Paris MOU tightens screws, sets barriers
The new inspection regime (NIR) of the Paris Memorandum of Understanding on Port State Control goes into effect from 1 January 2011. The NIR introduces a 100-percent mandatory inspection of vessels, imposes more stringent requirements than the previous one as well to vessels calling at ports in Europe, as to the relevant shipping companies and flags of states. According to some market participants, the introduction of the NIR is in fact a protectionist measure of the European Union.
Blacklisting all together
From next year we can expect a large number of extended inspections on ships, which will inevitably lead to an increase in the number of banned ship calls at the ports that fall under the jurisdiction of the Paris MOU. The fact is that the NIR effective next year includes total inspection of all ships calling at European ports. But the main feature is that the NIR system uses as a tool the risks management to make decisions about the checks and bans on ships entering the ports. All vessels will be divided into three levels of risk: low, medium and high to establish according to them the inspections frequency, their thoroughness and the bans procedure.
The risks management system will take into account not only age, type and condition of the vessel itself, but the assessment of a shipping company and the state of flag as well.
A controversial point in the new NIR is that the assessment of shipping companies is taken into consideration. It will be rated how a company fulfills its obligations to ensure the ship safe navigation. Moreover, evaluating this parameter is will be taken into account the company’s entire fleet (based on the identification number of the International Maritime Organization - IMO), with the shortcomings and the number of detentions of ships for the past 36 months. Any prohibition on entry into European ports for ships will have a significant negative effect on the rating of the company as a whole. Each shipping company will be assigned to one of three groups according to the quality assessment degree: very low, low, medium and high rating. Thus, even a ship in good condition may be subjected to discrimination because of the low rating of the shipping company.
As Alexander Dmitriev, advisor to the head of the Murmansk transport branch of JSC MMC Norilsk Nickel suggested, during the round table “NIR of Paris MOU: New Challenges and Horizons” initiated by Russian Transport Ministry and organized PortNews, in this situation it would be more reasonable to register vessels to the new, "clean" companies.
In turn, the Deputy General Secretary of the Paris MOU Anette Carien Droppers explained to representatives of the shipping business that the new company will automatically receive an average rating. It is important that the even if the ship is sold to another company it will continue to be subjected to effects of the result of the latest inspection for a period of three years from the date of the PSC inspection. That is, even if the ship was sold right after the test, which showed a negative result, and then repaired in the new company within three years it will still have a negative status.
According to Vitaly Klyuev, Deputy to the Director of the Department of State Policy in Maritime and River Transport of Russian Ministry of Transport, who was also speaking at the roundtable, just after the first inspection the new company may come down to the lowest level of rating and become a company with a high level of risk in the NIR, with all the negative consequences for the company’s registered vessels.
Another thing is that since the negative effects of low-quality rating of the shipping company are distributed to all of its fleet, the ship owners may resort to registration of each vessel to a separate legal entity, to diversify its risks.
Moreover, at changing the company it might make sense to carry out a complete overhaul of the ship, with the change of its IMO number.
Blacklisting all together
From next year we can expect a large number of extended inspections on ships, which will inevitably lead to an increase in the number of banned ship calls at the ports that fall under the jurisdiction of the Paris MOU. The fact is that the NIR effective next year includes total inspection of all ships calling at European ports. But the main feature is that the NIR system uses as a tool the risks management to make decisions about the checks and bans on ships entering the ports. All vessels will be divided into three levels of risk: low, medium and high to establish according to them the inspections frequency, their thoroughness and the bans procedure.
The risks management system will take into account not only age, type and condition of the vessel itself, but the assessment of a shipping company and the state of flag as well.
A controversial point in the new NIR is that the assessment of shipping companies is taken into consideration. It will be rated how a company fulfills its obligations to ensure the ship safe navigation. Moreover, evaluating this parameter is will be taken into account the company’s entire fleet (based on the identification number of the International Maritime Organization - IMO), with the shortcomings and the number of detentions of ships for the past 36 months. Any prohibition on entry into European ports for ships will have a significant negative effect on the rating of the company as a whole. Each shipping company will be assigned to one of three groups according to the quality assessment degree: very low, low, medium and high rating. Thus, even a ship in good condition may be subjected to discrimination because of the low rating of the shipping company.
As Alexander Dmitriev, advisor to the head of the Murmansk transport branch of JSC MMC Norilsk Nickel suggested, during the round table “NIR of Paris MOU: New Challenges and Horizons” initiated by Russian Transport Ministry and organized PortNews, in this situation it would be more reasonable to register vessels to the new, "clean" companies.
In turn, the Deputy General Secretary of the Paris MOU Anette Carien Droppers explained to representatives of the shipping business that the new company will automatically receive an average rating. It is important that the even if the ship is sold to another company it will continue to be subjected to effects of the result of the latest inspection for a period of three years from the date of the PSC inspection. That is, even if the ship was sold right after the test, which showed a negative result, and then repaired in the new company within three years it will still have a negative status.
According to Vitaly Klyuev, Deputy to the Director of the Department of State Policy in Maritime and River Transport of Russian Ministry of Transport, who was also speaking at the roundtable, just after the first inspection the new company may come down to the lowest level of rating and become a company with a high level of risk in the NIR, with all the negative consequences for the company’s registered vessels.
Another thing is that since the negative effects of low-quality rating of the shipping company are distributed to all of its fleet, the ship owners may resort to registration of each vessel to a separate legal entity, to diversify its risks.
Moreover, at changing the company it might make sense to carry out a complete overhaul of the ship, with the change of its IMO number.
Waiting for inspector
Although the decision to impose a ban on calls at the Paris MOUs ports, as well as the frequency and thoroughness of inspections are calculated automatically (currently a new information system "Tethys" is being developed), the inspection procedure itself and its results carry out people, which can lead to biased conclusions.
For example, Vladimir Popov, the deputy head of the Federal Service for Supervision in Transport of Russian Transport Ministry, noted at the conference the low quality of Russian inspectors. According to him, of the 54 detentions of ships at foreign ports in 2010, 45 detentions occurred after the vessels left Russian ports. That shows the low quality of inspections by domestic port state control officers.
There is no positive dynamics in the statistics as yet, Vladimir Popov said, and the increase in the number of penalties and audits can not change the situation. In connection with this Rostransnadzor has decided to publish two "blacklists" – of shipping companies, whose vessels are maintained in poor condition and port control inspectors who let them through.
"It is better to have these vessels checked properly here in Russia, then have them detained abroad", Vladimir Popov explained the Rostransnadzor’s approach.
Participants of the round table came to the conclusion that the "human factor" when inspecting vessels continues to play a high role – it much depends on relations of a specific inspector with the captain and crew members of inspected ship. There might be both subjective ‘nitpicking’ and ‘indulgence’. According to Vitaly Klyuev, the Paris MOU countries pay great attention to training of inspectors and reduce the impact of this "human factor".
Not all flags are welcomed there
As to flags, since Russia has passed successfully IMO audit in 2009, the country’s flag is in an ‘approved list’ of the Paris MOU.
Besides, recognized in Russia such classification societies as the Russian Maritime Register of Shipping, Germanischer Lloyd and Bureau Veritas have very high appreciation of the Paris MOU
“If the state has done everything possible to improve the performance, then the problem of business is to get a good assessment of companies and the ships history in order to obtain the status of vessels with low risk”, said Vitaly Klyuev. He called on ship owners “not to give the inspectors a chance to find shortcomings" through a careful implementation of all requirements and improve their performance.
Noteworthy, in the new regime the ship’s flag will indeed be important. Flags of the Paris MOU are divided into three groups according to risks: "white", "gray" and "black". So, the ‘black-flagged’ vessels will not be allowed to call at the EU seaports after two detentions within 24 months, while ‘gray-flagged’ vessels after more than 2 detentions in 36 months. If a vessel was not permitted at the European ports twice, then the subsequent ban incurred regardless of the flag. For such ships the permission to call at the ports of Europe will be closed for good after the fourth ban. By the way, at present most of the flags of Western European countries are in an ‘approved list’.
As for the Russian ship-owners, it's no secret that they prefer to use ‘convenient flags’ not Russian ones, so that the above mentioned preferences to Russian flag and classification societies in many cases will be useless.
Since the fleet in Russia is quite old and the NIR gives negative grades to vessels over 12 years old this may turn out a ‘downside’ for Russian shipowners.
All this means the Russian shipping companies will have hard times under the new inspection regime, and some of them may even leave the European market.
As Alexander Timchenko, General Director of dry bulk fleet management company International Shipping Group & Trading Ltd said in an interview with PortNews that in his opinion the introduction of the new inspection regime is actually a form of European protectionism associated with the desire to ‘squeeze out’ the rivals from the market.
Vitaly Chernov.
Although the decision to impose a ban on calls at the Paris MOUs ports, as well as the frequency and thoroughness of inspections are calculated automatically (currently a new information system "Tethys" is being developed), the inspection procedure itself and its results carry out people, which can lead to biased conclusions.
For example, Vladimir Popov, the deputy head of the Federal Service for Supervision in Transport of Russian Transport Ministry, noted at the conference the low quality of Russian inspectors. According to him, of the 54 detentions of ships at foreign ports in 2010, 45 detentions occurred after the vessels left Russian ports. That shows the low quality of inspections by domestic port state control officers.
There is no positive dynamics in the statistics as yet, Vladimir Popov said, and the increase in the number of penalties and audits can not change the situation. In connection with this Rostransnadzor has decided to publish two "blacklists" – of shipping companies, whose vessels are maintained in poor condition and port control inspectors who let them through.
"It is better to have these vessels checked properly here in Russia, then have them detained abroad", Vladimir Popov explained the Rostransnadzor’s approach.
Participants of the round table came to the conclusion that the "human factor" when inspecting vessels continues to play a high role – it much depends on relations of a specific inspector with the captain and crew members of inspected ship. There might be both subjective ‘nitpicking’ and ‘indulgence’. According to Vitaly Klyuev, the Paris MOU countries pay great attention to training of inspectors and reduce the impact of this "human factor".
Not all flags are welcomed there
As to flags, since Russia has passed successfully IMO audit in 2009, the country’s flag is in an ‘approved list’ of the Paris MOU.
Besides, recognized in Russia such classification societies as the Russian Maritime Register of Shipping, Germanischer Lloyd and Bureau Veritas have very high appreciation of the Paris MOU
“If the state has done everything possible to improve the performance, then the problem of business is to get a good assessment of companies and the ships history in order to obtain the status of vessels with low risk”, said Vitaly Klyuev. He called on ship owners “not to give the inspectors a chance to find shortcomings" through a careful implementation of all requirements and improve their performance.
Noteworthy, in the new regime the ship’s flag will indeed be important. Flags of the Paris MOU are divided into three groups according to risks: "white", "gray" and "black". So, the ‘black-flagged’ vessels will not be allowed to call at the EU seaports after two detentions within 24 months, while ‘gray-flagged’ vessels after more than 2 detentions in 36 months. If a vessel was not permitted at the European ports twice, then the subsequent ban incurred regardless of the flag. For such ships the permission to call at the ports of Europe will be closed for good after the fourth ban. By the way, at present most of the flags of Western European countries are in an ‘approved list’.
As for the Russian ship-owners, it's no secret that they prefer to use ‘convenient flags’ not Russian ones, so that the above mentioned preferences to Russian flag and classification societies in many cases will be useless.
Since the fleet in Russia is quite old and the NIR gives negative grades to vessels over 12 years old this may turn out a ‘downside’ for Russian shipowners.
All this means the Russian shipping companies will have hard times under the new inspection regime, and some of them may even leave the European market.
As Alexander Timchenko, General Director of dry bulk fleet management company International Shipping Group & Trading Ltd said in an interview with PortNews that in his opinion the introduction of the new inspection regime is actually a form of European protectionism associated with the desire to ‘squeeze out’ the rivals from the market.
Vitaly Chernov.