Leading names from the ship registries sector discuss the development of closer ties between class and flag
Digitalisation is having an impact across all facets of the tanker industry. What was once proprietary information is becoming widely available to all through the increasing transparency of the internet 2.0. This has an impact on the engineering and surveying exclusiveness of class societies. At the same time, online forms and databases of ships and crew certificates are making some of the functions of ship registries faster and more cost effective. Ship registries are expanding their remit, but what of the development of closer ties between class and flag?
The Liberian Registry, administered by the Liberian International Ship & Corporate Registry (LISCR, LLC) and represented by chief operating officer Alfonso Castillero, responded to the question of closer ties between class and flag by noting: “Flag is becoming more technical, and class needs to step it up. I see many class societies hiding behind curtains when it comes to sharing responsibilities in PSC detentions, throwing the weight only to the flag, and I also see a lack of data transparency.
“However, class is undoubtedly a strategic partner in the ship registration business, though I see a move from various major flag States to take the lead on some of the work that has historically been done by class. The blind delegation of technical responsibilities to class leaves flag with little control over the quality of their fleet. Then, when a vessel gets detained or there is an accident, the responsibility falls back to the flag, while the issue at hand can often be attributed to class. In these instances, we do not see class societies stepping up and communicating with the flag on how to prevent issues in the future.”
He continued: “Flag must create more rigorous programs to verify vessel and class quality, or flag should take a more direct approach and carry out technical responsibilities themselves. However, there is typically a lack of technical knowledge on the part of the flag State; they often do not have the capacities to understand technical language.
“There is a major disconnect from what class societies are supposed to be doing on behalf of the flag. The collaboration that we saw in the industry 20 years ago has been lost. Key industry players need to collaborate on technical issues, especially in the wake of 2020.”
In response to the same question, the Marshall Islands flag, which is administered by IRI, noted the changes that are taking place in that relationship. IRI’s president Bill Gallagher said: “Back in the 1990s there was a separation between flag and class and that was the accepted situation. Today, we have a pretty deep technical bench and I like to think an even relationship with class. Even so, while other flags are taking on class-type activities to develop different revenue streams, we (IRI / Marshal Is) tend to let class do what class does best. We don’t feel it is not necessary to be involved in all the activities that class already cover. We recognise that it is an evolving situation, and the relationship between class and flag is in a period of evolution. For example, we have opened more offices in the US to mainly deal with the relationship between class and the US Coast Guard.”
There are some developments between class and flag that Mr Gallagher feels are not all that positive. “One thing that is important to note is that unlike the other two major flags, we do not apply a surcharge to class. We realise that if we did that it would be passed on to owners,” said Mr Gallagher.
IRI’s worldwide business operations director Theofilos Xenakoudis reinforced that IRI / Marshall Islands is committed to development. “We are working towards new standards of co-operation with class and we take it very seriously,” he said. “This means identifying any areas of weakness in that co-operation.” Mr Xenakoudis explained that there were regular meeting with all the class societies to explore and explain any issues that had arisen and identify solutions.
Mr Xenakoudis pointed out that this co-operation also included regions where IRI / Marshall Islands is developing operations. The flag is on a push in Asia and is making headway in Japan. The company has offices in Tokyo and one in Imabari. “The Marshall Islands flag is highly regarded by Japanese shipowners and has good co-operation with the shipyards in Imabari,” he said.
It has been a difficult few months for the Panama Ship Registry. Despite having removed the crude oil tanker Grace 1 from the registry – in early July 2019 the vessel was detained by Gibraltar police and boarded by Royal Marines. The vessel was one of nearly 60 tankers and other vessel types that have been withdrawn from the Panama flag following the reintroduction by the US of sanctions on Iran. “Panama will maintain its flag withdrawal policy,” Panama Maritime Authority’s general director of merchant marine Rafael Cigarruista told news organisation Reuters.
“Our intention is to improve our fleet’s percentage of compliance, not only regarding sanctions by international organisations, but also Panama’s current legislation and maritime security rules,” he added.
The problem for Panama is that it has one of the largest fleets under registration. While the flag is efficient at registering vessels, the state-owned nature of the organisation and the perception that it is slow to remove vessels persists, despite the speed with which it reacted to the re-imposition of US sanctions.
In response, Panama Ship Registry has overhauled its systems to create a single integrated platform. The present ‘Electronic Ship Registration System (ESRS)’ used by Panama Maritime Authority’s General Directorate of Merchant Marine (Ship Registry) will be electronically meshed with that of the General Directorate of Public Property registry of Ships (ownership titles and mortgage registration), to simplify the process of ship registration.
The new system will include innovations adapted to the existing technology and improvements to the registration process. “The integration in a single platform will facilitate the procedure for the user, which is our prime goal,” said Rafael Cigarruista.
The main features of registration – such as certificate of ship registration, cancellations, mortgage registration, ships and radios licenses, property and encumbrances certificates and discounts, name reservation and general documents for the vessel – will continue to be available on the platform.
The Panama Maritime Authority (AMP) is calling an international tender before the end of 2019/Q1 2020, for companies interested in providing the software. “The implementation will take place in phases and should be fully operational by end-2020,” said Mr Cigarruista.
“The users, shipowners, operators, managers, banks and/or law firms will be able to use the platform directly. At the end, they will deal with only one system. The PKI system, used to date only by lawyers, will be integrated. The platform will be versatile in different languages. This new system will position us in the global era,” he added.
The ESRS will offer Electronic Signature: all documents will be signed electronically; this functionality involves an agreement with the Public Registry of Panama and its General Directorate of Electronic Signature. Electronic Registration Certificates (ship patent, radio licenses et al) using QR and/or bar code, will be accessible for printing. The system will also include a payment gateway: all different methods of payment currently used, such as credit and debit cards, will be available.
A registration calculator will allow users to calculate the costs for each operation, including discounts, through the web platform. The platform will also issue electronic certificates on property and encumbrance certifications, electronically signed in English and Spanish.
Flag’s underlying purpose
Some flags are already quite far down the path to digitalisation, or were designed that way from the outset. Palau International Ship Registry chief executive Panos Kirnidis commented that in developing systems and growing closer to class, a flag should not forget its underlying purpose.
“I think it is a good starting point to remember what the first role of a flag is to be responsible for its ships operating in a safe, secure and environmentally friendly manner. Flags role includes helping to develop regulations, together with the other IMO member states, and ensuring that ships in their registry are following the regulations. Class oversight is important in helping us do our job. Although, class is a key resource on technical issues, flags also have technical and operational expertise and going forward it is going to be the blending of these skills and expertise that is going to bring the real benefits. The role of the flag is to make sure that quality is maintained.
He noted the development of a unique web solution called ‘ePISR’ that allows the organisation to process all applications and workflows, which are accessible by different levels of industry stakeholders. “With ePISR the shipowner and manager [can] process all their ship and seafarer’s inquiries to PISR and retrieve KPIs of their fleet,” noted Mr Kirnidis.