Topic 3 :

INTEGRATED TECHNOLOGY New integrated technology platform to help energy and shipping companies. Platform technology is a term for technology that enables the creation of products and processes that support present or past development. For the ease of manufacture, which don’t need so much training.

Integrated technology and technology adoption ship company port Mode of shipment

POLICY AND LEGALIZATION Policy - a course or principle of action, adopted or proposed by a government, party, business or individual. The term is used in many different ways, varying from institution to institution, organisation to organisation and sometimes within institutions and organisations as well.

Common features of good policy: it states matters of principle it is focused on action, stating what is to be done and by whom it is an authoritative statement, made by a person or body with power to do so.  Good policy is a tool which makes administration easier, and allows people to get on with the organisation’s core business more efficiently and effectively.

Legalization - is the process of authenticating or certifying a legal document so a foreign country's legal system will recognize it as valid and with full legal effect. Export document legalization Many countries required this legalization document before good are shipped.

FLAG STATE (FLAG) Flag state refers to the authority under which a country exercises regulatory control over the commercial vessel which is registered under its flag. This involves the inspection, certification, and issuance of safety and pollution prevention document.

It is possible for an owner of a certain nationality to register his vessel under a different National Flag, and that FLAG is known as a “Flag of Convenience” (FOC) or now more commonly referred to as an “Open Register” or “Open Registry”. The term FOC has been used since the 1950s and comes from the flag ships fly to show their country of registration. The country of registration determines the laws under which the ship is required to operate and to be applied.

Top Flag States 1. PANAMA – 22.63% 2. LIBERIA – 11.14% 3. MARSHALL ISLANDS – 6.10% 4. HONGKONG – 5.48% 5. GREECE – 5.30% 6. BAHAMAS – 5.02% 7. SINGAPORE – 4.83% 8. MALTA – 4.40% 9. CHINA – 3.54% 10. CYPRUS – 2.45% 11. SOUTH KOREA – 1.63% 12. NORWAY % 13. UNITED KINGDOM – 1.39% 14. JAPAN – 1.39% 15. GERMANY – 1.38% 16. ITALY – 1.35% 17. ISLE OF MAN – 1.31% 18. INDIA – 1.17% 19. DENMARK – 1.06% 20. ANTIGUA & BARBUDA – 1.02% 21. UNITED STATES – 1.0%

Open Registers (FOC) Today, more than half of the world’s merchant ships (measured by tonnage) are registered under the so- called Flag of Convenience or Open Registers. Traditional reasons for choosing an open register include protection from income taxes, wage scales and regulations.

An open registry allows a Norwegian owner access to US finance, Japanese shipbuilding expertise with Scottish and Hong Kong ship managers, while employing cost effective crew from the Philippines, India or China. Before open registry system, national flags required national ownership, national construction and national crew. Flags of Convenience can enable both lower costs of registration and ongoing costs such as taxation.

Flag State Requirements By registering the vessel in a certain country, the Owner of the vessel undertakes to follow the shipping law or Mercantile Marine Act of the country. Generally the safety aspect of the Marine Law of any particular country is in keeping with the SOLAS Convention. However, there might be a few changes here and there, with some Flags insisting on higher standards but safely requirements must never be less than the minimum standards set in the SOLAS.

Flag State Responsibilities The responsibilities include such things as: Participation in International Maritime Treaties Implementation and enforcement record of IMO Convention Port State Control Supervision of survey Compliance with International Safety Management Code Seafarer’s competence standards Participation in IMO and ILO meeting

Choice of Flag State The decision of a ship owner to register his vessel in certain country is generally commercially driven. Taxes, tariff and crewing play a major part in the registration process of a vessel. However, with Port State Control becoming more stringent, together with the banning of ships, the choice of reputable flag with a good PSC is also becoming more important. With the increase in piracy choosing a Flag State with the ability to protect merchant vessels is also important.

When a vessel visits a port, the maritime authority of the country has a right to inspect the vessel (Port State Control) and ensure that it is maintained properly and is seaworthy in all aspects. An unseaworthy vessel on the coast of any country would pose enormous danger to the coastal environmental of that country.

PORT STATE CONTROL PSC is the inspection of foreign ships in national ports to verify that the condition of the ship and its equipment comply with the requirements of international regulations and that the ship is manned and operated in compliance with these rules. The PSC provides a ‘safety net’ to catch substandard ships. Inspection of ships in port would be taken by Port State Control Officer (PSCO).

Port State Control Agreements The Latin American Agreement Abuja MOU (West and Central Africa MOU) Black Sea MOU Caribbean MOU Indian Ocean MOU Mediterranean MOU Paris MOU NIR Riyadh MOU (Gulf Region) Tokyo MOU (Asia-Pacific MOU)

Criteria for detaining a ship by PSCO The main criteria for detention is that the ship is deemed unsafe to proceed to sea and that the deficiencies on a ship are considered serious by the inspector. 1. Certification of crew 2. Safety 3. Maritime security 4. Marine pollution and environment 5. Working and living condition 6. Operational 7. Management

STANDARD OF TRAINING, CERTIFICATION AND WATCHKEEPING STCW- set qualification standard for masters, officers, and watch personnel on seagoing merchant ship. Was adopt in 1978 by conference at the IMO in London, and enter into The IMO Convention on STCW of seafarer adopt a new set of amendments in Manila 2010 called “Manila amendments 2010”. All seafarers must be certified and trained according to the new standards.

STCW Convention chapters Chapter I : general provision Chapter II : master and deck department Chapter III : engine department Chapter IV : radiocommunication and radio personnel Chapter V : special training requirements for personnel on certain typel safety, s of ship Chapter VI : emergency, occupational safety, medical care and survival functions Chapter VII : alternative certification Chapter VIII : watchkeeping The most significant amendments are: New rest hours for seafarers New grades of certificates of competence for able seaman in both deck and engine New and update training, refreshing requirements Mandatory security training Additional medical standards Specific alcohol limit in blood and breath

INTERNATIONAL SHIP AND PORT SECUIRITY ISPS - Set of measure to enhance the security of the ships and port facilities, developed in response to the perceived threat to ship and port. The main objectives of the ISPS code : To detect the security threats and implement security measure To establish roles and responsibilities concerning maritime security to government, ship and port industry. To collate and promulgate security related information To provide methodology for security assessment.

INTERNATIONAL SAFETY MANAGEMENT CODE ISM – provides an international standard for the safe management and operation of ships and for pollution prevention. The purpose of ISM Code is : To ensure safety at sea To prevent human injury or loss of life To avoid damage to the environment and to the ship.

The shipping industry transports cargo through designated sea routes. The global shipping industry is regulated by the International Maritime Organization. Commercial shipping can be traced back to the Phoenician merchants who transported goods across the Mediterranean.

The shipping industry boomed after the opening of the Suez Canal (1869), which facilitated faster trade between Europe and Asia.

The industry continued its growth, especially in Asia, with Hong Kong become the world’s largest container port in 1989.

Demand and Supply drivers of the Shipping Industry: Freight rates Trade growth Geographical concentration of trade Access to and suitability of other modes of shipment Demand for oil and dry bulk Climatic conditions (rains, storms and tides)

The Top Shipping Company : APM Maersk, with a TEU capacity of 2,031,886. Mediterranean Shipping Company with TEU capacities of 1,469,865. CMA CGM Group with TEU capasity 988,141 respectively. The shipping industry is considered to be a catalyst for economic development, as it facilitates 90% of world trade. As markets became increasingly globalized, shipping volumes soared.

The challenges/problems of globalization in shipping industries.  Financial status Value of the ship - $100 millions Operating costs - $15000 per day Where does the capital come from ? Bank (HSH Bank, Commerz Bank)

Piracy/Port and Sea route Security Due to the value of ships Gulf of Aden Hijacking Naval ship Supertanker 2004, International Ship & Port Facility Security Code

The environmental impact Sea trade contribute almost twice to the word’s carbon footprint than air traffic. Sea trade contribute 4.5% - 6% of total emissions annually premature death each year in coastal area by entering the blood stream and affecting the heart and lung. The emission will affect the climate change.

MINI ASSIGNMENT In a group, think a challenge/problem of globalization that maybe occur in shipping industries.