Palau registry head attacks Paris MOU

Aug 04 2017


The Paris MoU Blacklist status is stopping the growth of new registries, is anti-competitive and has become a vicious circle, claimed Panos Kirnidis, Palau International Ship Registry CEO.

He was responding to the Palau Registry being relegated from the Grey to the Black list by the Paris MoU on 1st July, 2017.

“Once a new registry is launched it needs to grow and will not in the first period be attracting the newer and larger vessels, operators or owners. It takes time for the new registry to build trusted relations with the shipowners and stakeholders in the industry and to show its values. Consequently, the fleet may start as one of older vessels (although not substandard) and numbers will not match those of the established registries; however, there is a higher risk of those older ships being detained.

“It is more than simple numbers, but it is highly disadvantageous to new registries such as Palau, even though our services and credentials can be ranked as among the finest in the industry. To climb the rankings, we have to be seen as whiter than white and yet the very statistical formula negates our chances of progress. You can have 12 of the best vessels sailing the world’s oceans but if one or two fail an inspection, then by sheer lack of numbers you end up on the blacklist. Once the new registry is placed on the blacklist it condemns it to years of struggle to prove its credentials as a diligent and efficient flag. It is almost impossible to start off anywhere other than on the blacklist, despite the enormous impact it has on your business,” he said.

Kirnidis believed the system needs changing as it shuts out competition and fails to provide any support for new and developing registries. “There is a distinct imbalance in the world of shipping when it comes to the rankings of flag states and classification societies. It’s about time we woke up to the issues affecting new registries and their flags. Maybe it is easier at this time for me to hold such strong views; after all, my registry – Palau International Ship Registry (PISR) - is the newest entrant into the sector for more than a decade with a precise plan to lead the market among other reputable registries. But it is more about the processes and the inevitability of being placed on a blacklist that concerns me and maybe why a change is needed.

He added; “The Performance lists within the MOU’s places an unbearable burden on new registries trying to grow and prove their credentials. You can find yourself placed on the lower rank for even a series of minor infringements and issues, as detentions are detentions no matter what the issue is. This is where the system really falls down, for a small registry the numbers are stacked against it.

“Being placed on the blacklist as a new registry is more about a maturity process than having a significant number of issues related to your fleet but it is a system highly weighted against new registries. There is an inevitability of being placed on a blacklist that concerns me and maybe why a change is needed. Despite its credentials, highly experienced auditors, inspectors, managers and the latest Smart technology to operate its systems, Palau has been placed on the Black List because it currently does not have enough vessels in its fleet to escape the formulaic consequences.

“Having 23 detentions and inspections in a fleet of 300 vessels puts a new registry on the Blacklist, even though the overall number is lower than other fleets with more vessels, more detentions and more inspections. If another registry has 23 detentions but a fleet of 5,000, then the simple formula used means these detentions are deemed less relevant in the case of larger registries only because of the maths. This is why a mathematical formula without any weighting doesn’t work in the best interests of the industry. If your vessel is flying the flag of a blacklisted flag state, then vessels are inspected more frequently and more thoroughly. It is a vicious circle that is almost impossible to escape from. Just look at the top registries now they have all been through this process and taken years to migrate through it.

“For a small registry like Palau, one detention means we need 19 clean other inspections to avoid its negative effect, something that is hard to achieve when you have a small fleet. To grow our vessel base we need to gain the confidence of shipowners and managers and this is made harder when you find ourselves in the black list forming a vicious cycle, so even though our services and credentials can be ranked as among the finest in the industry we find ourselves not on an even playing field. It is a process we are working through and will enable us to show we are a diligent and highly responsible registry. A change to the way the formulas are used as it is a system highly weighted against new registries. There is an inevitability of being placed on a blacklist that concerns me and maybe why a change is needed,” he stressed.

Kirnidis said that he wanted the regulations and system to be re-evaluated and is calling for support from other registries to rewrite the mathematical algorithms and help attract new entrants into the sector. “In no way are we asking for a dilution of the regulations affecting the critical issues classification societies, flags, registries and any other relevant bodies are subject to. On the contrary, the reason so many registries have exemplary reputations is because of the expert work, diligence and experience they bring to world shipping. What we are asking for is for the anti-competitive practices defining the Performance Lists to be reviewed,” he explained.

He was responding to the Palau Registry being relegated from the Grey to the Black list by the Paris MoU on 1st July, 2017.

“Once a new registry is launched it needs to grow and will not in the first period be attracting the newer and larger vessels, operators or owners. It takes time for the new registry to build trusted relations with the shipowners and stakeholders in the industry and to show its values. Consequently, the fleet may start as one of older vessels (although not substandard) and numbers will not match those of the established registries; however, there is a higher risk of those older ships being detained.

“It is more than simple numbers, but it is highly disadvantageous to new registries such as Palau, even though our services and credentials can be ranked as among the finest in the industry. To climb the rankings, we have to be seen as whiter than white and yet the very statistical formula negates our chances of progress. You can have 12 of the best vessels sailing the world’s oceans but if one or two fail an inspection, then by sheer lack of numbers you end up on the blacklist. Once the new registry is placed on the blacklist it condemns it to years of struggle to prove its credentials as a diligent and efficient flag. It is almost impossible to start off anywhere other than on the blacklist, despite the enormous impact it has on your business,” he said.

Kirnidis believed the system needs changing as it shuts out competition and fails to provide any support for new and developing registries. “There is a distinct imbalance in the world of shipping when it comes to the rankings of flag states and classification societies. It’s about time we woke up to the issues affecting new registries and their flags. Maybe it is easier at this time for me to hold such strong views; after all, my registry – Palau International Ship Registry (PISR) - is the newest entrant into the sector for more than a decade with a precise plan to lead the market among other reputable registries. But it is more about the processes and the inevitability of being placed on a blacklist that concerns me and maybe why a change is needed.

He added; “The Performance lists within the MOU’s places an unbearable burden on new registries trying to grow and prove their credentials. You can find yourself placed on the lower rank for even a series of minor infringements and issues, as detentions are detentions no matter what the issue is. This is where the system really falls down, for a small registry the numbers are stacked against it.

“Being placed on the blacklist as a new registry is more about a maturity process than having a significant number of issues related to your fleet but it is a system highly weighted against new registries. There is an inevitability of being placed on a blacklist that concerns me and maybe why a change is needed. Despite its credentials, highly experienced auditors, inspectors, managers and the latest Smart technology to operate its systems, Palau has been placed on the Black List because it currently does not have enough vessels in its fleet to escape the formulaic consequences.

“Having 23 detentions and inspections in a fleet of 300 vessels puts a new registry on the Blacklist, even though the overall number is lower than other fleets with more vessels, more detentions and more inspections. If another registry has 23 detentions but a fleet of 5,000, then the simple formula used means these detentions are deemed less relevant in the case of larger registries only because of the maths. This is why a mathematical formula without any weighting doesn’t work in the best interests of the industry. If your vessel is flying the flag of a blacklisted flag state, then vessels are inspected more frequently and more thoroughly. It is a vicious circle that is almost impossible to escape from. Just look at the top registries now they have all been through this process and taken years to migrate through it.

“For a small registry like Palau, one detention means we need 19 clean other inspections to avoid its negative effect, something that is hard to achieve when you have a small fleet. To grow our vessel base we need to gain the confidence of shipowners and managers and this is made harder when you find ourselves in the black list forming a vicious cycle, so even though our services and credentials can be ranked as among the finest in the industry we find ourselves not on an even playing field. It is a process we are working through and will enable us to show we are a diligent and highly responsible registry. A change to the way the formulas are used as it is a system highly weighted against new registries. There is an inevitability of being placed on a blacklist that concerns me and maybe why a change is needed,” he stressed.

Kirnidis said that he wanted the regulations and system to be re-evaluated and is calling for support from other registries to rewrite the mathematical algorithms and help attract new entrants into the sector. “In no way are we asking for a dilution of the regulations affecting the critical issues classification societies, flags, registries and any other relevant bodies are subject to. On the contrary, the reason so many registries have exemplary reputations is because of the expert work, diligence and experience they bring to world shipping. What we are asking for is for the anti-competitive practices defining the Performance Lists to be reviewed,” he explained.  



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