Broadly, the term modern slavery' incorporates exploitation where a person cannot refuse or leave work because of threats, violence, coercion, abuse of power or deception.

Broad reporting requirements continue a growing trend for companies involved in the shipping industry to be subject to public scrutiny. The independent organisation for seafarer’s rights, the ITF, has regularly expressed concern at charterers’ levels of due diligence concerning the working conditions aboard ships they charter. Government enquiries and even the law reports, periodically record examples of practices having attributes of slavery, including withholding crew pay, or even crew starvation.

According to Norton, a 2012 inquiry by the New Zealand Government found a high incidence of human rights and labour law violations by foreign flagged chartered vessels operating in domestic waters and noted instances where local companies were required to compensate unpaid workers. Other recent examples include:

  • In June 2017, the general cargo ship Tahsin was detained by UK MCA in the Port of Sharpness in Gloucestershire. Crew members reportedly said they were forced to work in conditions which included the denial of clean drinking water (resorting to drinking sea water), being provided with out of date food, and the failure of the shipowner to pay seafarers’ wages.
  • In March 2018, the New Zealand Supreme Court allowed a group of Indonesian seafarers compensation for their unpaid wages, from the sale of a Korean flagged sister vessel forfeited to the New Zealand Crown for offences against the Fisheries Act 1996 (NZ).

Legislative responses will increasingly harness the power of publicly accessible information (such as central repositories containing all published modern slavery statements). In future, such sources may feature in media coverage or prompt questions from shareholders or other stakeholders.

In the UK, companies with UK operations and a turnover of more than £36 million annually are required by section 54 of the Modern Slavery Act 2015 to report on the steps they are taking to combat slavery and human trafficking in their own operations and their supply chains.

Companies that are already reporting under the UK’s Modern Slavery Act will have taken steps to investigate their manning agencies, repair yards, bunker suppliers, providores, port agencies and update the questionnaires they use in charter chains. Suppliers may not themselves be required to report under any legislation, but are increasingly likely to be responding to customers who must report. Accordingly many businesses - regardless of where they are based - will sooner or later find themselves on a trajectory towards reporting as a result of the introduction of laws in the UK, EU or Australia.

Steps in preparation for meeting reporting requirements (or indirectly, the expectations of customers and counterparties for their reporting) include:

  • Mapping the organisation’s structure, businesses and supply chains.
  • Formulating policies in relation to modern slavery – this will involve collating current policies, identifying gaps, adapting existing policies and formulating new policies, as needed.
  • Carrying out a risk assessment – identifying those parts of the business operations and supply chains where there is a risk of modern slavery taking place. Due diligence for owners should include vetting managers, agents, officers and, in the case of time or voyage charterers, their counterparty ship owners.
  • Assessing and managing identified risks – this may include carrying out further due diligence in the entity’s operations and supply chains and reviewing and adapting contract terms and codes of conduct with suppliers.
  • Considering and establishing processes and KPIs to monitor the effectiveness of the steps taken to ensure that modern slavery is not taking place in the business or supply chains.
  • Carrying out remedial steps where modern slavery is identified.
  • Developing training for staff on modern slavery risks and impacts.

The burden of increased regulation may also create competitive advantage for compliant operators in some trades and markets. On the whole, history suggests that the pace of change will be uneven and slow. Nevertheless, it is clear that the power of public scrutiny has already spurred the relatively rapid rise of modern slavery, as a business risk for the shipping industry.