As the Covid-19 crisis spread across the globe and restrictions on travel and trade were closing ports and cancelling flights, it began to cause severe delays to the ordinary rotation of cargo vessel crews between their ships and home ports. It soon became clear that this was not just a liability for the commercial shipping sector, but also a brewing humanitarian crisis for the hundreds of thousands of seafarers who are the engine of global trade.
A trickle of anecdotes turned into a flood. One European captain of an Asian dry bulk vessel was stuck at sea for months, forced to miss his son's funeral. Another captain sailed astray off his charted course to protest the lack of disembarking arrangements for his crew, stranded at sea beyond their contracts. An estimated 300,000 seafarers around the world remain stuck aboard their vessels, prohibited from disembarking at port or unable to secure flights home, while another 300,000 face financial ruin due to prolonged periods of being unable to return to work.
The importance of active engagement
It's clear that if nothing is done, it's just a matter of time before something disastrous happens. Our global investment team recently launched a campaign to raise awareness over the wellbeing of seafarers. As part of a global engagement with industry and associated stakeholders, we are reaching out to an initial group of about 30 firms across the shipping, cargo, airline and retail industries, as well as issuing a call to governments to prioritise action on the issue.
Seafarers are vital to the global supply chain - especially during the Covid-19 pandemic - as they ensure the uninterrupted global delivery of a vast array of goods, from dry bulk cargo like edible grains or iron ore, to energy inputs like oil and gas, to a broad range of consumer products.
Yet Covid-19-related restrictions on movement or port arrivals coupled with the drastic reduction of flights has meant that some seafarers have been forced to work for 15 months or more away from their families, way beyond both the industry standard of nine months and the regulatory limit of 11 months. These long periods of isolation are raising mental and physical health issues and putting into question their ability to ensure the safe handling of cargo.
Cutting through red tape
Part of the issue comes down to how commercial seafarers have been classified through the outbreak. Countries have relied on shipping to cope with lockdowns under Covid-19, yet seafarers are not widely recognised by governments as so-called ‘key workers' who would generally be granted exceptional rights to disembark in a port. This is a major issue that has prohibited merchant seamen from returning home. In a recent statement the United Nations agencies, including the International Maritime Organization, jointly urged governments to treat seafarers as key workers and resolve this humanitarian crisis.
A key-worker label will help ensure seafarers are exempted from travel restrictions and are able to board and disembark at different ports - helping to remove a multitude of roadblocks, including visa restrictions and constantly changing local customs rules.
Raising awareness
Surprisingly, until very recently there had been little discussion in the investment community about the issue of the wellbeing of seafarers, despite both the humanitarian concerns and general operational risks it posed to shipping companies.
Lobbying to improve the conditions of seafarers makes sense from both a humanitarian and investment perspective. The performance of some of the companies we invest in will ultimately be linked to the safety of cargos being handled by seafarers. Ensuring that the rights and interests of seafarers are represented helps lower the operational risks to the sectors involved and allows global trade to continue in a sustainable way.
Raising awareness to this issue isn't intended to offer prescriptive answers to this complex problem; instead it aims to help prompt stakeholders across the supply chain to work together to find the best solution. As we navigate through the Covid-19 crisis, it becomes even more crucial to take an active role in engaging with the companies in which we invest.
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This content is for investment professionals only and should not be relied upon by private investors.
This information is for investment professionals only and should not be relied upon by private investors. Past performance is not a reliable indicator of future returns. Investors should note that the views expressed may no longer be current and may have already been acted upon. A focus on securities of companies which maintain strong environmental, social and governance (ESG) credentials may result in a return that at times compares unfavourably to the broader market. No representation nor warranty is made with respect to the fairness, accuracy or completeness of such credentials. The status of a security's ESG credentials can change over time. Changes in currency exchange rates may affect the value of investments in overseas markets. Reference in this document to specific securities should not be interpreted as a recommendation to buy or sell these securities, but is included for the purposes of illustration only. Investments should be made on the basis of the current prospectus, which is available along with the Key Investor Information Document and current and semi-annual reports, free of charge on request, by calling 0800 368 1732. Issued by Financial Administration Services Limited and FIL Pensions Management, authorised and regulated by the Financial Conduct Authority. Fidelity, Fidelity International, the Fidelity International logo and F symbol are trademarks of FIL Limited. UKM0920/32306/SSO/NA
