Human Element Guide v1

Human Element Guide v1.
0a page v
Between the devil and the deep

blue sea
Sophies choice
There was once a UK TV commercial for fried potato
chips that featured two little sisters 1. On the bus to
school, the elder one mischievously asked the other:
Sophie, which do you prefer, Daddy or chips? The
question pre-occupied the little girl all day. Daddy or
chips? Daddy or chips? she repeated to herself. She was
still doing so when, back at home, she was served fish
and chips for supper. Then, in came Daddy, who, with a
peck on her cheek, stole a chip off her fork. She made
her decision. Chips, she announced with a rueful smile.
Fast forward a few years, and we find Sophie has now
become the Finance Director for a shipping company
operating in an increasingly competitive market. She has
to advise on financial trade-offs between investment
in automation and reduced manning, between the
investment in staff and the shareholders return on
investment, between the costs of doing business and
the savings that can be achieved across the company.
Safety or profits? Safety or profits?
Fortunately for her company and everyone in it
Sophie had long since realised that her sisters question
had been a trick. She now knew that back then, chips
were only on her plate at all because Daddy had been
able to put them there. Daddy was the source of chips,
not an alternative to them.
1
McCain Foods Ltd (1998), re-told here with permission
And so she broke free from the choice between the

devil and the deep blue sea2. She knew that profits
flowed from safety, and that without safety, profits

would be hard to come by. But how was she able to
convince her Board and the company shareholders of
this insight?
Putting it all above board
First she collected some key facts3:
In 1997, a P&I Club reported that human error dominated
the underlying causes of major claims. It was responsible
for 58% of all such claims a figure that has not changed
for ten years. Over the same period, the other main cause
ship failure had decreased by two-thirds.
In the five years to 2005, an average of 18 ships collided,
grounded, sank, caught fire or exploded every single day.
Incredibly, two ships sank every day.
The Standard P&I Club estimates that over a recent ten-year
period, insurance claims cost the P&I industry US$15 billion.
Thats US$4 million dollars every single day. Over 65% of this
vast payout an amazing US$10 billion was for incidents
in which humans played the dominant part.
The International Union of Marine Insurance (IUMI)
declared 2006 to be a catastrophic year for hull claims. The
next year, it was four times worse.
In sailing warships, the devil was the seam that sealed the main deck to the
hull. Anyone repairing this crucial seam was required to hang dangerously
over the side of the ship, literally between the devil and the deep blue sea.
3 From IUMI, Lloyds Register, BP Shipping, Teekay Marine Services, Standard
P&I Club.
2
IUMI reports the average number of incidents involving the

serious or total loss of vessels over 500gt had steadily risen
in the 15-year period to 2008. 60% of these around two
major incidents per day in 2008 were due to human error.
In 2008, a maritime disaster occurred nearly every week
(on average). Each one involved an insurance claim of over
US$17m or had an economic impact of over US$85m.
In 2008, maritime insurers paid out over half a billion US
dollars for casualties.
The cost of acquiring a new ship is anything from US$50m
for a general cargo ship to US$250m for a fully equipped
LNG tanker. In 2009, the renewal costs for the International
Group of P&I Clubs increased by an average of 16.5%.
P&I Clubs are conducting much more wide-ranging

member risk reviews as a condition of insurance and
premium calculation. These reviews now examine the
quality and effectiveness of management and leadership
ashore, shipboard personnel, change, accident and nearmiss
analysis and loss prevention.
Ship operating costs vary from US$2 to 20 million per year.
If a ship is damaged in an accident, these costs can no
longer be offset by its trading revenue. When the cruise
ship Royal Majesty grounded in 1995, it cost US$5 million in
just 14 days lost revenues. Furthermore, operating costs are
radically increased by the cost of unplanned repairs, legal
bills, third-party compensation, environmental cleanup,
knock-on effects such as refinery shut-down due to a
delayed tanker, and loss of commercial reputation. The final
costs for the 1989 Exxon Valdez disaster were US$4 billion.
Human Element Guide v1.0a page 1
Getting under
way
What is the human element?
The shipping industry is run by people, for
people.
People design ships, build them, own them, crew
them,
maintain them, repair them and salvage them.
People
regulate them, survey them, underwrite them
and
investigate them when things go wrong.
While these people vary in all sorts of ways, they
are
all, nevertheless, people with the same basic
set of
capabilities and vulnerabilities.
The human element is misnamed. It implies
something
that happens at the sidelines a piece of the
picture
that is hopefully being dealt with by some
specialist or
other. Or else it implies that its just one of those
things
a bit of a mystery about which we can do little more
than shrug our shoulders and hope for the best.
But humans are not simply an element like the weather.
They are at the very centre of the shipping enterprise.
They are the secret of its successes and the victims of
its failures. It is human nature that drives what happens
every day at work from the routine tasks of a ships

rating, right through to the policy decisions of the IMO.
Fortunately, there is a lot that is known about human
nature and a lot of practical things that can be done to
ensure people play to their strengths while avoiding
the pitfalls. So, what do we mean by human nature? The
compass rose on this page points to eight basic aspects
of human nature that we explore in this Guide.

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Human Element Guide v1.

Between the devil and the deep

McCain Foods Ltd (1998), re-told here with permission

And so she broke free from the choice between the

flowed from safety, and that without safety, profits

IUMI reports the average number of incidents involving the

P&I Clubs are conducting much more wide-ranging

Human Element Guide v1.0a page 1

every day at work from the routine tasks of a ships

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