Registries Featured in Maritime Reporter and Engineering News
The most recent issue of Maritime Reporter and Engineering News features a conversation with Theo Xenakoudis and Christian Mollitor of the Marshall Islands and Liberian Registries, respectively, along with statistics tracking the twenty-five largest flag States overall and by vessel type. The interview text is posted as follows, and the tables along with full article can be found through this link.
Private Equity Drives New Ship Buys
Ship Registries are an excellent bellwether of industry health and trends, and when Maritime Reporter & Engineering News sought answers to some topical questions, it went to two of the top organizations in the world, speicifically Theo Xenakoudis, Worldwide Business Operations Officer, International Registries, Inc. & Christian Mollitor, Vice President, Liberian Registry/LISCR, LLC.
By Greg Trauthwein
Give a brief description of the market you serve.
TX: Greek shipowners have historically been vety supportive of the RMI flag. Today Greek shipowners represent nearly 25 million gross tons of the RMI fleet. They are the largest group of owners in the Registry, followed by U.S. and German owners. According to a recent paper published by the Greek Shipping Cooperation Committee, the RMI Registry gained approximately half of the vessels purchased by Greek owners and more than 40% of the gross tonnage added to the Greek fleet in 2013. That same paper shows that 16% of Greek owned vessels fly the RMI flag and the RMI flag is the fastest growing in the market. Greek shipowners invested around $13 billion in 2013, and already $5 billion in Q 1 2014 for newbuilding tonnage according to a report by The TOC.
CM: The Liberian Registry is one of the world's largest and most active shipping registers, serving quality ships engaged in international trade. Liberia recently surpassed all-time tonnage records and the registty continues to grow. The fleet now stands at approximately 4,000 ships, aggregating 136m gt and more than 207m dwt.
What has been the trend or market condition that has most affected business in the past year?
CM: Owners are ordering ships again, and there is a great deal of private equity funding entering the market, in the U.S. and elsewhere, which is filling the shortfall created by a reduction in traditional bank finance for shipping. Liberia has the second-highest share based on market capitalization of shipping companies listed on the U.S. stock exchange, behind only the U.S. We expect that the use of private equity capital will continue to fund newbuilding and secondhand ship purchases throughout 2015 and 2016.
TX: Our business is to register ships, while at the same time ensuring that vessels under the RMT flag are in compliance with national and international rules and requirements. If you look at RMI registrations within the last five years, it is clear that more than 60% of the vessels registered were newbuildings. Arepott published in the fall of2013 which was based on the Korean Shipyards' orderbook showed that the RMI flag was the second largest flag represented. lt is anticipated that the average age of the fleet will continue to stay below ten years of age based on the known orderbook. One area that really began to change as early as 2012 was the activity of private equity funds and their investment into shipping. This has resulted in a number of acquisitions that entered the RMI fleet. This trend has continued into 2014.
Considering the legislative and financial considerations, what do you consider to be the biggest challenge to your business in the coming few years?
TX: One of the major challenges that all flag State administrations face today is the proliferation of regulation. Flag States must employ people with the knowledge, experience and capacity to ensure that their flagged vessels operate in accordance with international rules and regulations. Furthennore, Flag States must be adequately and effectively represented at the International Maritime Organization (IMO), where all international conventions and regulations are introduced. The RMI has a strong IMO delegation including a permanent representative. The delegation liaises with industry stakeholders and receives appropriate feedback from owners, operators and other Marshall Islands Quality Council (MIQC) members and its advisory groups. Another major challenge is providing support and assistance to owners and operators that have suffered due to market conditions.
Balancing commercial responsibility with regulation is absolutely essential to ensure proper maintenance and safe operation of ships, despite a decrease in vessel eamings. Having surpassed 100 million gross tons earlier this year, one of the challenges we face is managing our fleet growth while maintaining the same level of quality, reputation and service.
CM: In shipping, as in other industries, innovative companies can turn challenge into opportunity. An example of that can be seen in the Liberian Registry's response to continual pressure exerted on German shipowners by their national association (VDR) to register 30 percent of their fleets under an EU flag. Most German owners prefer the Liberian flag, and a large percentage of the Liberian fleet is linked to Gennan owners. So, as part of its commitment to supporting its clients in all circumstances, YCF Maritime, the parent organization of LISCR, LLC, has created a Luxembourg-resident sister organization - EuroFlag Services S.a.r.L - to carry out ship registration and management services for shipowners seeking to register vessels under the Luxemborg flag. This option allows owners the status of having an EU flag, while still retaining LISCR 's service, expertise and technical know-how.
