Lesson from Kerala Shipwreck: Balancing Risk and Revenues

Kerala is like a beautiful home in front of a highway. Once in a while, a truck may turn turtle in front. So if you want to, say, open an eatery and make some money, you would be bearing the risk of such an event.

- D C SEKHAR

Kerala is like a beautiful home in front of a highway. Once in a while, a truck may turn turtle in front. So if you want to, say, open an eatery and make some money, you would be bearing the risk of such an event. Singapore has very large crude carriers or VLCCs regularly passing through its congested sea lanes. The city-state is balancing the attending risks and revenues well.

In shipping, multi-million-dollar assets may pass by without touching the ports of a coastal state, without adding a dime to that country's economy. But when one of these vessels goes belly up, the problem lands on its shores. This risk is built into the destiny of every coastal state abutting busy shipping lanes.

Vessels are flagged in different flag states, have different technical third-party inspectors, different ship managers and are vetted by different vessel charterers. Understandably, they have different levels of compliance to the same international conventions they follow—such as Safety of Life at Sea or Prevention of Pollution from Ships—in letter and spirit. Only vessels that call your ports can be subjected to physical scrutiny under a 'port state control' protocol.

Vessels, typically, do not carry oil spill response equipment. They flash their third-party insurance cover to compensate for the spills they cause. The wherewithal for this response must be stock-piled by the coastal state. Tackling an oil spill demands quick-response capabilities, and it is practically difficult to extend this cover to every inch of the coastline across various terrains.