SUSTAINABLE SHIPPING: THE BENEFITS OF THE “SAFETY CULTURE” FAR OUTWEIGH THE COSTS

Abstract

ABSTRACT An important challenge for the maritime industry is whether those involved in the transport of oil will embrace the concept that the “safety culture,” which includes protection of the environment, is “good business.” Ship owners/operators and others in the maritime business will adopt the safety culture when they believe in a “continuous and never-ending improvement process as a means to promote productivity and profitability.” Sustainable shipping requires the prevention of costly accidents and activation of “best response,” thus reducing environmental impacts if oil spills happen. Proactive safety management, creation of a quality system with accountability in each link, training of qualified mariners, and using the appropriate response technologies are examples of policy considerations needed to implement this culture. These policy goals should replace short-term thinking of profit maximization and crisis reaction. Safety saves dollars. Oil spills result in tangible, direct losses of life; injuries; and damage to the environment, cargo, and vessel. Direct costs measure only part of the total. Indirect and hidden costs are harder to quantify. They include, for example, reduced worker morale and productivity, eroding customer base, and in this litigious age, Natural Resource Damage Assessments (NRDAs), economic loss claims, increased insurance costs, fines, imprisonment of Chief Executive Officers (CEOs) and loss to the corporation for their services, public notoriety, lost opportunity, and many other similar losses. The indirect and hidden costs equate to an increase in direct costs, using a conservative multiplier of 2.7 to 1. Estimates of the total cost of all categories for all vessels involved in marine incidents annually are between $581 million to $1 billion. (Conversely, high quality safety management yields cost savings annually for industry of between $500 million and $1 billion, or an average for individual companies of $200,000). True cost accounting (measuring all costs—external, internal, hidden) translates to a better bottom line.