Revealed: The ghost fleet of the recession anchored just east of Singapore
BY Simon Parry  /  28th September 2009

The tropical waters that lap the jungle shores of southern Malaysia could not be described as a paradisical shimmering turquoise. They are more of a dark, soupy green. They also carry a suspicious smell. Not that this is of any concern to the lone Indian face that has just peeped anxiously down at me from the rusting deck of a towering container ship; he is more disturbed by the fact that I may be a pirate, which, right now, on top of everything else, is the last thing he needs.

His appearance, in a peaked cap and uniform, seems rather odd; an officer without a crew. But there is something slightly odder about the vast distance between my jolly boat and his lofty position, which I can’t immediately put my finger on. Then I have it – his 750ft-long merchant vessel is standing absurdly high in the water. The low waves don’t even bother the lowest mark on its Plimsoll line. It’s the same with all the ships parked here, and there are a lot of them. Close to 500. An armada of freighters with no cargo, no crew, and without a destination between them.

My ramshackle wooden fishing boat has floated perilously close to this giant sheet of steel. But the face is clearly more scared of me than I am of him. He shoos me away and scurries back into the vastness of his ship. His footsteps leave an echo behind them. Navigating a precarious course around the hull of this Panama-registered hulk, I reach its bow and notice something else extraordinary. It is tied side by side to a container ship of almost the same size. The mighty sister ship sits empty, high in the water again, with apparently only the sailor and a few lengths of rope for company.

Nearby, as we meander in searing midday heat and dripping humidity between the hulls of the silent armada, a young European officer peers at us from the bridge of an oil tanker owned by the world’s biggest container shipping line, Maersk. We circle and ask to go on board, but are waved away by two Indian crewmen who appear to be the only other people on the ship. ‘They are telling us to go away,’ the boat driver explains. ‘No one is supposed to be here. They are very frightened of pirates.’

Here, on a sleepy stretch of shoreline at the far end of Asia, is surely the biggest and most secretive gathering of ships in maritime history. Their numbers are equivalent to the entire British and American navies combined; their tonnage is far greater. Container ships, bulk carriers, oil tankers – all should be steaming fully laden between China, Britain, Europe and the US, stocking camera shops, PC Worlds and Argos depots ahead of the retail pandemonium of 2009. But their water has been stolen.

They are a powerful and tangible representation of the hurricanes that have been wrought by the global economic crisis; an iron curtain drawn along the coastline of the southern edge of Malaysia’s rural Johor state, 50 miles east of Singapore harbour. It is so far off the beaten track that nobody ever really comes close, which is why these ships are here. The world’s ship owners and government economists would prefer you not to see this symbol of the depths of the plague still crippling the world’s economies.


So they have been quietly retired to this equatorial backwater, to be maintained only by a handful of bored sailors. The skeleton crews are left alone to fend off the ever-present threats of piracy and collisions in the congested waters as the hulls gather rust and seaweed at what should be their busiest time of year. Local fisherman Ah Wat, 42, who for more than 20 years has made a living fishing for prawns from his home in Sungai Rengit, says: ‘Before, there was nothing out there – just sea. Then the big ships just suddenly came one day, and every day there are more of them. Some of them stay for a few weeks and then go away. But most of them just stay. You used to look from here straight over to Indonesia and see nothing but a few passing boats. Now you can no longer see the horizon.’

The size of the idle fleet becomes more palpable when the ships’ lights are switched on after sunset. From the small fishing villages that dot the coastline, a seemingly endless blaze of light stretches from one end of the horizon to another. Standing in the darkness among the palm trees and bamboo huts, as calls to prayer ring out from mosques further inland, is a surreal and strangely disorientating experience. It makes you feel as if you are adrift on a dark sea, staring at a city of light. Ah Wat says: ‘We don’t understand why they are here. There are so many ships but no one seems to be on board. When we sail past them in our fishing boats we never see anyone. They are like real ghost ships and some people are scared of them. They believe they may bring a curse with them and that there may be bad spirits on the ships.’

As daylight creeps across the waters, flags of convenience from destinations such as Panama and the Bahamas become visible. In reality, though, these vessels belong to some of the world’s biggest Western shipping companies. And the sickness that has ravaged them began far away – in London, where the industry’s heart beats, and where the plummeting profits and hugely reduced cargo prices are most keenly felt. The Aframax-class oil tanker is the camel of the world’s high seas. By definition, it is smaller than 132,000 tons deadweight and with a breadth above 106ft. It is used in the basins of the Black Sea, the North Sea, the Caribbean Sea, the China Sea and the Mediterranean – or anywhere where non-OPEC exporting countries have harbours and canals too small to accommodate very large crude carriers (VLCC) or ultra-large crude carriers (ULCCs). The term is based on the Average Freight Rate Assessment (AFRA) tanker rate system and is an industry standard.

You may wish to know this because, if ever you had an irrational desire to charter one, now would be the time. This time last year, an Aframax tanker capable of carrying 80,000 tons of cargo would cost £31,000 a day ($50,000). Now it is about £3,400 ($5,500). This is why the chilliest financial winds anywhere in the City of London are to be found blowing through its 400-plus shipping brokers. Between them, they manage about half of the world’s chartering business. The bonuses are long gone. The last to feel the tail of the economic whiplash, they – and their insurers and lawyers – await a wave of redundancies and business failures in the next six months. Commerce is contracting, fleets rust away – yet new ship-builds ordered years ago are still coming on stream.

Just 12 months ago these financiers and brokers were enjoying fat bonuses as they traded cargo space. But nobody wants the space any more, and those that still need to ship goods across the world are demanding vast reductions in price. Do not tell these men and women about green shoots of recovery. As Briton Tim Huxley, one of Asia’s leading ship brokers, says, if the world is really pulling itself out of recession, then all these idle ships should be back on the move. ‘This is the time of year when everyone is doing all the Christmas stuff,’ he points out. ‘A couple of years ago those ships would have been steaming back and forth, going at full speed. But now you’ve got something like 12 per cent of the world’s container ships doing nothing.’

Aframaxes are oil bearers. But the slump is industry-wide. The cost of sending a 40ft steel container of merchandise from China to the UK has fallen from £850 plus fuel charges last year to £180 this year. The cost of chartering an entire bulk freighter suitable for carrying raw materials has plunged even further, from close to £185,000 ($300,000) last summer to an incredible £6,100 ($10,000) earlier this year. Business for bulk carriers has picked up slightly in recent months, largely because of China’s rediscovered appetite for raw materials such as iron ore, says Huxley. But this is a small part of international trade, and the prospects for the container ships remain bleak.

Some experts believe the ratio of container ships sitting idle could rise to 25 per cent within two years in an extraordinary downturn that shipping giant Maersk has called a ‘crisis of historic dimensions’. Last month the company reported its first half-year loss in its 105-year history. Martin Stopford, managing director of Clarksons, London’s biggest ship broker, says container shipping has been hit particularly hard: ‘In 2006 and 2007 trade was growing at 11 per cent. In 2008 it slowed down by 4.7 per cent. This year we think it might go down by as much as eight per cent. If it costs £7,000 a day to put the ship to sea and if you only get £6,000 a day, than you have got a decision to make. Yet at the same time, the supply of container ships is growing. This year, supply could be up by around 12 per cent and demand is down by eight per cent. Twenty per cent spare is a lot of spare of anything – and it’s come out of nowhere.’ Stopford explains: ‘Globalisation and shipping go hand in hand. Worldwide, we ship about 8.2 billion tons of cargo a year. That’s more than one ton per person and probably two to three tons for richer people like us in the West. If the total goes down by five per cent or so, that’s a lot of cargo that isn’t moving.’

Three thousand miles north-east of the ghost fleet of Johor, the shipbuilding capital of the world rocks to an unpunctuated chorus of hammer-guns blasting rivets the size of dustbin lids into shining steel panels that are then lowered onto the decks of massive new vessels. As the shipping industry teeters on the brink of collapse, the activity at boatyards like Mokpo and Ulsan in South Korea all looks like a sick joke. But the workers in these bustling shipyards, who teem around giant tankers and mega-vessels the length of several football pitches and capable of carrying 10,000 or more containers each, have no choice; they are trapped in a cruel time warp.

A decade ago, South Korean President Kim Dae-jung (who died last month) issued a decree to his industrial captains: he wished to make his nation the market leader in shipbuilding. He knew the market intimately. Before entering politics, he studied economics and worked for a Japanese-owned freight-shipping business. Within a few years he was heading his own business, starting out with a fleet of nine ships. Thus, by 2004, Kim Dae-jung’s presidential vision was made real. His country’s low-cost yards were winning 40 per cent of world orders, with Japan second with 24 per cent and China way behind on 14 per cent.

But shipbuilding is a horrendously hard market to plan. There is a three-year lag between the placing of an order and the delivery of a ship. With contracts signed, down-payments made and work under way, stopping work on a new ship is the economic equivalent of trying to change direction in an ocean liner travelling at full speed towards an iceberg. Thus the labours of today’s Korean shipbuilders merely represent the completion of contracts ordered in the fat years of 2006 and 2007. Those ships will now sail out into a global economy that no longer wants them. Maersk announced last week that it was renegotiating terms and prices with Asian shipyards for 39 ordered tankers and gas carriers. One of the company’s executives, Kristian Morch, said the shipping industry was in uncharted waters. As he told the global shipping newspaper Lloyd’s List only last week: ‘You have a contraction of oil demand, you have a falling world economy and you have a contraction of financing capabilities – and at the same time as a lot of new ships are being delivered.’

Demand peaked in 2005 when, with surplus tonnage worldwide standing at just 0.7 per cent, ship owners raced to order, fearing docks and berths at major shipyards would soon be fully booked. That spell of ‘panic buying’ has heightened today’s alarming mismatch between supply and demand. Keith Wallis, East Asia editor of Lloyd’s List, says, ‘There was an ordering frenzy on all types of vessel, particularly container ships, because of the booming trade between Asia and Europe and the United States. It was fuelled in particular by consumer demand in the UK, Europe and North America, as well as the demand for raw materials from China.’

Orders for most existing ships to be delivered within the next six to nine months would be honoured, he predicted, and the ships would go into service at the expense of older vessels in the fleet, which would be scrapped or end up anchored off places like southern Malaysia. But, says Wallis, ‘some ship owners won’t be able to pay their final instalments when the vessels are completed. Normally, they pay ten per cent down when they order the ship and there are three or four stages of payment. But 50 to 60 per cent is paid on delivery.’

South Korean shipyard Hanjin Heavy Industries last week said it had been forced to put up for sale three container ships ordered at a cost of £60 million ($100 million) by the Iranian state shipping line after the Iranians said they could not pay the bill. ‘The prospects for shipyards are bleak, particularly for the South Koreans, where they have a high proportion of foreign orders. Whole communities in places like Mokpo and Ulsan are involved in shipbuilding and there is a lot of sub-contracting to local companies,’ Wallis says. ‘So far the shipyards are continuing to work, but the problems will start to emerge next year and certainly in 2011, because that is when the current orders will have been delivered. There have hardly been any new orders in the past year. In 2011, the shipyards will simply run out of ships to build.’

Christopher Palsson, a senior consultant at London-based Lloyd’s Register-Fairplay Research, believes the situation will worsen before it gets better. ‘Some ships will be sold for demolition but the net balance will be even further pressure on the freight rates and the market itself. A lot of ship owners and operators are going to find themselves in a very difficult situation.’ The current downturn is the worst in living memory and more severe even than the slump of the early Eighties, Palsson believes. ‘Back then the majority of the crash was for tankers carrying crude oil. Today we have almost every aspect of shipping affected – bulk carriers, tankers, container carriers… the lot. It is a much wider-spread situation that we have today. China was not a major player in the world economy at that time. Neither was India. We had the Soviet Union. We had shipbuilding in the United Kingdom and Europe. But then, back in those days the world was a very different place.’

Stranded Russian sailors go on a hunger strike in Dubai
Shipping News / October 4, 2009

Three Russian seamen from a vessel stranded in the port of Dubai began a hunger strike on Friday, an International Transport Workers’ Federation official said. The Magdalena, owned by a German company and flying the flag of Antigua and Barbuda, has been anchored in Dubai since early August. The vessel’s owner reportedly owes the crew $230,000 in wage arrears. Onboard are nine Russians, two Ukrainians, four citizens of the Philippines, and one Estonian. “The captain of the vessel said that three crew members… went on hunger strike. The vessel’s owner has also been informed,” Pyotr Osichansky said.

The seamen demand repatriation and the repayment of wage arrears, and refuse to perform their duties. In early September the crew asked for international aid as they were running out of food and water. A week later two weeks’ worth of water supplies, provisions for three weeks, and fuel for 50 days were provided. A total of 23 Russian sailors are currently in a similar situation on two other vessels – the Piryit bulk carrier, which is stranded near the port of Cristobal in Panama, and the Southern Pearl vessel is anchored off the Bulgarian coast.

Crew of Ukrainian Freighter Stranded in New York Harbor
BY Robert D. McFadden / August 3, 1999

For three and a half months, a Ukrainian freighter has been stranded in New York Harbor, her cargo holds and fuel tanks empty, her master awaiting orders that never come, her 26-member crew idle and recently unpaid, food and supplies dwindling — a ship dead in the water, caught in a ghostly maritime limbo. Riding at anchor in Gravesend Bay off Brooklyn, a mile southeast of the Verrazano-Narrows Bridge, the 458-foot merchantman, Banner of October, has repeatedly requested supplies from its owner’s American representative but has received inadequate stores of food, water and medicine, and no shipping orders.

”I said to owners, please, please, people like eating,” the master, Capt. Aleksandr Golub, 62, said in a shipboard interview last night. A seamen’s welfare organization, alerted earlier by the Coast Guard to the ship’s plight, had brought aboard an emergency two-day supply of chicken, beef, fruits and vegetables for the crew of 23 men and 3 women, all Ukrainians. ”It’s bad,” said Valery Ignatov, the seafarers’ union representative, when asked about conditions aboard the weather-beaten black and red freighter, which had carried used cars and trucks from New York and Miami to the Dominican Republic and Haiti in recent years. ”No food. No water. No oil. Pay late.”

Captain Golub attributed the problems of his ship to the financial troubles of its owner, the state-run Azov Shipping Company, of Mariupol, Ukraine. He also attributed the suicide of his predecessor as ship’s master to depression over company turmoil that had left the crew unpaid for more than a year. The Coast Guard, which went aboard for a routine inspection on Saturday and found provisions running out, had known of the ship since Jan. 13, when Captain Ivan Kozlov, the previous master, was found hanged in his stateroom, off Sandy Hook, N.J., touching off a Federal Bureau of Investigation inquiry that found no foul play.

Douglas Stevenson, a lawyer for the Seamen’s Church Institute and its affiliated Center for Seafarers’ Rights, nonprofit organizations that have long sought to protect the welfare of seafarers, went aboard last night to meet with the crew and said afterward that the Banner of October was only one of a half-dozen Azov ships that are stranded around the world, off Europe, Asia and Africa. He said the crews of those and many other stranded ships had been caught in the backwash of recent years’ economic turmoil in Ukraine, other former Soviet states and third-world countries whose troubled economies have affected shipping.

The Coast Guard said that Azov Shipping, based in a port on the Sea of Azov, connected by a narrow inlet to the Black Sea, is represented in the United States by Azov Shipping International, based in Secaucus, N.J. Captain Golub identified the company’s local representative as Captain Vladimir Shamshin, who could not be reached at the company’s offices last night. Mr. Stevenson, who is also the director of the Center for Seafarers’ Rights in New York, said he intended to go to Ukraine later this month to talk with government officials about the problems of vessels that have been stranded, abandoned or inadequately supplied by financially troubled shipping companies.

The plight of the Banner of October is not unusual. Merchant crews, especially those on ships flying so-called flags of convenience from nations that have lax health and safety standards, are often exploited by employers who force them to labor hard in dangerous conditions for low pay, Mr. Stevenson said. A check of international commercial shipping that was reported in February found at least 10 ships, with crews totaling more than 200 members, that had been stranded in ports around the world, left by owners who could not, or would not, spend money for wages and for the maintenance and provisioning of ships that their companies considered temporarily or permanently unproductive.

The Banner of October, built in the Soviet Union in 1977, had been chartered for two-week trips carrying about 500 used vehicles — trucks from New York and cars from Miami to Puerto Plata in the Dominican Republic, and Port au Prince, Haiti. It usually returned to New York without cargo, Captain Golub said. The ship’s last voyage from the Caribbean ended in New York on April 13, the captain said, and since then, there have been no more shipments and no further orders. As the ship lay at anchor, various requests for supplies were made over the last three and a half months, he said. One shipment — a 22-day supply of food — was received on July 1, and the captain said the crew had made it last until now, stretching it out over more than 30 days. The last pay was received in June, he said.

There was also no Freon for air-conditioning, he said, and the crew had to swelter though July’s record-setting heat without coolants. Most remained below deck during the day to escape the heat and slept on deck at night to catch a breeze. The crew continued to maintain the ship, which the Coast Guard found to be well kept in its inspections, one last spring and another on Saturday. ”Things checked out O.K., except we were concerned about the amount of food they had on board,” said John Hillin, a civilian who is the Coast Guard’s official in charge of foreign vessels in the port. He and Mr. Stevenson said the Ukrainian consul in New York had been notified and had pledged to contact Azov officials and try to resolve problems by getting funds to purchase supplies.

Captain Golub said that Captain Shamshin, the Azov official in Secaucus, had told him that the ship would be reprovisioned on Friday at a dock in Red Hook, Brooklyn, but he also noted that arrangements to pick up a cargo in the port today had fallen through and that no new cargoes had been lined up. ”All contracts are canceled, and they’re just sitting there and don’t know what to do,” Andreas Krenz, a port chaplain for the Seamen’s Church Institute, said after helping to deliver emergency supplies of food and water to the ship yesterday. ”The fridge is actually empty, and they have just a little butter left and a couple of pieces of meat.”

The ship’s radio operator, Valery Kostenko, 33, was lounging in a day room last night with Anatoly Lichkatyn, 30, the fourth engineer. Both wore shorts, T-shirts and sandals and were watching a video of ”Lethal Weapon,” translated into Russian. Like other crew members, Mr. Kostenko spoke a broken English. Asked about the supply situation, he said: ”No provisions on the ship. No supplies.” Captain Golub added: ”Nothing medicine also.” The crew had not been ashore since the ship arrived in New York Harbor three and a half months ago, the master said, but most of its members seemed last night to be less frustrated than glumly resigned to their situation.

Stranded Pakistani seamen pray for Texas deliverance / December 4, 1998

Five miles off South Padre Island, Texas, a Pakistani freighter is anchored in a seafarer’s limbo. “Please, for God’s sake, help us. We are dying,” pleaded Maqsood Ahmed, the desperate captain of the Pakistani-flagged Delta Pride. The captain and his crew, 22 men in all, have been stranded in the Gulf of Mexico for nearly five months after the ship’s owner, Star Shipping Lines, went bankrupt. For most of that time, the 738-foot Delta Pride, which has no cargo, was anchored off Tampico, Mexico, before moving last week to the Texas Gulf coast.

Provisions exhausted
There is little fuel or water on board. For a time, the only food was rotting potatoes and mildewed cabbage. Most of the crew are suffering from sores and skin rashes. In addition, they have not been paid in almost two years. The Coast Guard says the crew radioed on November 24th that its provisions were exhausted. The message called for food, water and medical attention. A doctor and emergency provisions have been sent.

Crew members don’t have passports so, for now, they are barred from U.S. shores and the Coast Guard will not allow the Delta Pride to dock in nearby Brownsville. “Without knowing the condition of the vessel, we’re not going to bring in a vessel that could endanger the port or the other users of the port until we think it’s safe to come in,” Coast Guard Captain Dan Guerrero told CNN. However, the Coast Guard said any crew member who has a medical emergency will be brought ashore immediately.

Help and prayers
The bankruptcy of the ship’s owners has left the crew without a way to get home. The Allied Bank of Pakistan holds the lien on the craft. A ship service company hired by the bank has paid for a small amount of fuel. Brownsville maritime organizations have donated food and water to last for a few weeks. Five times a day, the ship’s Muslim crew spreads prayer mats on the rusty deck and prays to Allah. Captain Ahmed also recalls looking at his last $10 bill on a nightstand as he asked for guidance. “It’s written, IN GOD WE TRUST, and I said, ‘Thank God I got my answer. You told me to go to America.'”

Help for stranded shipmates / 20 September, 2001

A seamens’ charity in north-east Lincolnshire has come to the rescue of a crew on a Maltese ship left without food, water or money. The “Black Sea Star” brought cargo from the Middle East to Immingham a month ago. The Maltese vessel was arrested temporarily over fuel bills unpaid at another port. It then emerged that the crew from Georgia in the former Soviet Union had not been paid for up to 18 months and was surviving on a diet of potatoes. The ship was carrying road construction machinery to the UK from the Suez Canal.

It was arrested by the Admirality Marshall Officer on 5 September 2001. The welfare of the 11 crew members then became the responsibilty of this authority. But when the arrest order was lifted a few days later after their employers could not be contacted, the men were left without any support. Workers from the Immingham Seafarers Commission discovered them in a sorry state. Padre David Craig, the centre’s cleric, said: “The men were really depressed. They hadn’t seen fresh food for a while. “They were desperate to contact their families. The captain is 70 years old.”

Bankruptcy claims
The Maltese authorities cannot find the ship’s owners. Telex messages received from Georgia claimed bankruptcy on their behalf. The men refused to hand over their cargo to the Dutch company who commissioned its delivery until they had been paid. The firm gave them a bonus payment as a gesture of good will which they accepted. This has enabled six of them to get a flight back to their families from Humberside airport this weekend.

The remaining five continue to get provisions from the Immingham charity while the International Transport Workers’ Federation (ITF) attempt to get their back-pay. The vessel has navigational defects and is not allowed to leave the port. The Associated Ports Authority can petition another arrest order if port fees remain unpaid. The ship will then be sold by tender to cover these expenses. Padre Craig said this was one of the worst rescue missions he had ever been involved with. “They’d been living on variations of potato soup. There is no welfare state in Georgia and the mens’ families have been without any money for all this time.”

Sailors from Ukraine Thank Supporters

The following was published in the The Ukrainian Weekly

Dear Editor:
Thanks from Ukraine for the help and support provided by The Ukrainian Weekly readers during a desperate situation of this past summer. On September 20, the stranded group of Ukrainian sailors from the 650-foot cargo ship Epta left Houston and returned to Ukraine. They were deported without any of the six months’ pay that was owed them for the repairs and maintenance they were hired to do on the Epta. The sailors left Houston disheartened to face the grim realities of the mounting debts that their families had incurred while they were stranded in Houston. The U.S. Marshall’s Office had seized the ship and forced the issue into bankruptcy court, and the matter was to go to court in May of 1999.

However, on December 24, a settlement of the case involving the sailors’ wages was reached with the other creditors of the ship Epta. A judge’s order allowed the distribution of the funds for the sailors’ wages (approximately $76,000) to take place immediately. This amount represents only a portion of their back pay, but it will help them repay the tremendous debts their families had acquired in order to survive. It is a happy ending to an unpleasant situation that occurred this summer in the Port of Houston.

The Ukrainian sailors want to thank all the organizations and individuals, both Ukrainian and American, in Houston and beyond, who were instrumental in helping them survive under difficult circumstances. The Sailors’ Fund, organized by the Ukrainian Catholic Church of the Pokrova in Houston, coordinated the collection of money (approximately $30,000), food, clothing and telephone cards while this situation was being resolved. The Ukrainian American Cultural Club and the Ukrainian National Women’s League of Houston also provided valuable help and generous contributions to the Sailors’, Fund.

The Ukrainian sailors were abandoned thousands of miles from home by ruthless ship owners and operators. They were left penniless to fend for themselves. To their rescue came many Ukrainian Americans and their organizations. The Ukrainian American community should be proud of the kindness and generous support it provided to solve this problem for these sailors.

Greg and Nadia Buchai
Sugar Land, Texas

{Greg Buchai, a Houston financial adviser, and attorney Dennis McElwee negotiated a settlement for the sailors.}

This repo man drives off with ocean freighters
BY Dan Weikel / March 1, 2007

If repossessing a used Chevrolet can be tricky, consider retrieving the Aztec Express, a 700-foot cargo ship under guard in Haiti as civil unrest spread through the country. Only a few repo men possess the guile and resourcefulness for such a job. One of them is F. Max Hardberger, of Lacombe, La. Since 1991, the 58-year-old attorney and ship captain has surreptitiously sailed away about a dozen freighters from ports around the world. “I’m sure there are those who would like to add me to a list of modern pirates of the Caribbean, but I do whatever I can to protect the legal rights of my clients,” said Hardberger, whose company, Vessel Extractions in New Orleans, has negotiated the releases of another dozen cargo ships and prevented the seizures of many others.

His line of work regularly takes him to a corner of the maritime industry still plagued by pirates, underhanded business practices and corrupt government officials, waters the Aztec Express sailed right into. The saga began in 2003 when the vessel’s Greek owner died and his company did not keep up payments on a $3.3-million mortgage. Bahamian court records show that an American businessman who had used the vessel to haul 235 used cars from the northeastern United States to Haiti did not pay the charter fee, contributing to the loan default. Once the ship arrived in the Haitian port of Miragoane, the businessman bribed judicial officials to seize the vessel and sell it to him in a rigged auction, according to court records.

Meanwhile, a violent rebellion threatened to topple President Jean-Bertrand Aristide, making it impossible for the lender or the owner’s relatives to contest the sale. The condition of the Aztec Express further complicated matters. Its main engines were out of commission, having been idle and untended for months. Hardberger was hired by the New Jersey-based mortgage holder. He flew to Haiti and drove with an armed bodyguard to Miragoane. He gathered two important pieces of information. Watchmen stationed on the Aztec Express sold fuel from the vessel on the black market. Second, port authorities had a cellphone, but they could use it only at the harbor’s soccer field, where cellular service was reliable.

Hardberger managed to get the guards off the ship by offering to buy fuel. When they came down to the dock to discuss the transaction, off-duty Haitian riot police hired by Hardberger held them at bay. Meanwhile, an oceangoing tugboat also hired by Hardberger slipped into port and backed up to the Aztec Express. Under a full moon, the crew began cutting the anchor chains with blowtorches. In case harbor officials noticed and tried to call for help on their cellphone, Hardberger had paid a witch doctor $100 to cast spells on the port’s soccer field. The witch doctor marked the field with gray powder, a clear warning to believers in voodoo, the nation’s dominant religion. No call ever went out.

Once the freighter was freed, the tug hauled the ship out of port and headed for the Bahamas, where British-based maritime laws give a high priority to lenders’ claims. The next day, however, another tug intercepted the ship. Its captain said he had been sent to take over the operation. Hardberger’s team checked with the marine towing company hired for the repossession and found that no relief boat had been sent. It then summoned the Bahamian coast guard, which detained the other tug on suspicion of attempted piracy.

Hardberger said the second tugboat had been sent by the American businessman when he learned that the Aztec Express had been pulled out of Haiti. In the Bahamas, a court upheld the ship’s repossession and ordered its sale to settle the lender’s claim. “Haiti has a corrupt legal system where cronyism and corruption are the order of the day,” Judge John Lyons wrote in his decision. “Justice is dispensed according to who can pay the going rate.”

Hardberger said small-to-medium-size cargo ships such as the Aztec Express are among the most vulnerable to chicanery and illegal seizures. Often operated by small shipping lines, these modern-day tramp steamers regularly visit developing countries plagued by unstable and corrupt governments. In the worst-off nations, Hardberger said, it is possible to seize a $10-million ship with a $100 bribe to a justice of the peace. “You need more than what an attorney can do in some of these countries,” said John Lightbown, a ship owner who recently sought Hardberger’s help to avert a seizure in Haiti. “Deals can be bought and sold under the table. Max gets into the middle of things. He’s been around the block,” he said. “I don’t know anyone who does this, except for Max,” said Jonathan S. Spencer, a New York-based maritime adjuster who determines the monetary losses of shipping accidents. “It’s hard to say how much people like him are used. They work in gray areas of the law. They are very discreet, and the people who hire them are discreet as well.”

With his graying hair, walrus mustache and moderate build, Hardberger doesn’t fit the profile of a swashbuckler. He taught history and English at parochial schools in Louisiana and Mississippi after graduating from the University of New Orleans and earning a master’s degree from the University of Iowa Writers’ Workshop. Outside the classroom, he worked on Gulf Coast oil rigs and the vessels that served them. For several years in the 1980s he skippered a cargo ship in the Caribbean and later wrote “Freighter Captain,” a novel based on the experience.

In 1998, after a four-year correspondence course, he passed the California bar exam on the first try. He now practices maritime law, mostly in the Caribbean, but regularly comes to Southern California to handle cases. Hardberger fell into the ship extraction business in 1991 while managing two freighters for Morgan Price & Co., a wastepaper exporter in Miami. Morgan Price had chartered one of the vessels, the Patric M, to a Peruvian company that used it to carry steel to Venezuela.

When the company refused to pay Morgan Price $80,000, the Miami firm instructed the captain to dock at Puerto Cabello in Venezuela, its destination, but not unload the cargo. In retaliation, Hardberger said, the Peruvian firm bribed court officials to detain the Patric M in port and allow the company to operate it. A judge even jailed the master and chief engineer, but not before the engineer was forced at gunpoint to power up the vessel’s cranes so unloading could proceed. Hardberger flew to Venezuela. He says he persuaded court officials to put the captain and chief engineer under house arrest at a hotel. Hardberger then met with the two men. The captain refused to participate in the repossession, fearing for his safety. When the chief engineer agreed to help, he and Hardberger slipped out of the hotel through a laundry room.

In the evening, they took a taxi to the waterfront and walked along the port wall that was topped with barbed wire, finally gaining entry by crawling under a railroad gate. Once inside the port, Hardberger said, they hid in doorways, culverts and the shadows of shipping containers to elude guards and stevedores. “Extractions are a big risk. If you get caught, you are looking at a very serious charge,” Hardberger said. “In some countries, you could wait two or three years for trial and end up with a 20-year sentence.”

At the unguarded ship, both men climbed the gangway, and Hardberger found the first mate, a heavy-set Panamanian, who agreed to cooperate. The Patric M’s crew, which had not been replaced by the Peruvian company, was assembled in the mess for a briefing. Everyone signed on to the plan. Later in the evening, the crew cut the ship’s lines from the deck. The main engine came to life with a few deep thumps. Proceeding at “dead slow ahead,” Hardberger steered the 340-foot cargo ship past a naval base and through the narrow harbor entrance. En route to Aruba, Hardberger said, he received a radio message saying Venezuela had notified Interpol – the global police agency – that the ship had departed without permission.

He soon found an isolated anchorage off the island of Vieques, Puerto Rico. The crew ground off the original name and identification numbers that are stamped into the steel of every cargo ship when it is built. All the Patric M’s documents – plans, ledgers, log books and certifications – were copied and altered to reflect its new name. The originals were destroyed, including its Panamanian registration forms. Then, Hardberger said, he found a country willing to register stateless vessels, no questions asked. He declined to name the country, but there were only a few at the time, such as Honduras, Vanuatu and the Marshall Islands. International regulatory agencies have since banned the practice. About a year after acquiring its new identity, the Patric M was sold by Morgan Price.

“International waters,” Hardberger said, “are worse than the Wild West. In many ways, there is little or no opportunity to avenge the wrongs people have done to you.” For the last 3 1/2 years, Hardberger has operated Vessel Extractions with Michael L. Bono, an admiralty law attorney and one of his former high school students. Before repossessing a ship, they make sure the vessel has been seized illegally and the claims filed against it are fraudulent.

If negotiations and legal methods fail, the company will proceed with an extraction, a step that might include payments to local officials if a nation’s government is corrupt. Those payments, Hardberger said, are made under exceptions in the federal Foreign Corrupt Practices Act, which prohibits U.S. citizens from bribing foreign officials to retain or obtain business. “In a rogue state, you can’t tie your hands behind you,” Hardberger said. “It is common to find that the court system is rife with corruption.”

Extracting a ship can cost a client $100,000 or more. If a repossession is requested, Hardberger and his team quietly enter the country involved. They seek out friendly officials and trusted local contacts such as ship agents who tend to a vessel’s logistical needs in port. “You need to pick up clues about the ship and what is said in the bars, at the ship chandlers and in the local whorehouses,” Hardberger said. “Crews are not that sophisticated and talk about their orders and departure times. You can really keep track of a vessel this way.” Hardberger said he does not carry a firearm, though he has hired bodyguards, as he did with the Aztec Express. Stealth and trickery are the preferred methods. “I do not want my face seen,” he added.

Such tactics were employed in April 1999, when Hardberger was asked to extract a 280-foot cargo ship that had put in for repairs at Drapetsona, a part of the Greek port of Piraeus. “It’s a place,” he says, “where ship names are repainted quickly.” The small freighter was Hungarian and, despite the fall of the Soviet Union, was still equipped with a commissar’s office. It contained a secret radio room and the complete works of Lenin. When the repair company charged four times the agreed-upon price to fix a huge dent in the stern, Hardberger said, the owner refused to pay. Port officials then denied the vessel a clearance to leave.

Hardberger and the ship’s agent got permission to move the ship to a port anchorage under the ruse that she needed refueling. The new location would make it possible for a crew to reach the vessel by launch. Then, with everything in place, Hardberger waited for the weekend of Greek Easter, a religious festival marked by rich pageantry and widespread celebration. To help the coast guard enjoy the event, Hardberger arranged for the ship agent to drop off several cases of ouzo at the station, which overlooked the port.

At 2 a.m. on a Sunday, a crew boarded the unattended freighter and sailed it out of the harbor unnoticed. Hardberger, who coordinated the operation from shore, sat in a seaman’s bar in Piraeus with friends, including the ship’s agent. In the ancient port, they toasted their success with vodka.



Thanks to recession, Gujarat’s ship-breaking yards are booming, but impact on environment is toxic
BY Andrew Buncombe /  31 August 2009

It is known as the graveyard of ships, a place where ageing vessels are torn apart by unskilled labourers and the metal then sold on as scrap. In recent years these often deadly and dangerous ship breakers’ yards, which stretch a full seven miles along the coastline of the Indian state of Gujarat, have themselves been a little on their uppers. Booming demand for freight meant that it made sound economic sense to keep even older ships in operation, and many of the labourers in the Gujarati yards were laid off.

But now, by no small irony, these workers in the world’s largest ship-breaking yard have been saved by the global recession. The economic downturn and a subsequent fall in demand for cargo ships has meant that for many ship owners it makes better sense to send an ageing ship to the scrapyard rather than to keep her maintained but idle. But while the recession may have been good news for the owners of the ship-breaking firms, it is very bad news for the environment. The scrapping of ships in South Asia – Bangladesh and Pakistan are also major scrappers – is a rudimentary, almost medieval affair. Ships are allowed to beach on the sands and then armies of men with little or no training pull apart the ships with hand-tools. Toxic substances such as mercury and asbestos are allowed to seep into the environment.

One of the attractions to the ship owners of having their vessels dismantled here is that the ship breakers in this part of the world receive little of the regulatory oversight that takes place in Europe or the US. For the ship owners, it means they can dispose of their ships more cheaply, while for the scrappers it means bonanza-time. Over the last 10 months, the scrappers at Alang in Gujarat have received and dismantled around 280 ships, up from 163 during the same period a year earlier. Some breakers believe that over a 12-month period from January, they might reach a total of 400 ships.

“The costs of a laid-up vessel are considerable. It costs a lot to keep it empty. If there is no cargo, it is better to lose them,” said Nikhil Gupta, owner of the Hare Krishna Steel Corporation and a senior official with the breaker’s trade organisation, the Ship Recycling Industries Association of India. Speaking by telephone, he added: “After 35 or 40 years these ships are not as safe, and the insurance premiums go up. In the past there was a lot of trade and it made sense to keep them.”

Pat Swayne of the Baltic Exchange, the London-based maritime trading house, said there is no question that increasing numbers of older ships are being scrapped. “Previously many ships that were able to make a lot of money [for the owner], are now facing rising costs,” he said. “If you decide to lay up a ship then you have to find somewhere to lay it up and the question is where do you lay it up? The older a ship is, the more costs are associated with it. Scrapping becomes a very viable option.”

Since the mid-1980s, the vast breakers’ yards at Alang have developed, under only loose regulation, along a stretch of coast that enjoys a tidal range of around 13 metres, making it easier to beach a condemned vessel directly onto the shoreline. Previously the industry was based in Mumbai, but gradually it moved to Alang and continued to expand. Now, Alang accounts for than half of all the ships scrapped worldwide, followed by Pakistan and Bangladesh, which each scrap almost a quarter of the remainder. Mr Gupta said that as a result of upturn in scrapping, up to 40,000 workers are now directly employed by the breakers at around 170 plots along the coast. Around 130 plots are in use today, up from just 25 in 2006.

For those directly and indirectly involved in breaking, the cash tills are jingling and many breakers have recently been tempted back into the industry. In the surrounding area there has already been a visible impact on the area. New homes are sprouting along the 35-mile stretch of road that links Alang to the city of Bhavnagar, and the local roads are awash in what some call “snazzy sedans”. On the edge of Alang a huge flea market has sprung up, selling multifarious equipment and fittings taken from the ships.

Locals say that when an owner decides to scrap a vessel, they rarely have the time or opportunity to make a full assessment of the value of such things. As a result, the flea market sells everything from ships motors and cutlery sets to fridges and lifeboats at bargain prices. “Last year I bought a torque wrench here for about 3,500 rupees (£44), which would have cost me 50,000 on the open market,” Vasant Pachal, an engineering workshop owner from the city of Vadodara, recently told The Hindustan Times while browsing at the market. “Apart from the great deals, I get to see the latest in technology every time I come here.”

Yet for environmentalists and labour campaigners, the upturn in business means something else. Campaigners point out that the working conditions for the often undocumented migrant labourers from India’s poorest states, can be highly dangerous and there are regular reports of injuries and fatalities. Earlier this month, six workers died when a fire broke out at one of the plots. Activists say the impoverished workers have no bargaining power.

Dwarika Nath Rath, a Gujarat-based activist and member of the Socialist Unity Centre of India, a small Communist party, has for many years been monitoring the human toll of the operations. “These workers, coming from places like Orissa and Bihar, say that if they want to save their families they have to die themselves,” he said. “The main problem is that there is no regulation, there is no law. These people need to be given ID cards and registered as workers. When an accident happens these people are not in the log-book.” Ingrid Christiansen, a Delhi-based official with the International Labour Organisation, the UN body that oversees working conditions, said that there had been some advances in working conditions at the breakers’ yards but that there was “room for improvement”.

In May, an international convention meeting in Hong Kong agreed new rules that sought to regulate the worst of the industry’s excesses, but campaigners say it has made little difference. Indeed, the convention rejected a proposal supported by over 100 human rights and environment protection organisations to phase out beaching operations – where ships are dumped at high tide and then drift to beaches to be taken apart. “Beach breaking would never be allowed in Europe,” said Ingvild Jenssen, director of the Belgium-based campaign group Platform on Shipbreaking. “When a vessel is broken without containment on a tidal beach there is bound to be pollution of the coastal zone. Experience with ship repair pollution in Europe and the US, and consequent rules for how these activities must be dealt with in contained environments, illustrates the problems.”

The booming market on the Gujarat coast has brought back an old customer – to the consternation of campaigners. They claim that among the ships that will be hauled onto the beaches and pulled apart in the coming weeks are two US vessels, MV Pvt James Anderson and MV 1st Lt Alex Bonnyman. They will be the first such US ships scrapped in south Asia since 1998, when the Clinton administration – under pressure from campaigners – ordered a moratorium on the scrapping of US government-owned ships in south Asia. “This is really shocking,” said Jim Puckett, of the Basel Action Network, another campaign group. “Now we have elected an environmental President, and his administration for the first time in 10 years is willing to ignore the law and dump toxic waste from US flagged ships on developing countries.”


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