SHIP S REGISTRY By Capt K Kumar Importance

SHIP’S REGISTRY By Capt. K. Kumar

Importance, Benefits & obligations of ship Registration n Identity: Nationality and Homeport Right to fly a country’s flag: Attendant benefits as well as binds the ship to statutory control of the State. Evidence of title to vessel: Evidence of title (of ownership) to the Maritime property in the ship. State will define the eligibility criteria- stringent conditions & obligations of owners and comparatively less benefits or less stringent conditions & obligations on owners and more benefits.

Certificate of Registry n n n Ship’s name and name of homeport Ship’s details as per surveyor’s report Details of her origin-where built or second hand ship-as stated in the declaration of ownership Name/description of her registered owners and nos. of shares owned by each owner Name of the Master

Procedure for ship’s registry in India P. O. MMD, in Mumbai, Kolkata and Chennai act as Registrar of ships. n Documents required for registration; - Declaration of ownership -Builder’s certificate: dimensions, tonnages, time/place where built -Instrument of Sale, if 2 nd hand ship -Permission of the D. G. Shipping to register a ship if built outside India. n

Registry Procedure n n n Survey & Measurement by MMD surveyor who will issue ‘Certificate of survey’ and ‘Tonnage certificate’ Approval of ship’s name by Registrar Carving & marking Notes Marking of ship-permanently and conspicuously On completion of registry, Registrar grants the ‘certificate of Registry’.

Commercial importance of ship’s registry n n n Ship’s flag- Reputed flags like those of N. Europe, Scandinavia, USA, Japan etc. inspire confidence in Insurance Co’s as well as in Trade since such ships maintain very high technical and safety standards. Ships flying F. O. C. flags inspire little confidence. Ownership- Reputed Companies inspire great confidence in commercial circles while small, illreputed or ‘fly-by-night’ operators are considered highly risky. Reputed Co’s owning F. O. C. ships are considered far safer than F. O. C. ships owned by new Co’s or hardly known operators. _____

Cargo Handling n n n Various types of cargoes and their transport by sea in specialized ships Bulk carriers (15000 to 300000 dwt) are suitably designed to carry Grain, Fertilizers, Minerals & concentrates. IMO’s BLU (bulk loading & unloading) Code book prescribes procedures for proper cargo handling at terminals. It also provides checklists for both ship’s officer & terminal in-charge for safe operations. The objective is to ensure safest, fastest and cost effective cargo operation through proper co-ordination and cooperation between ship and terminal.

Bulk Carriers Owner/carrier’s objective is to achieve fast turnround in ports at minimum possible cost since shipping is a highly capital intensive, competitive and volatile business. Ships and terminals are to ensure that all cargo handling equipment (cranes, derricks, chains, blocks, sheaves, hooks, chains etc. ) are of adequate strength (Safe Working Load) and are properly tested, maintained and surveyed periodically in accordance with the Dock safety Regulations (under the auspicious of ILO). Also that the crane drivers/operators are competent.

Bulk Liquid cargoes n n n Crude oil is carried in large Suezmax & Panamax tankers of 75 -90000 dwt, in VLCC tankers of upto 300, 000 dwt and in ULCC tankers of upto 650000 dwt as suitable for particular trade. Petroleum products & Chemicals are carried in specialized tankers of upto 7590000 dwt capacity. Vegetable oil may be carried in small tankers of up to about 25000 dwt capacity.

International Code for safe carriage of chemicals in bulk (IBC Code) n Code provides international standard for safe carriage by sea in bulk of dangerous and noxious liquid chemicals so as to minimize the risk to the ship, it’s crew and to environment, having regards to nature of products involved. Hazards properties include flammability, toxicity, corrosivity and reactivity, as well as hazards they may present to the environment if accidentally released.

International Code for safe carriage of Gases bulk (IGC Code) n It is code for the design and construction of ships, involved in carriage by sea in bulk of liquified gases and other substances and the equipment they should carry so as to minimize risk to the ship, to it’s crew and to the environment, having regards to the nature of the products involved.

Other specialized ships n n n Reefer ships to carry refrigerated cargoes like Meat, Fish, Poultry, dairy products, fruits & vegetables. Car carrier/ Ro-Ro ferries to operate on short sea routes to carry cars, trucks/vans/buses, passengers and even containers. Heavy-lift cargo/Project carrier are specially designed to carry heavy/oversized machinery & structures.

Cellular container ships n n Holds are fitted with guide channels and container shoe-sockets to facilitate stowage of rectangular metal containers, 20’ and 40’ boxes. Ships may be fitted with Gantry cranes or side travelling cranes or with centrally mounted jib cranes to facilitate loading/unloading of containers of various types (Standard dry box, open top, open side, half height, reefer, tanker and collapsible etc. ) ____

CONTAINERISATION n n Cargo Securing Manual as detailed in IMO’s MSC/Circ. 745 provides guidelines for securing containers and general packages. Proper stowage and securing of containers is of vital importance for safety of ship, cargo and crew & environment. Lashings should regularly be checked and attended to.

Advantages of Containerization n n Savings in packing of goods as container, as unit of transport, is robust and provides protection. Much Lesser handling/less damage. Prevention of theft/pilferage Quick loading/unloading in port and hence ship’s port time is minimized. Natural separation/segregation from other cargoes, preserves quality.

Advantages of containerization n Door to door service, Lower insurance premium and packing cost to shipper. Easy tallying and documentation and amenable to computerization. Lower inventory and logistics cost, hence lower capital cost to Shippers made possible by frequent and regular schedule of container ships.

Disadvantages of Containerization n n Highly capital intensive-Ships, containers, Terminals & equipment. High degree of training and skills are necessary for smooth operations. Repositioning of boxes after discharge may be unavoidable due to imbalance in trade and involves cost of handling/storage/transportation. Infrastructure-Roads, bridges, highways, ICD’s, CFS’s & handling equipment etc. requires capital. DC’s & UDC’s are at disadvantage due paucity of funds and want of technology. _____

Ship Chartering methods Demise/Bareboat charter-Owner only responsible for ship as asset. Hence insures (H & M) & pays it’s premium. Charterer manages & operates the ship Technically & Commercially. ▪ Time charter- Owner responsible for technical management, safe navigation and cargo care on ship. He pays for H&M insurance premium, Master & crew wages, Surveys, repairs & maintenance, stores, spares, provisions, Lub. Oils, chemicals, water& claims for cargo damages sustained while in ship’s custody. n

Time charter contd… n Time charterer operates ship commercially and pays for Port dues, pilotage/towage, canal dues, bunkers , stevedoring costs/charges, hold cleaning/dunnage, cargo lashing/ securing, cargo claims arising from wrong cargo documentation and stevedore’s negligence, brokerage on cargo and Agency fees etc.

Voyage charter (single) n Owner remains responsible for technical & commercial management , navigation and safety. Owner has to pay for all the costs/ cargo claims except that voyage charterer is responsible for loading and discharging costs at both load-port and discharge port for that particular voyage. _______

International Multimodal Transport n n n Goods carried from one country to another by more than one mode of transport Single contract of carriage for door to door service. MTO is responsible to shipper for through transport of cargo. Minimum formalities/documentation Faster transit hence less capital tied up in transit Minimum handling of /damage to cargo hence reduces cost of transport Protection against theft and contamination

MT Procedures in brief n n n Shipper packed FCL boxes brought to CFS/ICD/CY and handed to MTO Agent. LCL boxes are packed and unpacked at CFS/ICD both ends by MTO Agent All Customs & export/import formalities by shipper’s/ Consignee’s CHA at both ends. MTO reserves the slots/space on all modes of transport through his agents for through transport of cargo up to final destination, with MTO remaining responsible for their safe custody until final delivery to the Consignees. MTO’s Agents arrange for necessary guarantees to Customs Authorities when boxes cross State frontiers. MTO covers his liability towards cargo damage through his P & I club or Through Transport club or Insurance company. _______

International Conventions & Documentation n International Conventions and legislation relating to safety and marine pollution prevention are developed and adopted by International Maritime Organization (IMO) which is responsible for measures to improve the safety of International shipping and to prevent marine pollution from the ships. IMO is a specialised agency of the United Nation. Over 163 countries are members of IMO. It’s governing body is the Assembly (representing all the member States) and the executive body is the Council which is elected for a term of 2 years. The council is supported by 5 Main Committees and various sub-committees besides various experts and consultants. It has adopted over 45 conventions.

Implementation of Conventions n n n Each member State Govt. is responsible for implementing the conventions once convention comes into force after it’s ratification/ acceptance by required nos. of States owning min. %age of world tonnage. Ratification means making the convention into the law/statute of own country. In India once the bill, containing provisions of the convention, is passed by the Parliament is incorporated in Merchant Shipping Act 1958, Statute book for Shipping laws/rules/regulations related to safety and pollution prevention. The provisions of the M. S. Act are enforced upon all ships flying Indian flag by D. G. Shipping, the administrative officer appointed by the Govt. of India for the purpose. Through it’s various administrative offices of MMD, Shipping Offices & Port State control in various ports of India, the D. G. Shipping administers and regulates the implementation of the provisions of the M. S. Act.

Surveys and Certification of ships n n Classification Societies like L. R. S. , I. R. S. , A. B. S. D. N. V. , N. V. etc. are entrusted with the responsibilities of surveys of ships Hull and Machinery during the construction of ships and subsequently during the running of ships on five yearly cycle basis to ensure that the ships are constructed in accordance with the requirements of the International Conventions and that they are maintained in efficient and seaworthy condition during their operational life. Statutory surveys are carried out by the Govt. /DGS/MMD Surveyors on ships flying their flag to enforce compliance with Conventions.

Documentation n n Statutory surveys include surveys relating to Ship’s Registry, Tonnage Certificate, Load Line, Safety Equipment, Safety Radio Telegraphy, Safety Construction, International safety Management (ISM), I. O. P. P. and ISPS etc. under SOLAS, MARPOL and other Conventions. Class Certificates are issued by the Classification Societies after satisfactory surveys while Statutory Certificates are issued by DGS/MMD after satisfactory surveys. All such valid certificates, with periodical endorsements, carried on ship are evidence that the ship complies with the applicable International conventions,

Ship’s Cost Structure Capital Costs- Are fixed costs associated with the ships purchase. It include: - Pre-delivery expenses - Loan repayment - Interest payment - Equipment leasing charges - Initial Registration fees/charges + taxes N. B. All above are fixed costs borne by the ship owner but Bare-boat charterer pays the daily charter hire and Equipment leasing charges, whether ship is earning revenue or not. n

Operating or Running costs n n n Crewing Costs include Officers & crew wages, O/T, long-term benefits, Insurance contribution for crew, Training & recruitment costs, Crew travel costs, sundry & unrecoverable medical costs. Storing costs include Deck/engine/ cabin stores, ropes/paints/general stores, Lub-oils, chemicals, fresh water & Provisions. Maintenance costs include Deck repairs & spares, Engine repairs & spares, Electronic & Navigational Aids, Charts & Publications, Dry-docking, Surveys & Certification costs.

Running costs contd…. n n n Insurance costs include H & M insurance, P & I club call money & contributions, Deductible allowance, insurance for War risks and insurance premium for loss of earning. Administrative costs include Communication costs, port costs on Owner’s account (if on time charter), Management fee or proportionate office administration and business development costs. Operating costs are semi-variable costs and are paid by the Owner/manager whether the ship is earning revenue or not.

Voyage Costs These are variable costs associated with commercial employment of ship. They include: - Bunkers - Port and Canal charges - Pilotage & Tug hire - Stevedoring charges (Ldg. & unldg. ) - Agency fees & expenses These are paid by the ship operator, be it the owner or the charterer. ____ n

Prevention against Maritime Frauds co-existed with Maritime Trade and can be traced back to 215 B. C. n What is a Maritime fraud? Single party or many parties acting in collusion to defraud another by misrepresenting facts in an unethical manner, e. g. 1)Sinking of an over-valued ship flying F. O. C. flag carrying a highly valued non-existent cargo during periods of economic and political upheavals and depression in shipping business. (Insurance fraud) 2)Shipowners/Charterers fearing heavy losses due to serious port congestion (W. African & Middle East ports in 1970’s and 1980’s) discharging cargo elsewhere, selling it and getting ships released for further trading. (Contract fraud) 3)1 or 2 ships owner continue operating old ships despite mounting debts (Mortgages, loans and liens etc. ) until arrested by court order and then owner declaring insolvency. (Insolvency fraud by ‘fly by night’ operators) n

Types of Maritime frauds 4) Forging by the seller of export documents, required by the buyer of goods under documentary credit system, when goods either did not exist or of inferior quality. (Documentary frauds common in Greece, Cyprus, Lebanon & Nigeria) 5) Issuance of false certificates/ documents by corrupt Customs/Port/Bank officials & Surveyors etc. acting in collusion with the cargo owners. (Fraud by corrupt practice) □ Common features of Maritime fraud cases: Ships of over 15 years of age involved. Single ship owner or common management company involved. Ships on single voyage charter flying flag of Greece, Panama/Liberia/other FOC states, Cyprus, Spain, India, S’pore, S. Korea and Sharjah (U. A. E. ) involved. Ships had frequent and/or recent change of ownership/name etc.

Precautionary measures by buyer/seller of goods n n Ship goods only by well established shipping companies/lines. Issuing bank of Letter of Credit and Advising bank negotiating shipping documents must be mutually acceptable by buyer & seller so that they enjoy absolute mutual trust. Custom House Agent deployed must be duly licensed and member of National Association and must know how to protect seller/buyer interests. Shipper must confirm whether carrier vessel is chartered, who the owners are and whether ship is duly approved by reputed Insurance Authority.

Precautionary measures by Banks/Mortgagor n 1) 2) - - - Two types of frauds: Presentation of genuine documents but subsequent fraudulent action by a 3 rd party in respect of goods/ship. Presentation of fraudulent documents in respect of inferior or non-existent goods or ship. L/C (opened by buyer) must clearly specify all the documents to be presented to the bank before payment is made to the seller of the goods or ship. Careful choice of Shipping Line and reputed freight forwarder (CHA) & transporter helps greatly in reducing risk of fraud. Careful scrutiny of ship’s register in Registrar’s office, where all mortgages and Liens are required to be registered by the Banks/Salvors/Master & crew to learn of all the encumbrances attached to ship, before advancing any funds to owner in respect of the ship.

Measures by Ship owners & Charterers n n Ship owner should check on the reputation and financial status of the charterer, using reputed ship broker, before fixing a charter and insist upon Bank guarantee from the charterer covering estimated charter hire. Institutions like BIMCO, Baltic Exchange and NYPE can often assist with enquiries about charterer etc. Avoid giving the Time charterer authority to sign Bs/L on behalf of Master. As far as practicable Master should himself sign the Bs/L after verification with the Mate’s Receipt otherwise give letter of Authority to the chart agent to sign Bs/L strictly in accordance with the Ms/R. Similarly Charterer should know the reputation of the ship owner/disponent owner before entering into a Charter party contract. Cargo must be delivered only against the original duly discharged Bs/L or against adequate bank guarantee acceptable to the carrier and his P & I club.

Precautions by Insurance Companies n n n In case of Hull Insurance, Insurer must exercise every care in checking the background details of both the ownership as well as it’s management & trading record. Requirement of Standard Classification, retention of class by regular surveys/inspection & maintenance of ship is a standard practice but strict compliance is essential. Cargo Insurers must insist upon Institute Classification clause (ensuring that ship is properly classed) and approval by Regulatory Authority (G. I. C. in India) will ensure proper maintenance by the owner/carrier.

Maritime Frauds n ALL THE ABOVE PRECAUTIONS CAN ASSIST IN MINIMIZING THE RISKS OF MARITME FRAUD BUT IT CAN NOT PREVENT IT TOTALLY. DISHONESTY (IN ABUNDANCE SUPPLY TODAY) OF ONE PARTY COMBINED WITH MISPLACED TRUST(HARDCORE MARKETING AND IMAGE PROJECTION IS THE ORDER OF THE DAY)AND CARELESSNESS AND SHORT-SIGHTEDNESS BY ANOTHER (IT IS THE ORDER OF THE DAY) ARE SURE RECIPE OF A MARITIME FRAUD WAITING TO HAPPEN. ---- END ----