglected.
• Much of what is done and not done in the maritime zone is subject to international obligation and concession. It is not an entirely unregulated area. It has a complex international legal regime to which we are required to pay more than lip service. 
• The wealth of opportunity in the maritime industry needs to be unlocked for the benefit of the nation as a whole.  
• We need to be unapologetic about looking to protect at least some of our own interests against international competition. We would not be alone in doing so. 
• Prioritized full central and local government support is required, from the top levels down. Government backing will however not be forthcoming until there is a change of mindset in Government recognising the potential of the maritime industry, and the responsibility that such potential brings with it. 
• We need commitment from labour â€" organised and on the shop floor. We are competing in a tight international market which expects well-trained and effective people on the job.
• We have an industry wonderfully well-suited to drive employment and transformation. We can enable transformation by easing the entry of Triple BEE newcomers into existing business structures. But to make full use of the opportunities the maritime zone offers, there will be a price. Short term incentives and even subsidisation would in the long term produce enormous dividends. In principle, these incentives should as far as possible consist of appropriate preferential funding (such as the IDC and the NEF), tax incentives and fiscal and legal reforms.
• Direct government involvement in the commerce of the maritime industry should generally be discouraged although the state should provide the infrastructure necessary to enable efficient operation of the industry through adequate provision of harbours, cargo storage and handling facilities, drydock and repair facilities, training institutions and dministrative support. In some instances, such as building or buying ships or floating docks, the state should take an initial stake with a defined exit strategy. 
• We need to create a supportive fiscal and legal business environment, free of bureaucracy, officialdom and officiousness, and utterly free of corruption and cronyism.
• We need to look forward with positivism, confidence and passion, knowing our strengths and our weaknesses in relation to our competition. 
• We should recognise the difference between wants and needs, and strivefor what is attainable rather than bang our heads against the brick walls of what is not, however noble or politically correct the idea may be.  
• We need to plan creatively and well in advance for future market needs, learning from past experience, but bold enough to look at inventive ways forward. 
• To succeed, we need to join hands with other sectors â€" especially those that generate the cargoes that are an important component of maritime endeavor. 
• And finally, we need less talk and more action. No more expensive policy studies and grand conferences. Rather let’s convene small, effective task groups to implement policy that is already firmly established in White Papers Sector Studies, the African Integrated
  Maritime Strategy 2050 and indeed in the African Maritime Charter. But let’s get to government talking (and listening) to business about how the state can help grow the industry â€" and how it is per haps inhibiting it. 

Now to some specifics.

The SA Ships’ Register It is a common myth that a viable maritime industry cannot happen without having a fleet of ships proudly flying the SA flag off their taffrails. The reality is that this is a want rather than a need. Most of what goes on in the maritime industry is blind to whether or not we have big ships
on our flag.  

The issues are simple: ships make their revenues from carrying cargo. To make a profit they need to operate in a fiscal and legal environment that is level with others competing for that same cargo. In shipspeak, this means shipowners in other countries do not pay income tax. They pay a flat rate tax based on the tonnage of their ships. And they employ crews that do not pay income tax either.

So as long as we in SA impose income tax on a shipowner, that shipowner will not be able to compete with others who only pay tonnage tax. That means SA ships would have to charge higher freights. And higher freights would mean that the exporters of our raw materials would have to get less for their products if they sell CIF so that they can nominate the ship that carries the cargo to its overseas buyers. Our iron ore exporters have recently posted a caution of lower earnings. They can’t afford to prune
their price. And if they insist on selling CIF instead of FOB where the buyer carries the cargo out on its own ships, those buyers will soon look elsewhere for product. Brazil beckons.

So the tonnage and income tax issues have to be resolved before we can consider foreign-going ships on our flag as a reality. As also must a technical legal problem in SA law where the mortgagee bank ranks much lower in the pile than it does in other shipping jurisdictions. This amending legislation
has been stuck in the pipeline for years.

And there are simple economies of scale that would make our small shipping lines, however indigenous, uncompetitive with the likes of Chinese shipping.

Against this caution we can distinguish foreign-going ships from those plying our coasts between our own ports. There we have a better chance.

Cabotage and Coastal Shipping
The key here is the principle of cabotage which allows a country to reserve to its own nationals the carriage of cargoes between its own ports and even the provision of services to ships in its own territory.

There are other countries and regions that have enacted cabotage protection. It would be a suitable catalyst to boost our coastal carriage and would at the same time allow smaller coasters to be built here, owned here, operated here, crewed here and serviced here. Because there is not the same outside competition as there is for foreigngoing trade, we can legitimately legislate that certain or all coastal cargoes should only be carried on SA ships. There are numerous â€˜ownership’ structures, even bareboat chartering, which will bring ships onto our flag. Even unfavourable tax structures from which coastal shipping lines will also suffer can be addressed with subsidies â€" at least until the tax issue is resolved.

Cabotage thus comes with a price tag â€" mostly subsidisation of set-up capital and tax. But it lends itself to the creation of an environment ideal for transformation and the formation of Triple BEE companies
funded by BEE sources with relatively cheap capital. It may in the future also be possible to finance an indigenous fleet through the envisaged BRICS bank, though it appears SA would have to match any BRICS investment with its own buy-in.  This would require serious money.

There is potential opportunity in developing a Pan African cabotage network in which African ships ply between African ports carrying Africa’s needs. Here we would have the edge on foreign competition
because our ships should be multipurpose shallow draft vessels specially suited to our markets. Pan African cabotage is the accepted policy of the African Maritime Charter. We should learn from the likes of Nigeria and take steps to implement it as soon as is practical.

But let’s get on with it because if you are to reserve coastal carriage for indigenous shipping lines, you need your own (or at least bareboat chartered, SA flagged) ships first. So it is a long process.

There is no doubt that whilst getting some big ships (other than our fishing fleet which never left) back onto our flag may present challenges, the sight of our flag again flying from even a small fleet will give a great boost to the industry. It is a strong want, even if it’s not quite a need. But it will take time, and the rest of the industry must not hang about waiting to hoist that flag. Frank discussion with successful SA bulk cargo carriers, beneficially owned and operated here though with their ships on foreign flags, is vital. Because these fleets are also â€˜home’ fleets, and should not be seen as pariahs.  They make shipping work.

SA as a Refreshment Station
This is what we were historically and geographically destined to be: suppliers of victuals, good quality (and soon low sulphur) bunker fuels, repairs and services, and crew changes to ships that should be
welcomed to our coasts and our ports.

There is much going on in this field, but much more could be done. We need to be innovative, mindful of the truism that you need first to get your customer into your shop. Transnet as the port operator is not a
private competitive company, nor should it pretend to be. It is an organ of state funded in part by our taxes. It should be within Transnet’s remit to serve and to offer incentives to help develop the industry â€" such as free calls at our ports to ships wanting bunkers only. Once they are alongside they will take on other stores. Next time they will do a crew change, and the next call may involve repairs. Loss leaders are what generates real business.

And there should be a comprehensive education programme within the ports and the Departments of Home Affairs, Customs & Excise and Health to ensure that visiting ships and their crews are made to
feel that they are valued customers. Bureaucratic attitudes and red tape policies don’t make us in any way a happy place to visit. Seamen and women are our customers too â€" not just their invisible shipowners.  Today’s seamen will be tomorrow’s decision makers.

Let’s have a task team to streamline the procedures and develop customer respect.

Marine Mining, Oil and Gas
This is a key area of growth and opportunity for South Africans. Chris Sparg of DORMAC reported to the recent Nautical Institute Seminar in Cape Town that his company’s oil and gas projects in 2012 had
a value of some R380m and generated 1,4m man hours. This is true job and skills creation, but there is insufficient central government dialogue, let alone support. Not enough drydocks, not enough cranes, not enough repair berths and excessively high port costs â€" all are holding us back. Over a hundred offshore rigs are to be built and erected in our and neighbouring waters.  Angola, Namibia and even Mozambique are poised to take this business. South Africa needs immediate steps to ensure that its shipbuilding and repair industry is properly geared up and supported to claim at least part of this construction and maintenance.  For instance, the government should stipulate as a term of any marine
prospecting licence given to anyone, local or foreign, that part of the rig construction is required to be put out on tender to the local shipbuilding market. In relation to foreign eg Mozambique rigs, we need to be
able to compete internationally. This will be difficult, but it may be possible for the government to negotiate a SA construction term as part of future contracts to buy gas from Mozambique, Namibia and Angola.

Similarly, concessions for local minerals, oil and gas exploitation should contain a term requiring that support ships need to be at least part locally built and repaired.

To this end similar stimulation and subsidy, tax breaks and other incentives should be available to the small ship building industry. Where appropriate, the government should consider chartering in or buying
floating dry docks that can be placed in a place suitable for the shipbuilding industry to grow and provide jobs. Areas such as Saldanha Bay or even within Simon’s Town dockyard are possible. All sheltered waters should be examined to accommodate this possibility. Clearly any new areas would have to be in close proximity to labour and materials. TPNA’s history of graving and floating drydock facilities is dismal. And its priority booking for state ships loses our industry far too many potential jobs.

If properly set up, there is no reason why we should not be competing with other countries for a share of the shipping business connected with the massive oil and gas industry potential that Africa has.
Some companies have done sterling work, notwithstanding, and we are already building excellent small ships. Let’s make sure we build on those foundations. Many jobs and skills would follow meaningful
growth.

Crewing and Training
Our citizens have one big advantage over many others in the maritime crew pool â€" they speak competent English. The maritime industry requires a high level of training for both sea and shore service. Full
provincial and national support should be given to the likes of the Simon’s Town maritime school and those CPUTs putting on maritime programmes. Use those who know the industry â€" the likes of Brian Ingpen and Simon Pearson whose lives are steeped in maritime training to run with a small task team to explore these possibilities.  Private organisations like the Institute of Chartered Shipbrokers are playing a significant role and should be encouraged.

One important point though: developing our crew programme does not depend on our having ships on our flag (though it would help). The SA Agulhas is a brilliant move, but we do and can contract with our
trading partners to provide berths for cadets to do their required seatime. We could also do without one ministry not knowing what the other is up to: the DAFF debacle with the marine patrol vessels lost us more than 100 seagoing jobs in one spectacular bureaucratic bungle. It’s all a question of effective coordination of the industry.

Casualty Response and Policing
South Africa in the 1970’s developed one of the first and most effective marine casualty response packages â€" of which the standby Safmarine tugs were an integral and pioneering component. Casualty response requires immediate, informed, experienced and effective action. It is not a training ground for hopefuls.

We should take great and I suggest conservative care to nurture this expertise and capability, built up over decades, not try to force change in favour of ill-equipped and poorly prepared alternatives. Change, by all means. But only if that change is wellconsidered and for the better. The stakes are just too high.

And if the government does not soon come to the oil pollution compensation party and bring the Fund Conventions into effect, all gains achieved in developing the maritime sector could be wasted on uninsured clean-up costs. This remains a disgrace.

Maritime Tourism, Fishing and Aquaculture
These are areas that could also serve local transformation imperatives. Why can’t we bring in fisherfolk who have lost their livelihood to over exploitation or poor resource management to create a small scale coastal tourist experience? With BEE funding.  What a challenge for the West Coast.

Maritime Administration
SAMSA’s main brief is safety and the promotion of the country’s maritime interests. In reality it has become the most effective means of administering all aspects of the maritime industry. If there can’t be a dedicated maritime ministry, second prize would be re-deploying all existing remnants of the old Marine Division of the National Department of Transport to SAMSA, rebranding it as the South African Maritime Administration and Safety Authority, and elevating its CEO to Director General in transport,
responsible for maritime affairs generally. That way we may achieve better cohesion and co-operation with other ministries.

Re-Kindling Maritime Spirit
We already have a maritime industry served by many dedicated and skilled people. SAMSA is doing a great job in rekindling a maritime flame right from schools up. SAMSA needs all the support we can give it. And while we are about it, let’s immediately re-open at least some areas of our now tight closed docks to those who might still want to ‘go down to the sea in ships’. And let good service lead to all our ports
being known world-wide as Ports of Convenience.

By John Hare, Emeritus
Professor of Shipping Law, University of Cape Town.

This is an edited and updated version of an article first published on the Insight page of the Cape Times
on 8 August 2012.