The role of flag states is changing

by Ioannis Efstratiou, Acting Director, Cyprus Department Merchant Shipping first published in Seatrade Maritime, Q1 2017

There is no doubt that the role of flag states is changing. However, the provision of proactive support, advice and consultancy is not something new and leading flags such as Cyprus have been doing this for many years. The value add that certain flags offer extends far beyond the bare essentials of registration and certification. We consider proactively sharing intelligence with ship owners and operators one of our main obligations to clients, offering the best advice to directly support the protection of their business interests.

We know that a personal approach and continuous flow of communication is extremely important to owners and operators. This is why the Cyprus flag has maritime offices in Piraeus, London, Hamburg, Rotterdam, and New York City, comprising a highly skilled and multilingual workforce. We pride ourselves on our accessibility and personal, consultative approach. But let’s be clear – this is far from the norm; many flags have only a skeleton staff to literally answer emails and issue certificates.

In today’s challenging market conditions, the development of new and evolution of existing regulations has a significant impact on owners and operators. Now more than ever the role of flag states as a conduit between regulators and industry is critical. By working in close cooperation with clients and organisations such as the Cyprus Shipping Chamber and the Cyprus Union of Shipowners, the Cyprus flag is able to convey the thoughts and opinions of those affected, directly influencing how legislation is created and implemented. This is a great benefit to those vessels flagged with Cyprus.

The European Union’s (EU) Monitoring, Reporting and Verification (MRV) regulation provides one topical example. The regulation came into force in July 2015 and by 31st August 2017 companies shall submit to an accredited verifier a monitoring plan for each of their ships visiting EU ports. The final text of the Implementing and Delegated Acts have recently been published but the guidelines for the full implementation of the regulation are still to be finalised.

Cyprus has been involved in the development of MRV since the very beginning and actively participating in formulating the regulation in Brussels. Although the industry is represented, to some extent, in the European Sustainable Shipping Forum (ESSF) working groups, we believe that it is our responsibility to specifically represent the concerns, opinions and priorities of the Cyprus shipping industry.

Although Cyprus is not very happy with MRV regulation, we continue to work in close cooperation to draft and shape the proposed guidelines to be drafted by the ESSF. This will ensure that we have the clearest possible picture as to how we're going to implement the regulation and to guide our shipowners accordingly.

Our role as a state will be limited to the verification and compliance of ships visiting Cyprus and ensuring that our ships are complying with the regulation. However, owners and operators have been very interested in learning about the regulation and how it will be implemented, which is why we have planned several MRV seminars – in early 2017 – in conjunction with the Cyprus Chamber of Shipping and the Cyprus Shipowners Association. In addition, we’ve held training for our surveyors and, when the guidelines are close to being finalised, a circular will be issued explaining in detail how the Cyprus administration intends to implement the legislation.

From a leading flag, ongoing and proactive communication in the form of circulars and seminars, for example, to share intelligence is expected. But, in addition, owners and operators are increasingly looking for a flag that isn’t simply an industry spectator and aggregator of information, but rather directly involved in addressing and shaping industry issues, challenges and regulation. They want an influential champion that proactively ensures that their best interests are effectively represented.