Commercial Vessel Compliance

11/3/2014: International Maritime Organization objectives and adoption of international maritime conventions and regulations

Last week, Jeffrey Lantz, director, commercial regulations and standards for the Coast Guard, spoke at the 2014 World Maritime Day Parallel Event, held in Morocco.

His comments, shared in this post, are focused on ballast water, EEDI, code for ROs, III Code, ISM Code, goal-based standards and the cost-benefit analysis of future regulations. Maritime Commons is providing an excerpt of the key takeaways from Lantz’s remarks for those of you who did not attend the event…

Delivered by Jeffrey Lantz

I am going to ask you to consider the International Maritime Organization accomplishing its objectives through the adoption of maritime conventions and regulations. As we think about this, we need to include the “implementation” of the Conventions and regulations. Appropriately, the theme for this year’s World Maritime Day is “IMO Conventions: Effective implementation.” Clearly for any international convention to be effective and fit its purpose, the countries that have signed on to that Convention must also commit themselves to effectively implement it.

The IMO Mission statement very succinctly and clearly states that IMO “is to promote safe, secure, environmentally sound, efficient and sustainable shipping through cooperation.”

And we all know why this is important:

• 90% global trade is carried by sea
• It is carried on approximately 55,000 ships with capacity of 1.4 million tons deadweight tonnage
• Approximately 9.1 billion tons of goods loaded each year (2.8 oil; 2.6 bulk; 3.7 other)
• Developing countries make up about 60% of goods loaded and unloaded

The conventions adopted by IMO, which number more than 50, significantly contribute to safe, secure and environmentally sound shipping. Fortunately, the vast majority of these 50 conventions have been widely ratified by countries throughout the world. And for the most part, they have been effectively implemented by many countries. But for a number of reasons, the level of implementation is not consistent throughout the world which, unfortunately, has prevented the full realization of the conventions’ effectiveness.

Ballast Water

Environmental matters are front and center more and more at IMO, which can only be interpreted as society expressing its expectations for shipping to protect the environment. The Secretary General mentioned the Ballast Water Convention as not yet entered into force, thus depriving IMO from having a mechanism to prevent the spread of aquatic nuisance species from ship’s ballast water. However, at MECP 67, which just concluded, two notable events took place. First, both Japan and Turkey announced their ratification of the Ballast Water Convention, thus bringing it closer to satisfying the entry-into-force provisions. Secondly, the MEPC adopted a resolution that, among other things, committed to immediately beginning a comprehensive review of the ballast water management system approval guidelines and agreeing that ship owners that have moved early and installed approved BWMS should not be penalized. This resolution should really help in pushing the adoption of this convention thus significantly contributing to meeting IMO’s environmental goals.

Energy Efficiency Design Index

IMO continues to address the important and difficult issue of ship efficiency. In 2011, IMO adopted efficiency standards for ships, known as the Energy Efficiency Design Index, or EEDI, requirements and in doing so, international shipping became the first and only sector, in the world, to have mandatory regulations addressing the emission of greenhouse gases. This was, and continues to be, a significant accomplishment. However, as the EEDI requirements apply only to new ships built after 2013, IMO has decided to consider efficiency standards for existing ships. In doing so, IMO agreed to take a very systematic and pragmatic approach with the first step to collect data on the efficiency of shipping as a basis for determining what, if anything, needs to be done to increase the efficiency of shipping.

We are always quick to say that shipping is the most efficient form of transportation – the effort to collect this data provides us a wonderful opportunity to quantify our efficiency. Furthermore, it will give us a sound basis to decide what, if anything else is needed.

Code for Recognized Organizations

I’m going to address two instruments that were recently adopted by IMO within the last year which, when fully implemented, have the potential to significantly impact and enhance the accomplishment of IMO objectives. The first is the Code for Recognized Organizations or RO Code for short. All countries rely to some extent on recognized organizations – ROs – to verify the ships of their flag comply with the IMO instruments. Overwhelmingly, the ROs are also classifications societies, which is entirely logical. Classification societies have the competency and capacity, which flag administrations leverage to implement the IMO conventions. However, flag administrations need to oversight their ROs to ensure their ROs are implementing the IMO conventions in accordance with their instructions and thereby giving full and complete effect to the conventions. The RO Code, which includes both mandatory and recommendatory provisions, greatly helps by providing the necessary consistency and worldwide assurance that the IMO conventions are being implemented and compliance is being verified.

IMO Instruments Implementation Code

The IMO Instruments Implementation Code, or III Code, focuses on the implementation of IMO instruments. One of the most important provisions of the Code is that audits of IMO member states are now mandatory. IMO has had a voluntary member state audit program for a number of years and over time, many countries, including most of the leading maritime countries in the world, have voluntarily undergone an audit. To a country, I believe all have said the audit was beneficial as it identified areas for improvement that will assist them in implementing the IMO instruments. I sincerely hope, that countries that have not undergone a voluntary audit, approach the mandatory audit with the same positive attitude.

IMO is looking forward to the mandatory audit program to assist IMO identify the areas to concentrate IMO’s integrated technical cooperation program effort to best help those countries most in need of assistance for implementing IMO instruments.

International Safety Management Code

There is another IMO instrument that bears mentioning because I think it has the potential for significantly contributing to IMO achieving its objectives. I’m talking about the International Safety Management Code, or ISM Code for short. IMO’s history with safety management is not new: it started with guidelines in 1989 which was followed in 1993 when IMO adopted the ISM Code and it became mandatory in 1998.

I think it is time for a review of the ISM Code and ask ourselves if it is really meeting its intended purpose, and if not, what changes may be needed. The review needs to include the views of flag and port states as well as classification societies, especially those who act as ROs.

When a ship, either through a flag state or port state control examination, is found out of compliance with safety, security and environmental requirements, we need to be able to answer the question – is the non-compliance due to a failure of the safety management system?

Many companies within the industry have well-functioning safety management systems and have a strong safety culture. But we also know, this isn’t true for everyone, and that needs to be our goal.

Goal based standards

I have no doubt that today’s IMO conventions and regulations have contributed significantly to IMO accomplishing it objectives. But to a large extent, the existing regulations are very specific and deterministic. We need to consider the regulations of the future. Currently, there is a small but significant push within IMO to develop future regulations as “goal based”. This is a good trend as it allows for more flexibility and innovation which will enhance the efficiency of shipping. However, in some instances, the need for very specific and detailed requirements will remain. In addition, often times industry simply needs to know exactly what is required to address a specific risk. IMO needs to be prepared to strike the right balance for future regulations to include both goal based along and specific/detailed requirements.

Cost benefit analysis of future regulations

I would like to see more rigorous cost-benefit analysis for all future regulations developed by IMO. When examining cost, in addition to the cost to shipping, we also need to include the cost to Administrations to enforce and implement as well as the administrative and information collection costs. This overall cost needs to be balanced against the benefit gained and a decision reached on whether or not the benefit justifies the cost. This won’t be easy, and often times it will be extremely subjective. Admirably, IMO has started consideration of the cost of risk control actions through the Formal Safety Assessment process, but not all regulations developed by IMO come through the FSA process. I think there is room for improvement in this regard.

IMO has developed a number of mandatory conventions, codes and regulations, which without question have significantly contributed to IMO meeting its mandated objectives. Is there room for improvement – absolutely! But I hope you agree, that with the recent adoption of new instruments, the continued effort to bring conventions into force, the advent of the mandatory audit scheme and the trends to more goal based standards, IMO is on the right track and will continue to answer the call of society to ensure the maritime industry is safe, secure, environmentally sound and efficient.

This blog is not a replacement or substitute for the formal posting of regulations and updates or existing processes for receiving formal feedback of the same. Links provided on this blog will direct the reader to official source documents, such as the Federal Register, Homeport and the Code of Federal Regulations. These documents remain the official source for regulatory information published by the Coast Guard.