Partnerships Drive SubChapter M Solutions

 

Unless you’ve been lost at sea for the last few years, you know about Subchapter M. You know the June publication of the U.S. Coast Guard’s regulations for ensuring minimum safety standards on tows and tugs, which will extend inspection requirements to the majority of these vessels for the first time, moved the long-awaited, and in some cases, dreaded program from the haze of eventually out into the cold light of day. 

 

Nearly every story written about Subchapter M in the last two years has carried the warning that, “you know, you don’t have as much time as you think to get your ducks in a row.” And that is still true today, albeit more urgently so, as the proverbial clock is now ticking for real. 

 

The deadline for meeting the USCG requirement for having a safety management system (SMS) in place and completed vessel surveys and external audits, may be July 20, 2018, but it’s less a date you should be looking at meeting, as it is the date you should be counting backwards from. Which means that old saw “better late than never” is best turned on its head. Vessel operators should be approaching SubM compliance thinking “better sooner rather than later,” when it comes to developing and vetting their compliance strategy.

 

According to Pat Folan, Tug & Barge Solutions (TBS) founder and vice president, at least 75 percent of the required paperwork has to be done in the quarter leading up to the audit. “That will get your TSMS certified in about a year. And you have til July 2018 to get your Certificate of Inspection (COI). We typically find no company can perform that well. When first implementing an SMS, 75 percent don’t happen in the first six months. We’re lucky to see mid 90 percents in a year.” 

 

“So we’re talking about getting the plan built, approved and implemented by the beginning of 2018. They should be implementing an SMS NOW. 2018 isn’t that far away,” cautions Josh LaVire, ABS Inland Market Manager.

 

Of course vessels doing work in the oil patch, American Waterways Operator members or forward-looking companies long concerned about safety, are already familiar with much of what Subchapter M requires through their involvement with other safety management programs such as SIRE, the Responsible Carrier Program and International Standards Organization-based safety management systems (SMS), respectively. 

 

But for as many as close to half of the 5,500 vessels owned by an estimated 1,100 companies that the Coast Guard says will be affected by Subchapter M, some of which are small operations with little to no computer experience and a captain and crew wearing multiple hats, compliance with the almost 800-page Subchapter M regulations can seem daunting.

 

Much as the similar International Safety Management (ISM) standard did for larger vessels, classification society ABS predicts Subchapter M will create a large business process and systems challenge for small boat operators. But they don’t have to go it alone. There are a host of fleet management and maintenance compliance software developers, classification societies, independent auditors and surveyors, as well as consultancies that do everything from helping companies craft custom SMS, to providing system and management audits, to overseeing internal audits, etc., lining up to grab a piece of this business. 

 

Practicing what they’ll be preaching, many of these players are also opting not to go it alone. From an industry perspective, the best way to either serve, or in some cases, break into, the inland and coastal brown water subchapter M market is to provide a turnkey solution – an approach that can not only simplify the issue for clients, but is also a tremendous help to the parties in these partnerships. 

 

In some cases, these players have gone so far as to buy complementary companies, while others have signed deals to share resources and assign specific parts of the compliance work. A key goal in partnering for application vendors was the ability to provide clients with access to a network of experienced and widely dispersed auditors and surveyors. Hello classification societies! 

 

Tug and tow boat owners and operators will need to make many decisions, not the least of which is whether to go with a TSMS or pick the so-called Coast Guard option, but first they’ll need to decide whether they want help navigating the new regulations. If so, are they better off with a team approach or sticking with a single class society? And is a retrofit experienced blue water approach acceptable or would a built-from-the-ground-up brown water application be the better solution? The clock is ticking.

 

How about a solution that involves services, vetting and support from a wide range of industry players? MarineCFO, a developer of operational and business management applications, and Lloyd’s Register, a U.S. Coast Guard-authorized third-party and 200-year-old worldwide classification society, teamed up in September to offer Subchapter M compliance services via LR Class Direct compliance and quality assurance services and MarineCFO’s Vessel 365 scalable, user-friendly recordkeeping software. 

 

“Lloyd’s was looking to complete their portfolio with a top-notch provider of electronic record keeping, and we wanted to tap into a major class society with a lot of experience in the inland market,” says Rogerio Vieira, MarineCFO vice president of sales. 

 

Lloyd’s also saw that Vessel365 was built from scratch for brown water and Subchapter M, and was not a dumbed down blue water application, adds Vieira. “It would be a hard fit – the language is not the same, the dynamic nature of how things are reported is not the same.”

 

The brown water market is also more price-sensitive and less technologically engaged. “As Turbotax is to the U.S. tax code, Vessel 365 is to Subchapter M requirements,” says Dean Shoultz, founder and chief technology officer of Marine CFO. “We realize significant portions of the operators impacted by SubM are small and extremely cost-sensitive, so we worked diligently to drive the cost down. We are cognizant also that for a lot of these guys, technology is not in their wheelhouse. So our goal was to keep it very simple and not intimidate them. We want to be the Walmart of our space.” 

 

The general lack of technology is one factor driving a marketwide mobile approach to SubM solutions. Another is the dynamic nature of the inland market, notes Vieira, with vessels in dispatch much of the time, picking up and dropping off all day amid sporadic or unreliable or expensive connectivity. The application had to be built defensively by taking a mobile approach. 

 

Along the way in developing Vessel 365, MarineCFO sought a vetting from “one of the most astute admiralty firms in the country,” Walker & O’Neill, to make sure the system was okay from a liability perspective and that it complied with all regulations. “It was more of a behind the scenes partnership to make sure what we were doing was properly done,” says Vieira. There were in fact a few places where the lawyers thought Vessel 365 was “too reckless,” and were able to suggest changes that would legally protect the customer from doing things that they had seen in cases in court that had come back to haunt them, adds Shoultz. One fallout of that vetting was the development of a biometric signature for accident reports so the parties involved couldn’t deny their testimony later.

 

Covering all fronts, MarineCFO also created the “Shipmate Program,” which it uses to partner with small organizations doing Subchapter M work. “It’s a unique value proposition we are proposing to Third Party Organizations [TPOs]. We allow them access to our product, get them trained in our system, then they go out find a client using it. They can be much more comfortable guiding them in the best implementation of the TSMS and the usage of our solution.

 

Shoultz even considers feedback from customers a form of partnering, noting that it has led to changes that reflect the reality of the client’s work, for example, dulling down too bright screen colors so users “can still see the river ahead of them.” 

 

Another option is the 1-2-3-4 punch provided by the relationship between maintenance and compliance software developer Helm Operations and its siblings and parent company. Helm integrates its Helm Connect Maintenance software with sister company Safety Management Systems LLC (SMS)’s consulting services, which provide expertise in a range of marine safety, environmental, quality and security management systems and audit support, as well as Subchapter M. Also in the mix is naval architects NAPA Group, which provide ship design and operation expertise with a focus on safety and eco-efficiency. The companies are owned by Japan-based ClassNK, one of the largest classification societies with over 9,000 commercial vessels under class and offices worldwide, including six in the U.S. 

 

The grouping provides clients with a complete range of services, from new builds, to maintenance tracking and record keeping required under SubM, to consulting, training, auditing and surveying services. 

 

“The biggest advantage we’ve had has been SMS, which has been quite integral in helping with the development of a solution. When we have a new release, it’s been great to have an auditor’s eye go through the software as we build it out,” says Rodger Banister, vice president of marketing. SMS also helped Helm to position its software as the repository for an SMS, says Cooper Barry, product manager of maintenance and compliance. “We targeted the specific functionality required for a piece of software to manage an SMS.”

 

As for ClassNK, “they are a great knowledge center for us with all the things happening with the regulations, and they are great interpreters of that regulation, so we can make sure our products meet the smell test. It’s like working with experts in house – it’s been fantastic with us,” Banister enthuses.

 

On the flipside, Banister says ClassNK was attracted to its installed base in the towing market. “Maybe these customers might be willing to think about a different way to get an SMS set up or survey done. We give the market choice.” 

 

“We want to make great software [that is] as easy as possible for people to learn and use – the ‘iPhone’ for the market. Part of that process is working with partners, whether customers or actual partners – to influence the development of the software,” he adds. If crews don’t like software, they won’t use it, so Banister says Helm tries to head off any issues by leveraging the expertise of its partners, to make sure everything down to the nomenclature is correct in its products. 

 

“Old guard” maybe, but there’s plenty of life and expertise in the 155-year-old non-profit American Bureau of Shipping (ABS) classification society, which is leveraging the web and mobile technologies to develop more targeted and familiar solutions,” says Stephen Schwarz, vice president and COO, ABS Nautical Systems. The ABS team of surveyors, engineers, researchers and regulatory specialists work in 200 office in 70 countries, and are split between ABS Group (SMS consulting) and ABS Bureau (reviews, audits and surveys). 

 

Unlike Lloyd’s, ClassNK and RINA, ABS sees itself as maintaining internally all the pieces its competitors seek to add through partnering, such as Subchapter M software, SMS consulting, audits and surveys. Hence ABS, while also touting a turnkey approach, is going it alone. 

 

The ABS Nautical Systems (NS) fleet performance software family includes NS Core, a streamlined version of its core asset management and compliance application featuring NS Subchapter M. That module is cloud-based, user-friendly and offers dashboards and reporting capabilities to capture, manage and report on Subchapter M compliance requirements. 

 

“Our clients are concerned that the crew on board is not used to working with IT. They need something they can use with minimal disruption to their regular activities and that requires very little training. Our mobile application will be delivered on a tablet with recognizable tasks, and a simple user interface, pre-configured to their Subchapter M requirement and everything is managed in the cloud,” explains Schwarz.

 

ABS is also not shy about pointing to its blue water experience with safety management systems, which has informed its knowledge of the process, its understanding of what companies need to do, and how to get it done. But there’s no mistaking blue water needs for brown water, nor any effort to revamp another form of SMS into a TSMS nor an attempt to apply class rules to non-class vessels. 

 

“Subchapter M is a specific statute, and the scope of our activities is driven by that statute. We dove deep into the audit and surveying requirements to build our internal processes off the requirements of the regulation,” says LaVire. “So we didn’t say, ‘okay, our ABS rules regarding this say X, so we’ll have subM dry docking requirements say the same thing.’” 

 

ABS also looked at the Coast Guard’s Bridging Program and modeled the appearance of its process off that program. “So everything we’ve developed for Subchapter M is bespoke to Subchapter M,” adds LaVire.

 

“We bring to the table the ability to have through a single point of contact, support for any asset of compliance of SubM that a company might need. We are very experienced in statuary compliance, we have the biggest network of offices – over 30 port offices and certified 200 surveyors and auditors – our affiliated group can help with SMS development and a dedicated team of engineers in New Orleans can handle any new construction or review.”

 

One advantage of the ABS network of port offices and manpower, says LaVire, is that it typically does not have to move people around to jobs, which cuts down on travel costs for clients. 

 

TBS, as it is known, provides SMS consulting, survey and audit services for ISM, RCP and TSMS operators. Once clients decide on an SMS, TBS helps them put together a manual with a highly detailed table of contents to bring to an entity like class society RINA, which maintains a non-exclusive partnership with TBS. 

 

“We create a map for certifying authorities,” so they don’t have to waste time digging around the manual to find what they are looking for, or even whether it’s there, says founder Pat Folan. Chipping a few hours off the safety evaluation in turn offers clients a quicker turnaround and a little less cost, he adds.

 

Folan has found that building relationships with companies you think might be competitors can pay off in surprising ways. For example, after working with SMS on an audit, they came to the realization that while in the same business, they were targeting different markets and weren’t competing. Which got them to talking.

 

“We try to figure out how we might partner, hash out ideas, educate each other. We got a good relationship out of it. They have a wealth of experience regulatory wise and opened the door for us to [sister company] Helm. 

 

And that has been a boon. “Their software does exactly what we want to customize,” Folan says. A client that wanted to move off paper and go digital, wanted to see the product in action first. Working with Helm, TBS was able to create a working demo that won over the captain, deckhands and anchormen. “They took to it like fish to water. Compliance with documentation shot up to 100 percent every day. Our way of tracking nonconformities was simplified. Their audit feature is phenomenal.”

 

TBS also works with ClassNK, and acknowledges that working with two class societies doesn’t necessarily please both of them. But, he says, he likes to keep doors open. When it comes to recommending TPOs, Folan likes to look for the outfits “that have experience with the field these guys are in,” such as the Towing Vessel Inspection Bureau (TVIB), which he says almost exclusively looks at towing. He worries that class societies might not know how to interpret what they see when stepping onto a 50-ft. tug. “What we do with RINA is say, ‘Here is what you will see in the field;’ they ride along with us to get a feel.”

 

Beyond the above partnerships and players are even more options, like Germany’s Spectec, which claims to offer the only continuously working mobile application for subM today; TVIB, which is an approved TPO and provider of training for other TPOs; and companies like Wheelhouse Technologies, which are working on adapting their existing fleet management products to serve Subchapter M needs. 

 

There’s no shortage of help on the horizon, so jump in – the water will be fine.

 

 

 

 

(As published in the March 2017 edition of Marine News)