As shipowners adapt to the changing economics of the maritime industry—and an increasingly complex web of regulatory requirements—organisations like the Liberian International Ship & Corporate Registry (LISCR) are undergoing an evolution of their own.
LISCR CCO Alfonso Castillero believes now, more than ever, flag states must support broader efforts to mitigate the impact of overcapacity and Rising cost of compliance with environmental conventions by reducing administrative burdens while introducing what he describes as “regulatory efficiencies”.
To that end, Castillero says the Liberian Registry will continue to take an increasingly active role in technical aspects of the shipping industry like audits, inspections, ship design and construction—areas long dominated by classification societies.
Castillero charts the evolution of the Liberian Registry and its changing role below.
Q. How is the shipping industry changing and what are the implications of these changes for organisations like LISCR?
A. Market conditions are extremely challenging right now. That said, as a result of recent changes to the international regulatory framework of our industry, we are starting to see opportunities for shipbuilders to think outside the box and develop truly innovative vessels that meet or exceed the market demands of the future. We see this as critical to the sustainability of the shipping business.
There is a continuous flow of multiple new requirements coming into force from not only the IMO but also from the EU, individual flag states and coastal states, in addition to increasingly stringent environmental conventions. All of these new requirements are very different in complexity and application and, at the same time, there is mounting commercial pressure for the industry to become more and more competitive as well.
On the positive side, the IMO has acknowledged there is a need for innovation in ship designs to ensure a sustainable maritime industry moving forward.
That being the case, flag states are now allowed to pursue innovative ship designs that don't comply with traditional regulations. They can be approved using an alternative approach provided for in various IMO instruments. To do this, flag states need to work closely with shipyards, designers, owners and classifications societies.
Do you think the implementation of international regulations are becoming impractical? Would more involvement from flag states help ease those burdens ? Share your thoughts by joining the conversation with Alfonso Castillero on LinkedIn.
Q. Why do you believe that flag states should be more involved in ship design and construction than they are today?
A. Historically, few flag states have shown interest in becoming more technically oriented bodies. Instead, they opt to outsource much of their work to classification societies. While flags are ultimately responsible for a vessel’s safety and compliance with regulatory requirements, it’s uncommon for them to get involved with technical matters like ship design.
The blind delegation of technical responsibilities to classification societies—especially those with questionable track records—isn’t something flags should tolerate. The new approval concept to support the development of innovative ship designs means that flag states will already be involved in the design process at the outset, which delivers additional benefits (e.g., alignment and efficiency). This approval concept deviates from the traditional prescriptive rules and regulations in that it relies on a risk-based approach that, when supplemented by advanced engineering analyses and studies, can demonstrate an equivalent level of safety that traditional prescriptive rules and regulations would provide—if not higher.
The blind delegation of technical responsibilities to classification societies—especially those with questionable track records—isn’t something flags should tolerate
Moreover, we want to promote innovation, to support new ideas and technologies that make the industry safer, greener and more competitive. Recent changes in the international regulatory framework have set the stage for true innovation in ship design. With IMO member states applying goal-based standards and a risk-assessment approach to compliance—and conventions being less prescriptive than they were in the past—new opportunities to innovate are starting to emerge.
Q. How is LISCR taking a more active role in ship design, safety and technical innovation?
A: We’re committed to supporting shipyards and owners in the pursuit of innovation, pursuits that lead to the development of competitive, environmentally friendly ships of the highest quality and safety standards.
To that end, over the past two years, we’ve been meeting with shipyards and designers in China, Japan and South Korea. Roughly 100 meetings have taken place thus far, which have led to nearly a dozen strategic memoranda of understanding (MOUs) and technical agreements. Through these collaborations, the exchange of market and technical intelligence can be incorporated in the designs of shipyards, keeping intact their commercial interests and providing a competitive edge.
We’ve been meeting with shipyards and designers in China, Japan and South Korea. Roughly 100 meetings have taken place thus far, which have led to nearly a dozen strategic memoranda of understanding
We’re particularly proud of the progress made with shipbuilders in China. We’ve signed agreements with international ship development groups as well as a handful private yards and designers.
The aim of these partnerships is, ultimately, to support the development of innovations that ensure Liberian flag shipowners have access to the safest, most advanced, competitive ships in the market—vessels that meet the regulatory demands of today and tomorrow.
The best time to optimise a ship’s design, from a regulatory perspective, is at the concept and design phase. This is why we developed a Ship Newbuild Services offering for owners that are interested in pursuing joint industry projects (JIPs). In addition to us, other partners typically include a designer, shipyard and class society.
The benefit of including the Liberian Registry is that we can offer an alternative approval approach to the traditional prescriptive rules and regulations that, in our opinion, can hinder real innovation. By applying our risk-based approach, designs that are truly innovative can receive the requisite approvals and certifications without compromising safety.
Q. If flag states like LISCR continue to get more involved in technical aspects of shipping, how will that impact classification societies?
A. Classification societies must get used to cooperating more closely with the flag states for the approval of innovative ship designs that don’t comply with the traditional regulatory framework. In these situations, to ensure that the most appropriate, robust risk-based approval concept is applied, flag and class must jointly support the designers, shipyards, owners and any companies that provide innovative components, products or design features.
When applying this new approval concept, flag states are obligated to document and report the concept to the IMO. Typically, both flag and class prepare this documentation together. That said, at the end of the day, the flag is ultimately responsible for submitting formal documentation to the IMO.
Once an innovative design has been approved, the process will revert to business as usual: The class society will survey the construction at the shipyard to ensure each ship is built in accordance with the approved documentation from both classification and statutory perspectives, the latter on behalf of the flag state.
This article represents a collaboration between the content marketing team at NHST Global Publications, the publisher of TradeWinds, and an advertiser. NHST wrote the introduction and questions.The CCO of LISCR provided the responses.
The approval concept that we’re discussing involves considerable time and resources from flag states. The Liberian Registry is unique in that we have the necessary technical expertise and experience needed to provide this new service that delivers benefits to all of the key stakeholders involved.
The alternative, risk-based approach to compliance is one of the added-value services offered by the Liberian Registry, and as we say: ALL FLAGS ARE NOT ALIKE.
All flags are not alike
When pressed about a recent war of words with a competitor about classification fees Castillero said: “Instead of arguing and fighting with other flags that compete solely on price, we’re channelling our energy towards technology-added value, support and service. This is where we will continue to concentrate our investment and effort going forward.”
Join the conversation
Do you think the implementation of international regulations are becoming impractical? Would more involvement from flag states help ease those burdens? Join the conversation about IMO 2020, the Ballast Water Management Convention and the changing role of flags on LinkedIn by clicking on the link below.