8/6/2024
How does staffing influence pricing?
Over the past five years, the inland barging industry has been grappling with a progressively acute shortage of qualified personnel. Nearly every barge company is advertising open vacancies in newspapers and staffing websites, indicative of the severity of the situation. Anecdotes abound of companies resorting to poaching experienced staff from each other. For instance, Rhine cruise ships are reportedly offering exorbitant remuneration packages to entice tanker captains to join their ranks. The escalation in operational costs resulted in a surge in Time charter, COA and Spot prices in the past years. This upward pressure on pricing subsequently became a significant factor during COA and TC negotiations. What Factors Contribute to This Situation? Expansion of the Barge Fleet:
The staffing shortage has empowered captains to be more selective regarding the regions they prefer to navigate and the types of operations they engage in.
ARA bunkers, some don’t like the intensity of the work, which may involve delivering multiple bunkers per day, both during daytime and nighttime hours. Meanwhile, a typical ARA delivery from point A to B entails longer sailing times, an average trip spanning approximately two to three days. This latter option may be more appealing to captains who prefer a less hectic work pace.
The Rhine region emerges as a popular choice for some captains, primarily due to the allure of navigating through the iconic landscapes of the Rhine, Moselle, and Main rivers. Consequently, these individuals opt to serve as captains in this specific area, drawn by the unique charm and appeal that the Rhine region offers.
ARA deliveries attract certain captains who prefer to operate within the ARA area for various reasons. Some may choose to sail only in this region to stay closer to their homes, while others might be enticed by the opportunity to command larger vessels that typically operate in the ARA zone.
According www.nationaleberoepengids.nl the starting salary for an inland tanker captain is €2,307 per month. On average, the salary for an Inland tanker captain is around €3,100 gross per month. However, when it comes to crewing in the inland tanker industry, the salary landscape is somewhat opaque. Intense competition among companies to attract and retain qualified personnel makes it challenging to rely on the stated salary index as a definitive reference.
Various sources informed Spotbarge salary ranges for these positions are spanning from €3,500 to €6,000 per month after taxes (tax benefits of registered companies in Luxemburg and Switzerland), typically involving two weeks of full-time sailing per month. Even salaries far above occur, but are considered as an outlier. Verifying these figures proves difficult, as individuals and companies are reluctant to discuss them openly or provide documentation. This secrecy further exacerbates the competitive environment within the industry.
Staffing operations
Type of staffing operations differ when looking at resting times and the amount a staff is able to operate. Charterers have to make a decision in what type they prefer regarding how many crew is on board for operations and what options the barge company offers.
In A1 or A2 navigation, a minimum of 10 hours of rest within 24 hours, with the following specifications:
Example given below of the different types:
For instance, an 8,000-ton barge operating in the ARA region can function efficiently with a crew consisting of a captain, a shipper, and two sailors. This crew works for two weeks, after which a new crew boards the barge for the remaining two weeks of the month. The sailing times in the ARA region are typically shorter, and waiting times are generally longer compared to the Rhine. Consequently, the ARA region requires fewer crew members to maintain operations effectively.
When navigating the Rhine, the distances are considerably longer, with sailing times potentially extending up to four days when traveling from the ARA region to Basel. If the charterer desires the barge to operate continuously, a crew consisting of two captains, a shipper and two sailors is required for each two-week period. After the first two weeks, a new crew will take over for the subsequent two weeks, ensuring uninterrupted operation of the barge.
Consequently, charterers take into account and discuss the type of crew on board when booking spot, COA, or TC contracts. Failing to consider this aspect and assuming that the barge operates 24/7 could lead to unexpected delays and late arrivals within the nominated time window. To avoid such surprises, it is crucial for charterers to be well-informed about the crew composition and operational capabilities of the barge they intend to book.
To illustrate the cost differences using the information provided, consider the following example. The monthly expense for an ARA crew operating an 8,000-ton barge could range between €40,000 and €50,000. In contrast, the monthly cost for a Rhine crew working on a 2,500-3,500-ton barge might amount to €60,000-€70,000. These figures highlight the significant variation in crewing costs between the ARA and Rhine regions.
In this example, we have assumed the same salary levels for both regions. However, it is essential to note that captains navigating the Rhine require more extensive experience to traverse the river's various sections in Germany, France, and Switzerland. The Rhine is divided into distinct parts, demarcated by kilometers. For instance, one such section spans from Mannheim (km nr. 424) to Iffezheim (km nr. 334). To operate in these areas, captains must possess specific years of experience and obtain the necessary certificates per area. As not all captains have these qualifications, those who do can command higher salaries due to their specialised skills and expertise.
Increasing barge capacity
As discussed in a previous article, the market is anticipating an influx of additional capacity, which consequently increases the demand for crew members to man these barges. This development could potentially intensify competition among barge companies and owners. Another possible outcome is that barge owners or companies may not maintain round-the-clock operations. Instead of having two crews on board, facilitating 24/7 or 18/7 sailing schedules, they might reduce operations. This is due to the redistribution of crew members to newly constructed barges. Consequently, this shift could result in longer transit times for barges to reach their destinations.
What can be done to attract staff?
Shipping companies and external training providers are actively recruiting personnel from Eastern Europe and the Philippines to address the workforce shortage. The Philippines, renowned for its staffing contributions to deep-sea shipping, is being targeted to raise awareness about opportunities in the inland barging industry. Modern barges now offer more luxurious accommodations compared to deep-sea vessels and internet connectivity enabling crew members to stay in touch with their families at home more easily. These improvements, combined with shorter rotation periods compared to deep-sea voyages, make inland barging an increasingly attractive alternative to traditional deep-sea employment.
Crew makes the difference
Good training and language courses are a must in order to deliver the best and safest service possible. As crewing might be tight, when a crew jeopardises safe operations, the oil and barge company will end the contract instantly. Suppliers and receivers of the product also take into account the experience of the crew, as they prioritise smooth and safe operations, particularly for COA and TC contracts. Effective communication and language proficiency between the terminal/refinery and barge crew are crucial aspects that can significantly impact the success of these operations. Inadequate communication can lead to misunderstandings, delays, or even safety incidents, making it essential for all parties involved to ensure that the crew's language skills and experience align with the requirements of the specific operation.
Remote sailing
Behind the scenes some barge companies, especially in dry bulk cargo’s are running tests with remote sailing. All navigational tasks are carried out by an on shore navigator. The crew is still on board for safety reasons and legislation. However as we will see self driving cars and robots very soon it wouldn’t be a surprise if remote sailing for inland tankers will be possible as well within 5-10 years time.
Supply and demand
Ultimately, it all boils down to market dynamics. Currently, the market for experienced crew members is highly competitive, driving up salaries. Beyond the tight labor market, crew in the inland barging industry presents a distinct lifestyle, requiring crew members to be away for two or three weeks at a time. Additionally, crew members bear significant responsibility for ensuring safety and managing the transportation of millions of euros worth of cargo. Knowledge of the ADN, waterlevels, technical knowledge and many more. Given these factors, a career in inland barging may not appeal to everyone and therefore these salary figures doesn’t seem so crazy at all.
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