Sailing Off the Deep End &

By Stephen Koepp

The Burmah Endeavour is a modern supertanker that can carry 458,000 tons of crude oil, enough to fuel all of Britain for two days. But for the past three years, the great ship has been out of work. It lies at anchor in the port of Southampton, manned only by two security guards who walk its 5 1/2 acres of decks. Meanwhile, 17 more big tankers stand idle in fjords along the coast of Norway. At the port of Fujairah, near the mouth of the Persian Gulf, Harbor Master Roger Turnbull begins each day in his control tower by counting the empty ships that appear on the horizon in their almost futile search for cargo to carry. One morning this month he counted 55, then two days later, 69. Says he: "They drift in during the night, and when we wake up, they're just sitting there waiting."

The ship captains will need plenty of patience. Right now the world's fleet of tankers and other cargo vessels is 30% larger than necessary to do the amount of work available. The huge surplus of hulls for hire has put ship owners and builders into their most severe slump since the Great Depression. The battle for business has severely corroded cargo-hauling rates and the values of ships. It costs only about $7 today to move a ton of grain from New Orleans to Amsterdam, in contrast to $17 in 1981. Says Fernand Suykens, director general of the port of Antwerp: "World shipping is very sick, and nobody knows when it's going to get any better."

Many shippers and builders have already sailed over the edge, or come close. The U.S., which had about 20 general cargo ship lines in 1970, now has only seven. This month the Swedish government announced plans to close the country's last major commercial shipyard, Kockums, located in the southwestern port of Malmo. Thage Peterson, Sweden's Industry Minister, said the government has pumped $4.7 billion into the shipbuilding industry over the past decade, but finally decided to end the Kockums subsidies because the firm had received no new orders in more than two years. In Hong Kong, the Tung family fleet of some 150 ships has nearly gone aground because of $2 billion in debts. A group of the Tungs' bankers helped bail out the company this month by giving it easier payment terms. The demand for cargo ships has been slackening since the mid-1970s, when oil prices went up and industrial countries began cutting back their imports. At the same time, shippers were taking delivery of huge fleets of carriers they had ordered when times were better. These modern craft, which feature highly automated loading gear, aggravate the surplus because they spend less time in port.

The financial crunch has depleted the once proud merchant marines of Western countries. Britain's fleet has shrunk in a decade from more than 1,600 ships to just 614. One reason is the country's high labor costs. A British crew for a bulk carrier costs an estimated $1.5 million a year, vs. only $550,000 for Korean sailors or $275,000 for Chinese.

Most shipowners around the world now avoid the steep costs of union wages and government regulations at home by registering their fleets with developing countries, notably Liberia, Cyprus and Panama. The latest popular flag belongs to a tiny South Pacific island group, Vanuatu, which charges a bargain- basement registration fee of $14,460, even lower than Liberia's $21,005. Vanuatu's fleet now numbers 100 ships.

The dwindling of fleets deprives the industrial countries of revenue, jobs and a crucial supply lifeline for wartime. Charges Britain's Sir Edward du Cann, a Conservative Member of Parliament: "The severe decline in Britain's merchant fleet now puts our nation's defense and our economy in deadly peril." The Pentagon has similar concerns about the U.S. commercial fleet, which has declined from 5,000 active oceangoing vessels at the end of World War II to about 400 today. The Government currently gives the maritime industry grants and loans totaling more than $1 billion a year in an effort to keep it alive.

More highly automated ships and Third World crews have put many Western sailors out of work for good. Since 1978 the number of British sailors has decreased from 60,000 to 33,700 and the ranks of West German seamen have dwindled from 33,000 to 23,000. Said Sailor Heinrich Kroeger as he sipped a beer at a dockside tavern in Hamburg: "I'm glad my son didn't follow in my footsteps. He'd be on welfare."

Greek shippers, famed for their merchant armadas, have tried to weather the storm by shrinking their fleets. "A shipowner who doesn't own a ship is in the best position today," says Stathis Gourdomichalis, president of the Union of Greek Shipowners. One such magnate, C.M. Lemos, sold a large part of his fleet for scrap and put the $45 million he received into real estate and other investments.

Selling a ship today is even tougher than finding work for one. The superabundance of vessels has depressed construction in Japan and Korea, which in recent years have built about 70% of the world's new ships. The Far Eastern yards became almost too efficient for their own good, using techniques like computerized welding to turn out ships at an ever faster clip. Today in the Yokohama yards of Mitsubishi Heavy Industries, twelve 60-meter cranes are used only to repair vessels rather than build them. Perhaps the busiest yard is in the port of Kaohsiung, Taiwan, where ships are broken down into scrap metal that is then generally turned into concrete-reinforcing rods.

The profit squeeze on shippers is expected to last for at least three years. By that time, more ships will have been scrapped and world economic growth may increase trade enough to boost business. Some contrarian investors have already started looking ahead by taking advantage of low prices. A giant tanker that cost $55 million to build can now be had for roughly $5 million. The investors need only install dehumidifiers to keep the engines from rusting, then sit back and wait for better times.

With reporting by Adam Zagorin/Antwerp, with other bureaus