Flag Registries - Why Is The Anti-Competitive Environment Allowed To Continue

2/15/2021 Riviera - Opinion - Flag registries: why is the anti-competitive environment allowed to continue?
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Flag registries: why is the

anti-competitive
compet
environment allowed to
continue?
16 Oct 2017 by Riviera Newsletters
Panos Kirnidis* takes a critical look at Flag States'

compet
competitiveness
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Panos Kirnidis* takes a critical look at Flag States'

compet
competitiveness
Recently my flag, Palau International Ship Registry (PISR), has

suffered from dubious and questionable port state control
(PSC) inspections that have resulted in PISR being placed on
the Paris MoU blacklist.
Given that anybody can easily access inspection records,

white, grey and black lists have an enormous impact on the
reputation and the ethical and commercial position of the
parties involved – the owner, the shipping company and the
flag of the vessel. Many conflicts have emerged among these
parties and while authorities who participated in research
indicated no conflicts, flags and shipping companies have
given the opposite view and incidences of unreported cases
are common.
PSC officers do not work to a common standard for

inspections. The selection of ships to be audited does not
follow random sampling and so does not reflect the real
situation. The mathematical formula used is biased against
smaller registries. There is no substantial historical evidence to
show that there is a direct relationship between the calculated
target factor (age, flag or Recognised Organisation[RO]) and
Editor's Choice
the standard of the ship.
There needs to be a more serious look at how PSC operates

in some parts of the world. Political influences can play a
damaging part in PSC detentions. Add into this volatile mix
corruption and sheer incompetence
compet in some parts of the
world, and it is not hard to see why there needs to be a tighter Global offshore wind capacity
control on PSC and the economic and management issues
increased nearly 20% in 2020,
despite Covid challenges
that are directly affected.
South Korea plans
Despite the fact that the majority of PSC inspections are world’s largest
conducted on a highly professional, transparent and equitable offshore windfarm
basis, incidents of corruption have been unofficially reported
Satellite support for
at a number of ports worldwide, notably in the Black Sea offshore energy
region. Some of these cases show that the PSC was used as asset
geopolitical leverage for a specific time period. If a registry decommissioning
had several vessels trading in the Black Sea region and other Polarcus to
registries had no ships in that area, the picture will not be a terminate all
genuine reflection of the performance of the two registries. It employees after
is important to stress that the MoU should be an agreement
banks withdraw
support
between maritime administrations and not governments, as
stipulated in all Memoranda.
Another major issue is that it can be proven, statistically, that

local PSC favours its national registered vessels or vessels
with the national RO. Take, for instance, the statistical
performance of Russian-flagged ships detained in Russia,
French-flagged
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The shipping industry needs ways to tackle this alleged

corruption among some PSC officers, who are extorting large
payments by threatening to detain vessels in port.
The problem is so severe that the international shipping

associations (Intercargo, Intertanko, BIMCO and the
International Chamber of Shipping) addressed their concerns
to the PSC MoUs, suggesting that they establish fully
independent internal affairs review panels to confidentially
assess any complaints of corruption or negligence. So many
shipowners and crews, feeling exposed, left under threat, but
the proposal was rejected by the PSCs on the basis that
established procedures are considered adequate.
The most vulnerable ships seem to be bulker vessels because

of the variety of facilities visited, compared with tankers or
container ships.
Remember that PSC officers are bound by a code of conduct,

as vessels, companies, flags and ROs are ruled by
international conventions. The code of conduct for PSC
officers encompasses three fundamental principles against
which all actions of officers are judged: integrity,
professionalism and transparency. We expect compliance with
these principles and codes, as we are adhering to the
applicable maritime rules and regulations.
The United Nations Conference on Trade and Development

(UNCTAD) states that “Entities engaged in the same or similar
lines of activity should be subject to the same set of legal
principles and standards to ensure fairness, equality and non-
discriminatory treatment under the law.” According to the
OECD, “competition
compet is central to the operation of markets and
fosters innovation, productivity and growth, all of which create
wealth and reduce poverty.” The current PSC standards do
not, in our opinion, meet these definitions.
There is not a common standard or code for PSC inspections,

so at the end of the day the PSC officers carrying out the
survey are the ones who decide if the vessel will be detained.
These inspections rely more on the prima facie impression of
the inspector to decide the extent and scope of inspection.
The same vessel can be released from one port and then
detained in another port soon after. Communication difficulties
both on the part of PSC inspectors and ship crews can result
in detention even though there might be no deficiency. There
are no translators or interpreters to assist with documentation,
for example.
There is also the issue of organisational structure: the lack of

communication, common activity and uniformity among the
PSCs seem to be obstacles to solving the problems.
Another issue is the lack of a grace period to appeal against
the results
usage, and assist before
us in our they become
marketing efforts. available to various interested
parties. Without even an inspection/detention report sent

(neither to the owner nor the flag administration), you can see
detention records that give you even more “credits for the
black list membership.”
Since we established PISR seven years ago, we have been

working toward the development of a smart registry, one for
the here and now with future-proofed technology and
foresight. What we are fighting against, though, is an outdated
inspection system that can plunge a newer and smaller
registry into a vicious circle. Even though the overall number
of detentions by PSC can be lower than for larger fleets, more
detentions and more inspections can be explosive for a
registry like PISR. If you go by the risk factor, the flags with a
greater number of ship calls have more risk and should be
targeted. But the PSC focus on so-called blacklisted flags even
if the number of ship calls is lower.
PISR recognise that over the past few years the PSC MoUs
have seen developments in training, communication,
procedures and aids. We are supportive of the current
activities to harmonise the practices of the PSCs and the
desire for more transparency, including PSC instructions for
the training of officers; references to the deficiencies found
during an inspection in order to limit incorrect reports;
publication
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window regimes. Yet it is not clear if inspection results will

improve with just the above-stated actions.
Palau would like the system to be re-evaluated, and is calling

for support from others in the maritime sector that want a
transparent and fair system for the rewriting of the
mathematical algorithms. This will help attract new entrants
into the sector and increase competition.
compet We are not asking
for a dilution of the regulations affecting the critical issues that
classification societies, flags, registries and any other relevant
bodies are subject to. We are asking for a review of the anti-
competitive practices defining the performance lists. That way
compet
at least we would all know, no matter what our size or
perceived industry standing, that the ports our vessels are
sailing in and out of are adhering to one set of regulations. We
are all sailing the same seas, are we not?
*Panos Kirnidis is chief executive officer of Palau International

Ship Registry
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2/15/2021 Riviera - Opinion - Flag registries: why is the anti-competitive environment allowed to continue?

Home News Events Marketing Solutions Jobs Data Register or Login

Flag registries: why is the

Panos Kirnidis* takes a critical look at Flag States'

By clicking “Accept Cookies” you agree to the storing of cookies on your

Panos Kirnidis* takes a critical look at Flag States'

Recently my ﬂag, Palau International Ship Registry (PISR), has

Given that anybody can easily access inspection records,

PSC oﬃcers do not work to a common standard for

There needs to be a more serious look at how PSC operates

Another major issue is that it can be proven, statistically, that

The shipping industry needs ways to tackle this alleged

The problem is so severe that the international shipping

The most vulnerable ships seem to be bulker vessels because

Remember that PSC oﬃcers are bound by a code of conduct,

The United Nations Conference on Trade and Development

There is not a common standard or code for PSC inspections,

There is also the issue of organisational structure: the lack of

parties. Without even an inspection/detention report sent

Since we established PISR seven years ago, we have been

window regimes. Yet it is not clear if inspection results will

Palau would like the system to be re-evaluated, and is calling

*Panos Kirnidis is chief executive oﬃcer of Palau International

DRY CARGO TANKER SHIPPING & TRADE

Related to this Story

Physical inspection Windship Technology Hyde Marine oﬀers

Events View All

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By clicking “Accept Cookies” you agree to the storing of cookies on your

Copyright 2020 Riviera Maritime Media Ltd.

By clicking “Accept Cookies” you agree to the storing of cookies on your

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