Pooling vessel inspection (Tradewinds April 5th 2013)

Pooling vessel inspection (Tradewinds April 5th 2013)

Prior to his recent departure as managing director of Research & Strategic Planning at DVB Bank, S Riaz Khan gave his view on what the shipping industry needs to do to improve inspection transparency, following the rejection of the bank’s application to join the Oil Companies International Marine Forum (OCIMF)

We all have a common cause in eradicating substandard ships. However, a lack of information on the part of those who want to improve standards in our industry may exclude the very stakeholders involved in the shipping industry.

DVB Bank SE (“DVB”) has been in the forefront of seeking to ensure that it only finances legitimate and well-heeled owners “vetted” via its Research and Strategic Planning (“RASP”) department.

RASP is composed of master mariners, chief engineers and analysts with hands-on experience (including on board), in the areas of chartering, operations and ship management, as well as finance. DVB seeks to ensure that the vessels it finances are with owners who follow the highest standards of quality and safety issues in the industry. DVB has been involved in financing and supporting the harmonisation programme for the Paris MOU [Memorandum of Understanding] and was the first bank to join not only Equasis but also CDI.

Our shipping industry has many organisations that carry out vetting, such as the insurance industry, class, numerous charterers, oil companies, traders, green awards, to name a few, and even DVB itself. Over the years we have incorporated a number of measures to further our due diligence with respect to the vessels we finance, including tracking their conditional class status. We have also received permission from most IACS [International Association of Classification Societies] members to electronically access class records, so long as the owner grants permission.

In today’s economically challenging environment (and likely to be so going forward), the prime area of cutting costs for vessels is in relation to operating expenses. This comes at a time when the awareness of protecting the environment and the need to be “green” continues to increase. Although electronic access to CDI, class, Equasis, port state control [PSC] reports and our own inspection programme covers a reasonable risk-profile assessment, our desire was to go that extra step to access vessel inspection and records carried out under the SIRE [Ship Inspection Report] programme. It is in this context that we had applied to OCIMF [Oil Companies International Marine Forum].

Our October 2012 application to join OCIMF did not pass OCIMF’s legal committee. We were informed of this in March 2013, some months later than we had initially been informed we would receive a decision after their November 2012 in-house meetings. According to OCIMF, an owner or operator is not allowed to show any third party a copy of the vetting report, as doing so would breach a ruling of the (international) competition authorities from some 22 years ago. We are unsure how sharing information with stakeholders in a vessel, with the consent of the owners, violates competition law. If anything, in our view, sharing this important information with the stakeholders involved in the vessel and the cargo being moved, would promote more awareness and competition for better-quality vessels plying our oceans. We view this type of transparency as being in the best interests of the shipping industry as a whole.

We at DVB, as part of our due diligence, want the ability to access information on vessels that have been inspected under OCIMF’s banner where we have a direct interest as mortgagee, subject to getting the consent of the owner. Furthermore, we would add that this principle of transparency should apply to other stakeholders as well, not just mortgagees.

On this issue of transparency, we understand that recently the insurance industry sought access to inspections carried out by the Paris MOU, but this too was denied, on the basis that the data would then be used for commercial purposes. There are many governmental organisations that do provide access to information to the general public and to other sources. We are of the view that any individual misuse (commercial or otherwise) of information provided in the general public good would be dealt with swiftly and robustly and therefore we would support any such moves made by stakeholders in the vessel and the cargo.

Turning to inspections, we are of the view that before an inspector goes on board any vessel he/she should have access not only to the last inspection report, but also rest assured that his/her fellow inspectors have the relevant, adequate training of the quality and standard to produce an accurate and reliable inspection report. The task of an inspection itself depends on the type of vessel. There is also the issues of the time limitations that inspectors face and their ability to access the cargo tanks/holds or the ballast tanks, one of the weak points in a vessel. We are of the view that any inspector having accessed the vessel should provide the next inspector with a schematic of the “hot spots” of the vessel for follow-up by the next inspector and details as to which parts of the vessel have not been accessed. A common standard database covering the life of the asset, noting inspection data, would greatly assist in properly accessing the technical and commercial viability of the vessel, not to mention enhancing safety and transparency within the shipping industry. At times a vessel may have numerous simultaneous inspections going on during the crucial time of loading or discharging a cargo when the focus should be on the operation on hand rather than dealing with a multitude of inspectors representing different stakeholders – a complaint also recently made in the media by many shipowners, especially in the chemical and product parcelling segments.

By way of analogy, the aviation industry has a data pool of inspection results which belong to the aircraft. Those financial institutions that have a mortgage on the aircraft are legally able to obtain a copy of the inspection results from the owner/operator/lessor, without the restriction that OCIMF has been asked, by the competition authorities, to apply to the shipping industry. We are of the view that should the shipping industry have the same access rights to information and inspection reports as is the case with the aviation industry, that same would benefit the shipping industry and enhance transparency.

We hope that we can generate some public debate on these issues from within our industry. We are of the view that it would aid the shipping industry as a whole, if it were possible for those who hold data and information to be able to provide the industry stakeholders with such information and data. Furthermore, we hope there are people in our industry who are willing to take up the issue of an amalgamated database that pools together inspection results. There is a possibility in our industry to improve the uniformity and standard of inspections, as one can then also run analytics on the frequency and discrepancies in inspections that are carried out. If anything, this scrutiny will improve not only the quality of inspectors currently employed by various organisations, but also improve the safety and quality, which we view as vital to the shipping industry as it strives to meet ever higher standards.

OCIMF footnote
David Cotterell, director, Oil Companies International Marine Forum, has responded with the following comment: “OCIMF is a membership organisation open only to Oil Companies. OCIMF has no involvement with tanker vetting which is a risk management process undertaken by members companies, acting individually. Access to SIRE is available under strict criteria to those with a legitimate interest in assessing tanker safety for the carriage of cargo, typically cargo owners, charterers and hydrocarbon terminals. DVB Bank, along with many other entities, requested access but were unable to meet acceptance criteria.”