25 & 26 September 2000, Athens Greece
Ministry of
Transport, The Netherlands
Keynote Speech : Quality
Shipping: A Political Perspective
Ladies and
gentlemen,
I would like to
start expressing my gratitude for the invitation for this Ship Risk Management
Forum 2000. I think this Forum provides an excellent opportunity to exchange
views with high level representatives of both governments and the industry on a
subject that in my opinion is of crucial importance to the maritime community:
tools to make quality shipping economically more rewarding.
Although the
international shipping industry has improved its performance over the past
decades, the ‘Erika’ disaster and other recent accidents show that substandard
shipping still haunts the oceans. For many players it seems to pay off to be
substandard, or rather: it does not pay enough to invest in quality. The ‘Erika’
disaster also shows that there is a great public concern about accidents at sea
and marine pollution. It is only too obvious that the public image of the
industry is seriously damaged by such disasters. It goes without saying that it
is in the interest of the industry that its image is one of quality rather than
calamities. In this respect it is revealing that some players in the industry
try to have no public image at all and seem to have an interest in making
shipping a secretive industry.
Unfortunately, the
economic rationality of today’s shipping market is not in favour of quality
shipping. The commercial pressure on shipping and related sources is extreme
and in an over competitive environment some are tempted to cut corners in an
irresponsible way. This has led to
badly maintained ships manned with ill-trained crews. A substandard operator
enjoys a substantial operating cost advantage versus a compliant operator who
meets minimum international standards. At the same time there are huge
financial cost of vessel casualties losses of human life. Thus, substandard
shipping poses an unacceptable threat to the safety at sea, the marine
environment and the competitiveness of those who meet minimum international
standards. Therefore, targeting substandard shipping in my view should be the
highest priority for maritime authorities and quality industry players alike.
Quality shipping as
a concept is on the agenda for some years now and has been discussed on various
occasions, like the Mare Forum conferences in 1996 and 1999 in the Netherlands.
However, discussions between governments and industry players were mainly
concentrated on the underlying problems of substandard shipping. Suggestions on
how improve the quality of shipping have received less attention. Therefore,
although in recent years a number of initiatives have been taken within for
instance the IMO and the European Union, there still is no coherent package of
policy measures to effectively tackle the problem. I think this Ship Risk
Management Forum as an excellent opportunity to develop ideas on action that
might be taken by governments and the industry alike.
Formulating and
implementing solutions to ban substandard shipping for many decades was
regarded as being an exclusive responsibility of governments. And of course,
governments in their role as flag states do have a large responsibility to
promote safety and protecting the marine environment. However, although the way
this responsibility has been carried out in the past has led to a vast set of
international conventions on safety at sea and the protection of the marine
environment, for various reasons the current rules and regulations do not
effectively ban substandard practices. In my opinion, a number of reasons for
this lie in the very nature of the conventions themselves. First of all, the
conventions created by governments and imposed by governments on the industry
that mostly try to comply at minimal costs and sometimes try to dodge the
rules. Thus they fail to stimulate the creation of a safety culture, or a
quality culture, within the industry. And it is my firm conviction that
substandard shipping can only effectively be expelled if there is a safety
culture deeply embedded within the industry. Therefore, policy initiatives
which favour quality shipping should also promote the transition to a safety
culture approach.
Secondly, the
conventions comprise mainly technical rules and regulations, all to often of a
poor quality. These rules and regulations do not change the economic factors
that primarily cause substandard shipping. In fact the quantity and the quality
of the rules and regulations make it difficult to enforce them. This in turn
seems only to attribute to substandard shipping. Over regulation and the all
too often poor quality of the rules and regulations call for a Regulatory
Reform. Let me make a distinction between already existing and future rules and
regulations. As regards the first category it might be feasible to reverse and
harmonise certain chapters of very detailed and obsolete rules and regulations.
I am aware of the fact that this will be a difficult and time-consuming task.
As regards the
second category, the new rules and regulations, I strongly favour to be very
critical on the drafting of new chapters. We should refrain from the drafting
of new regulations as a result of calamities before the causes of accidents
have been properly investigated.
In this respect
Formal Safety Assessment is regarded a useful tool for the decision-making
before the process of drafting is decided upon. Once a decision has been taken
to embark on new regulations on a certain subject, in my opinion considerable
attention should be given to the output oriented essence of these regulations.
The conventions should stipulate what should be achieved rather than how things
must be done so as to leave ample room for innovation. Further, participation
of private enterprises in the drafting process should be strengthened which
might lead to better possibilities towards enforcement.
But again, rules and
regulations cannot alter the economic factors that cause substandard shipping.
What is needed therefore is not an exclusive focus on more legislation, but a
policy that comprises a coherent package of initiatives to alter the economic
rationality within the industry. Such a package should make use of market
forces to penalise substandard shipping and promote quality.
It goes without
saying that from a political perspective such an approach involves a quite
different relationship between governments and the industry than what has been
common practice until now. Of course, governments will keep their
responsibilities as flag state. However, governments can never alter the
economic rationality within the industry on their own. What is needed is a close
co-operation in the policy process between government and the industry and an
active role of the industry in creating a safety culture.
Whatever the future
relationship between governments and industry will be, governments can take a
number of initiatives to stimulate quality shipping. In my opinion the starting
point for stimulating quality shipping must be the improvement of flag state
performance. Governments must ensure their registries to be a quality registry.
Instead of introducing more legislation they must focus on more effective
implementation of already existing rules and regulations. This, amongst other
things, involves making sure there is enough and competent staff to undertake
the tasks required by international conventions. It involves the commitment and
ability of flag states to have close relationships with organisations
authorised to act on its behalf, like classification societies. Governments
must also provide total transparency with regard to the ships in their registry
and adequate actions in case of port state control detentions. A more effective
implementation and enforcement of already existing legislation requires also a
sound understanding of how economic drives influence the way ship owners deal
with safety aspects. Transparent economic data will provide maritime
authorities with a tool to more adequately target substandard shipping.
Governments must
also change the way the regulations are formulated. They must no longer
prescribe what a ship owner must do in specific circumstances, but formulate
the goals a ship owner has to achieve. The way he reaches these goals is up to
him. This puts the responsibility for a ship where it belongs: in the hands of
the ship owner. Ship owners then will be
more able to deal with the regulations according to their individual situation.
The experience in the Netherlands shows that such a situation contributes to
the creation of a quality culture within individual companies.
In my view, only
governments that have taken up their flag state responsibilities are in a
position to address other stakeholders. I would appreciate when other
administrations that feel likewise would join us on this road towards improved
quality in shipping.
What role can the
industry play? First of all it must be understood that the industry cannot be
regarded as only comprising the ship owners. We all know that ship owners do
not work on their own but are part of a network that also comprises shippers,
brokers, classification societies, banks and insurers. They are all stakeholders
in the system called shipping industry. In my opinion they all not only have a
responsibility in reducing substandard shipping, they also can actively
participate in promoting a safety culture approach and create effective
positive economic incentives in favour of quality operators.
Quality players in
the industry can participate in the regulatory reform process aimed at
providing the maritime industry with a legal framework that contains economic
incentives for quality. The industry
can also develop further ideas on how to stimulate co-operation between ship
owners, shippers, classification societies, insurers and other sectors. A basis
for such co-operation is already provided for by the Maritime Industry Charter,
which was signed by many parties in 1999. Co-operation between quality industry
players might enhance the exchange of information and create more transparency.
In might also lead to a more uniform interpretation of international rules and
regulations. These kinds of actions will certainly contribute to developing
mechanisms for self-regulation in the industry.
It should be
understood that quality in shipping should be awarded and all players should be
shied away from using substandard shipping. I think actions to achieve this can
be undertaken in all sectors of the maritime industry. However, I think there
is one sector that can play a key role. That sector is the marine insurance
sector.
Of course, I am not
in a position to lecture the marine insurance experts on how to act. But if administrations
and the industry do want to improve the quality of shipping also the insurance
sector has to take up its responsibility. After all, substandard shipping
cannot exist if the insurance industry is not prepared to insure or finance it.
Ladies and
gentlemen,
Let us look ten
years ahead from now. Let us look at two possible scenarios. In the first
scenario the current situation is unchanged. Substandard shipping is still
being combated by governments through the introduction of more and more prescriptive
and detailed technical legislation. The burden of compliance with these rules
has become so huge that substandard shipping is the only way to make profits.
What has emerged is a substandard market. In the second scenario governments
and the industry have successfully implemented a policy aimed at targeting
substandard shipping. This policy makes use of market forces to penalise
substandard shipping and promote quality shipping. Rules and regulations do not
constitute a burden for the industry but provide guidance for goals to be
achieved with respect to safety. The shipping market is no longer only
cost-driven but also takes quality aspects into account.
Ladies and
gentlemen,
I think for all of
us the latter scenario is far more attractive than the former. It is also the
most difficult to realise. I therefore invite all of you to actively
participate in discussions during this Forum on how this second scenario can
best be achieved.
I thank you for your
attention.