The Marshall Islands Move to Head of the Class

 

When the Marshall Islands Registry announced that it had become the world’s second largest – at a whopping 223,262,177 deadweight tons – the registry’s leadership was quick to emphasize quality as the leading reason. International Registries (IRI) President Bill Gallagher didn’t discount the importance of the deadweight milestone, but quickly moved the conversation towards why it had happened. “How you differentiate yourself from the other flag states is simple – you have to be better,” he told Maritime Reporter in late March, adding, “Everybody says they’re a quality flag, but you don’t become a quality flag unless you have the people, put in the effort, and put money back into the flag.” 

 

With as many as 450 worldwide employees – the vast majority of them full time employees – IRI has done just that. Hence, the registry’s growth is also reflected in the growing cadre of professionals that IRI has put into place to keep pace. The results speak for themselves. Separately, in another development, the RMI Registry received preliminary confirmation that it will continue its United States Coast Guard Qualship 21 status for 2017. In a nutshell, the Qualship 21 designation means that ships flying the RMI flag are less likely to be detained in U.S. ports, something that ultimately assists owners and operators in keeping their ships on schedule, on charter and making money.

 

Qualship, for those unfamiliar with the program, is a 3-year rolling average during which a flag state has to achieve a detention rate of less than one percent. “That’s a very, very hard mark to make, especially for a large flag state like ours,” Said IRI COO John Ramage.

 

Gallagher explains the IRI philosophy, insisting, “Some people may not see the merits of Qualship, but we certainly do. For example, we added three inspectors as full-time employees in the Port of New Orleans. You have to resource the registry or you’re not going to make Qualship – that’s the bottom line from our standpoint.” To that end, Gallagher gives a lot of the credit to retired Coast Guard Admiral Robert North. “We’re the only flag that’s been on Qualship – the only major flag – 13 years running. No one has a record even close to that. And I give a lot of credit to Admiral North, who set the vision of the registry in the right direction,” says Gallagher. North helped the RMI set up what Gallagher calls a ‘Coast Guard style vetting system.’ IRI/RMI flag state inspections occur at least annually. Beyond that, and if it is a ship that they are concerned about, it could be quarterly.

 

In essence, the registry took the Port State Assessment system and converted it to what North calls the Flag State Assessment. “We did a monthly look at the fleet, the ship managers looked at the ships, and then when we saw a quality problem, we got with the ship manager and explained that to him and tried to develop an improvement process to give them time to take care of the issues if they wanted to remain in the registry,” explains North, who added, “If not, then they could go find another registry. It is as simple as that. It’s working.”

 

As regulations appear and begin to impact operations, IRI leadership also ramps up to ensure that the fleet keeps pace. Staying on QualShip depends on it, but as Gallagher says, it is also the right thing to do. “We have a former member of a U.S. Maritime Union and officer, who sailed 20 years as a captain, and today, probably devotes 50 percent of his time to looking at MLC issues and complaints,” he explained, continuing, “So we do have a mechanism for it. I think the one good thing is now the seafarers have a way to reach out to the flags now. That wasn’t there before, necessarily.”

 

At the same time, Ramage concedes that, in certain cases, seafarers are not aware of the complaints procedure. He adds, “Every ship should have a documented complaint procedure available to the crew members and sometimes we get called in when the crew complain to the port state control. And, you know, if they just come to us we could have helped them resolve the issue.” IRI also knows that here is more to the human element of shipping than just making sure seafarers are treated right, get paid and fed adequately. Beyond the robust attention given to the new MLC2006 code, Gallagher says that a great deal of attention is given to knowing who is on board the RMI fleet and making sure that they don’t represent a threat – no matter what ports they might call at. Gallagher explains, “A lot of flag states don’t do what we do. We actually, we have a system where we vet every seafarer – it is called World-Check – and we subscribe to it. It is very expensive but we cannot have an incident, you know, with zero tolerance 

for anything. It can be tedious, but at least we have comfort knowing that we as a flag state have done our due diligence. Of the major open registries, I know we’re the only one doing this.”

 

Making QulShip 13 years in a row also means vetting the owners and the managers to make sure that IRI knows who is behind the vessels. “The last thing our owners want is to have substandard tonnage coming into the registry. So that drives a lot of what we do. You know, we have a lot of blue chip owners and we want to keep it that way,” adds Gallagher.

 

There is a saying in Washington, DC: “If you’re not at the table, then you are probably on the menu.” The IRI has no intention of being on the menu. A regular participant in Washington (U.S. Coast Guard) and London (IMO), the registry has long been a part of the regulatory discussion and provided input through various committees, interaction and in some cases, just making the effort to be there and witness the process. Gallagher smiles and says, “We used to send a taxi over to IMO and now we send a bus. And that’s true. I mean, we really spend a lot of money as a flag state, sending the right people to IMO. Our regulatory guys say, ‘If you’re not in the working groups, you’re not impacting what happened.’ Where you really make a difference is at the working groups. So we’re not only just sending a couple guys to sit in a chair; we actually are very active in the working groups.”

 

Ramage insists that it isn’t for ‘show.’ “It’s the responsible thing to do. We really feel that we do a good job of trying to bring in the realities of operating vessels into the regulatory environment and IMO.”

 

On this side of the pond, the registry provides guidance on the flag to the Coast Guard annually. That effort has yielded fruit over time and has evolved in a valuable interactive tool for both sides. Gallagher adds, “When we first went in, it was more of a social interaction. Today, they ask us what we think and there is real give and take.”

 

The Marshall Islands is also a member of the Tokyo MOU and the technical group attends all of the major MOU meetings. That effort is trending towards better relationships with port state control everywhere and the registry hopes that one day, the proactive approach will yield better understanding from both sides, and fewer detentions. Ramage readily concedes, “We’re not quite there yet.”

 

Out in industry, the registry engages BIMCO, Intertanko and everyone in between. Gallagher explains why. “It’s not just the IMO and it’s not just the port state authorities that we’re interacting with. Bob [North] taught us that. Bob and I know each other very well – we grew up in the same neighborhood in Baltimore a few years apart – and went to the same high school. When I first met Bob, he said, ‘you know, you’ve only been 25 miles away from me and this is the first time I met you.’ So, the message was received that we weren’t doing enough outreach.” Today, that’s simply not the case.

Long a leader in technology for ship registries, IRI and RMI were early adopters of tracking their fleets, geo-fencing in pirate waters and all of it in real time. That much hasn’t changed. Today, that has provided an edge on the port control side of the equation, as well. Outside of U.S. waters, the 96 hours pre-arrival notice isn’t always given. 

 

Gallagher explains, “We’re employing it so we’ll actually pay attention. We do a risk assessment of vessels going into different ports. And, the vessels themselves are also automatically notified. That way, we’re using that same kind of concept that we used with the piracy, but also on a port state control side.”

 

Across the globe, and leveraging 27 full service offices, someone from IRI is always on duty. From Piraeus to London, New York, on to Houston, Long Beach, CA and now to Korea, marine and technical personnel are watching the fleet. 

 

“We brought in personnel in Korea, which also gives us an extra hour ahead of Hong Kong. So that was where the window was, you know, over the Pacific. Now, when Long Beach is closing down, we’re opening up in Korea and Japan, and that’s where the handover goes on,” said Gallagher.

 

Ramage and Gallagher both insist that, while the headcount is important, it is more important to have the right guys in place. 

 

At the same time, empowering those people is just as important. Ramage added, “We have people in the Far East and Europe who have the same power to make decisions as our people in the United States. So it is really a worldwide office.”

 

At one time, all IRI decisions were contemplated and made in the Reston office. That’s no longer the case. For example, the IRI maritime services group is now being run out of the UK. The Director, Worldwide Business Operations, is now based out of Greece. Gallagher says, “This is our largest market so that makes a lot of sense. The old registry was very centralized, but it isn’t the decentralization that’s important. It’s the people that we have, and the fact that these people are equal. We have good people.”Bottom line at IRI? You simply can’t rely on one region to staff up your registry. If you do, you’re not doing a good job.

 

John Ramage perhaps says it best when he insists, “We don’t actually own anything of any substance, do we? But what we have totally depended on is the ability of our staff to be consistent, so that an owner can go to Singapore, Tokyo, Houston, or London and his ship will be told exactly the same thing.”

 

Still, the U.S. headquarters is still the central, key cog in the operation. Housing the Maritime Services Group, IRI brings in key stakeholders from all the different markets at least three times annually to go through all the issues and challenges. That, says Gallagher, produces standardization.

 

Ensuring quality in a global fleet is ‘Job 1’ for IRI today. Saying it and doing it, says Gallagher, is another thing altogether. But, he says, the key is training and a uniform approach – no matter where or when an inspection takes place. “We have training all around the world for not only our employee inspectors, but also our contractors. So to try to keep it uniform, we’re conducting our own internal seminars for our training. The number of IRI inspectors that are actually employees is simply huge.” As a result, it is no accident that the Marshall Islands flag also finds itself in the upper reaches of both the Tokyo and Paris MOU’s.

 

Providing that sort of coverage and remaining cost-competitive with the other flags is a constant balancing act. It also means that some operators won’t make the cut when it comes to the safety and performance standards demanded by a robust set of rules, backed up by competent inspectors. Not always one of the largest flags, Gallagher nevertheless insists that the reason that they grew so quickly had everything to do with putting quality (and not numbers) first. “I think the fact that we were a quality flag and we kept that standard is why we’ve grown.”

 

Theo Xenakoudis is quick to point out that in the early days IRI was turning down at least one out of every three ships that applied for membership. He adds quickly, “Even in the difficult times, we were rejecting one in ten ships. But, it doesn’t happen anymore. They don’t come to us. They know that we’re going to say no.”

 

Almost 225 million tons and ~4,100 ships later, it doesn’t seem to matter anymore that the IRI standard is a difficult one to achieve and maintain. That, perhaps, is a tribute to the rapidly improving global fleet, no matter where it is housed. Quality, however, doesn’t happen ‘by accident,’ and for IRI and its Marshall Islands flag, this is no ‘chicken or egg’ scenario. 

 

The quality came first and the tonnage has steadily followed. And, that’s the way it should be. 

 

 

(As published in the July 2017 edition of Maritime Reporter & Engineering News)