Hellenic Shipping News interviews Mr. Theofilos Xenakoudis.

Registries, Inc.’s Piraeus office, the Maritime & Corporate Administrators of the Republic of the Marshall IslandsΒ Registries are like a “catalogue” or a list if you’d like, where ships are registered on an international level. This means that each country

chooses some ports of registry where ships are enlisted based on their type, tonnage, etc. A ship can be seen almost as a human being. It travels all over the world, it moves in coastal waters of various countries and as such, it needs a sort of “passport”, in order to be able to fulfill its purpose. Without the proper

documents from its Registry it is unable to travel, or get clearance to approach ports around the world.

Did Registries exist in the ancient world of trade, which was also conducted by sea for the most part?

I’d say that the concept of Registries is a relatively younger practice, with their roots found in Rome, where the first records of ship registries were found. It was later developed in England, during the 17th century, with the so called “Navigation Acts”, which was created in order to prevent foreign flagged vessels taking advantage by engaging in maritime trade activities that could be done by ships flying the British flag.

What’s the difference between Registries and Classification Societies?

Well, these two basically come together. A Registry provides the ship’s nationality, flag and identity, while a Classification Society performs inspections of ships and classifies them on the basis of their type (i.e., oil tanker, dry bulk carrier, LNG, LPG, etc.), something which is done during a ship’s construction phase. Registries and Classification Societies are working together when it comes to International Conventions signed by a State, under the guidance and auspices of IMO. When each State signs such a Convention, it usually appoints a Classification Society to act on its behalf, as a Recognized Organization. So, the cooperation is direct and frequent, benefiting, at the end of the day, the maritime sector.

International Registries, Inc. represents the Marshall Islands Registry in Hellas. When did this cooperation begin?

Let me start by saying that our company was founded 60 years ago, in 1948, in order to meet the rising demand of U.S. trade and products all over the world. So, for the next 50 years and until the year 2000, we were managing the Liberian Registry. But during the 1990″²s and because of the political instability in Liberia, we had concluded into an agreement with the Republic of The Marshall Islands (early of 1990″²s). Essentially, the big evolution of the Registry became apparent after 2000, when the cooperation and agreement with the Liberian State came to an end. The Marshall Islands is an independent state from 1986 and a member of U.N. from 1991.

Could you provide us with some figures regarding the Registry’s profile and ships?

I can tell you that we have approximately 1,660 ships flying the Marshall Islands flag on a worldwide basis. About 25%-30% of this number involves vessels controlled by Greek interests. Beginning 2000, which marked the actual beginning of operation of the Flag State, it is estimated that, on average, the number of ships flying the flag each year is increasing by 20%-25%, also taking into account that some ships are changing registry or are headed for demolition. In terms of tonnage, the figure is increased at a pace of about 15%-20% annually. It’s important to say that in terms of tonnage we are the Fourth (4th) Maritime Registry worldwide, with approximately 38.5 million G.T. (Gross Tonnage).

Are there any requirements from your part, in order to accept a ship in the Registry?

Yes, we employ an assessment procedure both for the ships and the shipmanagement companies. For instance, the age limit for each new ship coming into the Registry is 20 years old. But if a ship is in very good shape and the company’s previous record is solid, we might make an exemption, under the term that we shall perform a thorough pre-registration inspection of the vessel. For me there is no such thing as a “bad” vessel. A “bad” vessel is turned into such. That’s why it’s rather important to emphasize on the track record, quality and reputation of the shipmanager prior to the ship’s registration.

How does a shipowner usually choose the proper Registry?

Well, there are many factors. Some people will say that the number one issue is the cost of the Registry. Of course, the cost factor is very important and one has to be competitive, in order to retain a large market share. Equally important are the ratings that the Registry receives from various Port State Control organizations globally, which inspect the vessels. There are a number of MOUs (Memorandums of Understanding), like the Paris MOU, the Tokyo MOU, or the U.S. Coast Guard, which have databases publicly available to anyone. These figures actually act as a benchmark for the industry evaluating each Flag State, distinguishing between Black Listed, the Grey Listed andΒ  White Listed Flags (White List being the best rating), depending on each state’s track record.

What types of charging fees exist in terms of registering a vessel?

First there are the registration fees, which apply to any new coming vessel, which are a one-off fee. Then, we have expenses for the issuance of the necessary certificates, and finally we have the annual fees, which depend on the ship’s tonnage; the bigger the ship, the higher the fees. We also have some inspection fees, because our Flag State implements an annual inspection programme on all of the registered vessels, flying the Marshall Islands flag. I’d like to add that we have developed two kinds of payment. We have the so called Option A and Option B. For example, Option B was introduced in order to attract larger and modern vessels en-bloc. In order to achieve that, a little higher registration fees are imposed, which are one-off as previously mentioned, but on the other hand we are accordingly reducing significantly the annual fees that the shipowner has to pay for each ship. This billing method is beneficial for younger ships or for an en-bloc registration of 10 ships for example, because the registration fees can be also reduced, regardless of when they will be registered (if for instance a shipowner is expecting newbuilding deliveries over a period of time).

What’s the average cost of registering a vessel?

It’s difficult to provide an accurate figure, because it all comes down to ship’s type and size. The minimum, based on Option A, is approximately $4,000 annually. As for the registration fees, these bear a fixed price of $2,500.

How is competition shaped between Registries? Which are the differences from Registry to Registry? Is it only a matter of different pricing?

Generally speaking, most Registries impose similar fees. Marshall Islands is quite competitive, something we’ve tried to achieve, in order to attract more customers. But for me, quality is what differentiates various Registries. The registered fleet’s quality, based on its average age is quite important, as well as the Registries record on the MOU’s evaluation scale. I’m proud to say that Marshall Islands is the only major open Registry, which is certified for the third consecutive year under Qualship 21. This is a U.S. Coast Guard certification, which recognizes the Registry’s quality and reliability in US ports. This is quite an achievement, given that the U.S. authorities are very serious and rigid when it comes to quality standards. It is also very important for our Registry, because there are lot of vessels employed in trade with the U.S.
Another thing which is quite important for each Registry is the close cooperation with Classification Societies, which should enable the exchange of valuable information. And of course the quality of services is equally essential in differentiating Registries. Whether we like it or not Registries are service providers, they don’t sell something tangible, a specific product. As a result, we are compelled to continuously improve the quality of our services. This can be done only when one has strategically located offices and experienced staff that can help the customer, not only during the registration process, but also afterwards. Many people tend to think, that the Registry’s purpose stops at the completion of the registration process, but this if far from the reality. We are closely monitoring all of our registered vessels and are closely working together with Hellenic ship owners and try to help them with any problems that may occur onboard the vessel.

Which are the most typical problems that you have to deal with?

Usually, they involve small accidents like groundings, or minor collisions. In such cases we dispatch an investigator, who interviews the ship’s captain and officers, while we also receive a thorough report from the shipping company which owns the vessel. In serious accidents we are obligated to provide IMO with a detailed report on the incident. Such reports are aimed at preventing similar accidents in the future, which makes the role of Flag States a rather important one. This is the basis of all IMO’s rules and guidelines regarding sea navigation and safety.

How difficult is it to keep track of a ship, which is usually travelling around the world, not to mention have someone sent onboard?

Definitely, it’s not easy, but it is possible if you develop a worldwide network of offices, which is exactly what we did. We operate 15 offices around the world, many of which are in Asia, with headquarters in Hong Kong and branches in Singapore, Tokyo, Korea and two more in China, where many vessels are built. We have to keep our presence there, in order to assist our clients during the ship’s building process, but also the Classification Societies. We have also established a network of local inspectors globally, which of course don’t maintain an exclusive relationship with the Registry, but act mainly on a subcontractor basis, in case a certain need arises.

How do you find these people? What kind of experience do they have?

To tell you the truth it’s difficult, because you have to find people which you can totally trust, highly experienced and trained. Usually, we employ former ship masters, or people with experience in shipping companies. The combination of experience both in land and at sea is the best, in order to do the inspection job effectively. They must be locals, since the local knowledge of things like language, procedures, culture and habits is a major advantage in case of an incident.

During the last years, there is a lot of debate, usually in a negative manner, regarding the so called “flags of convenience”. Is this justified?

My opinion is that in today’s world, it’s a mistake to use the term “flag of convenience”. It’s an old term, which developed during the previous 2-3 decades. During the 1970″²s the ratio between National Registries and Open Registries was 70%-30% accordingly. Today’s this ratio is almost the opposite. Those who expressed their objections on Flags of Convenience did it because they believed that these Open Registries didn’t follow the rules, in terms of safety and environmental pollution. Another issue had to do with crew members. It was perceived that by flying an open registry flag, local seafarers would be sentenced to oblivion, remaining unemployed. That was because by flying such a flag, as a shipowner, you could employ seafarers of other nationalities. The thing is that no rule was set against using local crew members in a Foreign Flag. Open registries simply don’t limit the accessibility of a shipowner, based on his nationality, the crew’s nationalities and other such limitations, like for instance where the vessel will be built, etc.
I believe that the differentiation should not be between National Registries and Open Registries. It should be between good and bag Registries. It can go either way.

Let me put it in an other perspective. Are there major differences in terms of organization, between an open registry and a flag state registry?

Yes there are differences. Our structure and philosophy of business is evidently different, because we essentially are a private company, as opposed to a National Registry. Therefore, we try to provide the best possible service, as competitive as one can be, without compromising the level of quality standards and customer satisfaction. There is also the case of open registries which are state owned and operated, which is another category. In this case it’s more difficult to take the necessary initiatives, in order to increase one’s competitiveness, since things like bureaucracy tend to get in the way.