Alex Gray - IHS Fairplay.pdf - IMSF

The Source for Maritime Information and InsightINFORMATION+INSIGHT=KNOWLEDGE1Copyright © 2008 IHS Inc. All Rights Reserved. 1

The Challenges of recording and maintainingup-to-date data on Parallel/Dual RegistrationAlex Gray – IHS FairplayIMSF Annual Meeting, Oslo 2012Copyright © 2008 IHS Inc. All Rights Reserved. 2

The challenges of recording and maintaining up-todatedata on Parallel RegistrationWhat I would like to cover in this presentation:My role and the changing information gathering environment –background contextPressures to automate versus expertise – Process optimizationChecklist of criteria for collection – Quality goals and metrics,demand, finding reliable sources, resource issuesSearch for new areas of updating such as Parallel Registry tomeet market demandProgress and problems encountered so far on Parallel Registry,and the next stage. Does it meet the four ‘c’s yet?Copyright © 2008 IHS Inc. All Rights Reserved. 3

Copyright © 2008 IHS Inc. All Rights Reserved. 4

The dynamics of modern data gathering and theenvironment• Increased sophistication with the Integration of disparate databasesAIS/Ports/Ships/Owners/Casualties/Fixtures/PSC incidents• Corporate environment – sales driven rather than collegiate• Demand led but negotiations over resource allocation• Optimization and Automation versus Expertise• Global Load Balancing• Quality Drivers and MetricsCopyright © 2008 IHS Inc. All Rights Reserved. 5

Quality Drivers and MetricsThe IHS mantra of the 4 ‘c’s• Currency• Completeness• Consistency• CorrectnessCopyright © 2008 IHS Inc. All Rights Reserved. 6

Collect or not collect?Checklist:Recognisable demand from the marketplaceDefinable and measurable. Can we ring-fence it?Adequate sourcingProfitable – funding?Sufficient resources availableMeets the 4 ‘c’sCopyright © 2008 IHS Inc. All Rights Reserved. 7

Now on to Parallel/Dual Registration• The Challenge: To record vessels that are bareboat chartered to charterers whowish to further register these in countries of their own choosing. A large numberof Flag States have Parallel Registry agreements in order to accommodate this,and it appears to be growing in popularity.• Not all Flag States allow Parallel Registration whilst some limit the scope of ParallelRegistration (example – UK which allows parallel registration into their flag butparallel out of their flag is not permitted).• Each Flag State has its own rules and regulations over the period of Parallelregistration. In a lot cases, the period is 2 years with the possibility to extend afterthis period subject to agreement from the Flag State.Copyright © 2008 IHS Inc. All Rights Reserved. 8

The motive and demand for this information• The Motive: We are placing a lot of emphasis on recording registrationthrough the IMO Tonnage Assessment mechanism, thus it seems logical tocomplete the jigsaw by recording vessels involved in Parallel Registry.• The demand for this information: Comes from organizations involved inevaluating the web of relationships influencing ship utilization, such ascommodity traders, oil companies, insurers and vetting organizations.• Fits within the security and risk banner where companies are evaluating atrack records and weighing up the risk eg Iranian connectionsCopyright © 2008 IHS Inc. All Rights Reserved. 9

Copyright © 2008 IHS Inc. All Rights Reserved. 10

What do we mean by Parallel Registry?Defining itWhen a ship is bareboat chartered, parallel registration is notnecessary or mandatory. The ship has already been registeredbut the charterer may choose to register the vessel in anotherFlag State, as well, to secure certain benefits associated withdual registry. These vary according to the circumstances butcould entail lowering costs by choosing a register in a countrywith a more advantageous tax regime or lower registrationcosts, or by lowering labour costs.Copyright © 2008 IHS Inc. All Rights Reserved. 11

A typical motive: Lower Labour CostsFor the labour cost reduction imperative, certain traditional flagsmay have restrictions requiring the use of crew and officers whoare nationals of that country or require the charterer to negotiaterates with local trade unions. Bareboat registration offers theopportunity to loosen the protective nature of these employmentterms.12Copyright © 2008 IHS Inc. All Rights Reserved. 12

Historical ContextA bareboat charter is advantageous for charterers who do not have thefunds or investment opportunities to invest in an asset long term but stillwant to retain as much control over utilisation as is possible. It waspioneered after WWII when West Germany needed to secure ships topower its export drive and earn foreign currency.At the it did not have the resources to invest in newbuildings or buy onthe second hand market, hence an alternative way was to take foreignregistered ships on a lease arrangement. These were flagged under WestGermany during the period of the lease.13Copyright © 2008 IHS Inc. All Rights Reserved. 13

Latest trendsAPAC asset flexibility: The new economic climate has brought dual registryback into vogue, and an interesting development is the use of this mechanismin certain APAC countries such as China where tight financing and a lack offunds from investment houses encourages entrepreneurs to utilise atraditional maritime state and then seek the lower cost advantages of dualregistry to circumnavigate long term ownership commitments.14Copyright © 2008 IHS Inc. All Rights Reserved. 14

Process for creating and managing Parallel records• Suspension and re-allocation. Where clearly identified that a vessel has ParallelRegistry, either through Flag State advice or other confirmed sources, theunderlying registration and ownership details will be put on hold and therelevant details for the (parallel) registration authority, under whose flag thevessel is currently sailing, recorded in current records.• Checking. Where Parallel Registry is cancelled and a vessel reverts to the ‘true’owners, class files should be consulted before returning details previously heldin the dormant file• Double checking. It is important to check the original data as a vessel may alsochange owner at the completion of a charter, ie the Charterer may take up anoption to purchase at the completion of a long term charter.15Copyright © 2008 IHS Inc. All Rights Reserved. 15

The fields that we have set up to record ParallelRegistry arrangements• Flag (parallel true flag) eg Germany (On the database as ‘Parallel Flag’)• Flag eg Antigua and Barbuda (Parallel-in Flag)• Effective Date• Port of Registry• Port of Registry (parallel true port) eg Emden (On the database as ‘ParallelPort’)• Bareboat Charterer (Parallel-in Registry) eg Antigua and BarbudaCompany (On the database as ‘B.B.Charterer’)• Effective Date• Registered Owner (Parallel-out )• Effective Date16Copyright © 2008 IHS Inc. All Rights Reserved. 16

Copyright © 2008 IHS Inc. All Rights Reserved. 17

Copyright © 2008 IHS Inc. All Rights Reserved. 18

A typical example of a Parallel Registry setupVESSEL:- WELLINGTON STRAIT – IMO 9516777• Registered under GERMAN flag 20 th April 2012• Call Sign – DIVO2, Port of Registry - Hamburg• Registered owner - ms 'Wellington Strait' GmbH & Co KG, Germany• Paralleled in to LIBERIA flag 20 th April 2012 (for 2 year period)• Parallel Call Sign – D5BG5, Port of Registry – Monrovia• Parallel Registered owner - Wellington Strait Shipping Co Ltd, Liberia19Copyright © 2008 IHS Inc. All Rights Reserved. 19

Sourcing of the Data• Majority of our sourcing comes from Flag Authorities and Shipowners. Wecurrently show on our database 4,141 vessels under parallel registration. Ofthese, by far the largest Flag State that has vessels paralleled out of itsregistration is GERMANY which accounts for over 78% (3,237 vessels).• Flag States with the largest number of paralleled in vessels are – LIBERIA 1,283vessels, ANTIGUA & BARBUDA 1,109 vessels, MARSHALL ISLANDS 256 vessels,RUSSIA 269 vessels, MALTA 137 vessels, PHILIPPINES 162 vessels.20Copyright © 2008 IHS Inc. All Rights Reserved. 20

What we might be missing. The qualityimperativeQuality Goal: Completeness• We receive many Flag State data feeds, but quite a few do not show Parallelin/out information. A typical case is Panama where there are 31 that we knowof but are sure the figure is much greater• There could be thousands of ships under Flag States that we do not get a feedfrom especially in the APAC region (China)21Copyright © 2008 IHS Inc. All Rights Reserved. 21

Quality Goal: Correctness and Consistency: AssociatedHistorical Problems• Attempting to identify what is and what isn’t: Many Countries now operate systemsthat allow Parallel Registry with other administrations. This is identified on their officiallists in some cases with a separate number range, however, most Flag Authorities donot differentiate so clearly.• Result: Unnecessary updates being made to the database and confusion over which isthe actual flag and registered owner. A prime example in the past has been issues withunderstanding the arrangement between Panama/Philippines.• Further problems: Some flag States are recording the bareboat owners on their officiallists, which are at variance with the owners recorded by vessel’s Class Society andsometimes as advised by the Owners.22Copyright © 2008 IHS Inc. All Rights Reserved. 22

Ownership, Commercial Operation & ManagementSUPERGROUPSOWNING and OPERATING GROUPOPERATING GROUPSHIPSHIPOWNERSHIPFinanceGroup(Parent Co.= bank)GroupBeneficialOwnerRegisteredOwnerCOMMERCIALOPERATIONSOperating Company(owned by GBO)OPERATOR(bareboat or time)OperatingChartererGroup(owned by Operating Group)SHIPMANAGEMENTIn-house Managers 3 rd Party Managers Operating-Group Managers(owned by GBO) (not owned by GBO (Owned by Operating Group)or Operating Group)SMC CertificatesDOC CompanyTechnicalManagerShipmanager(best contact)MultipleSourcesCopyright © 2008 IHS Inc. All Rights Reserved. 23

Levels of Ownership/ManagementBeneficialOwnerGroupOperator3 rd PartyManagerShipManagerOperatorTechnicalManagerRegisteredOwnerShipDOCChartererCopyright © 2008 IHS Inc. All Rights Reserved. 24

Quality goal: Consistency. The changing conditions of acceptance withinflag states also makes it difficult to monitor and incorporate tonnage asParallel Registered:Flag States involved in Parallel Registry utilise the local legal framework tosafeguard the interests of mortgagees of ships in instances of bareboat charterregistration. A typical example is the Seychelles Registry which requires:• Parallel registration is allowed for a fixed period of time duringwhich the ship may continue to be registered in her original foreign registry.• The ship must be bareboat chartered-in to a Seychelles company• The laws of the ships initial foreign flag must allow for ParallelRegistration25Copyright © 2008 IHS Inc. All Rights Reserved. 25

The changing conditions continued:• The written consent of both the foreign registry and mortgagees (ifany) must be submitted to the registrar of Seychelles ships.• During the period of parallel registration in Seychelles the ship’s registration inthe foreign register will be suspended, except so far as it relates to ownership,mortgages and other encumbrances. During this period the ship will fly theSeychelles flag (not being allowed to fly the foreign flag) and the name of theship and here Seychelles port of registry shall be marked on her.26Copyright © 2008 IHS Inc. All Rights Reserved. 26

Progress so far on the completeness front:Out of 104,000 vessels in the fleet of 100 gt and above, we have 4,141 ship currently under Parallel Registry ofwhich Germany has the most vessels which are paralleled out - 3,237 (as at 4/2012)• Parallel in flags –• Liberia – 1,283• Antigua & Barbuda – 1,109• Marshall Islands – 256• Russia – 269• Cyprus – 122• Gibraltar – 107• Malta – 137• Philippines – 162• IOM – 37• UK - 5527Copyright © 2008 IHS Inc. All Rights Reserved. 27

Statistics by ship size - Paralleled in tonnageBy Tonnage:• Largest Vessel ‘Maersk Sandra’ IMO 9537757 at 323,183 dwt.• 40 other VLCCS in listing, also many bulk carriers in the range 180,000dwt. The tonnage range goes right down to the lowest of about 200 gtcovering crewboats, tugs and passenger ferries.• Mean Average dwt = 27,724 dwt• Median Average dwt = 12,705 dwtCopyright © 2008 IHS Inc. All Rights Reserved. 28

Copyright © 2008 IHS Inc. All Rights Reserved. 29

Statistics by Shiptype: As one would expect with the predominance of GermanParalleled out vessels the main shiptypes are containers (1,692 ships) and GeneralCargo (1,598) with a high proportion of tankers (788) ands Bulkers (624)180016001400120010008006004002000Number of ShipsContainershipGeneral CargoTankerBulk CarrierOffshoreTugs and DredgersRoRo and VehiclesFishingPassenger CruiseCopyright © 2008 IHS Inc. All Rights Reserved. 30

The next stage• Increase the number of tonnage assessment sources, to improve completeness• Put more emphasis on making contacts and chasing sources in APAC• Maintain the expertise in-house through the retention of SMEs• Get Parallel Registry into the standard products when it fully meets the 4 ‘c’s• Gauge how closer we are getting to comprehensive coverage and eventually builda time series for statistical analysisCopyright © 2008 IHS Inc. All Rights Reserved. 31

Thank you – Any questions?Thank youAny Questions?Copyright © 2008 IHS Inc. All Rights Reserved. 32