In this month's blog, the general manager John J. Kim of ClassNK's Los Angeles office explains ClassNK expansion in the U.S.
Like others in the classification business of equivalent experience, the working life of ClassNK Los Angeles Office general manager John J. Kim has coincided with profound change in maritime regulations brought about by the creation of port state control (PSC).
Having joined the classification society in 1991 as a non-exclusive surveyor working out of ClassNK’s Anchorage office, Kim took an opportunity to become an exclusive surveyor in the society’s New York office in 1993. It was during his time in New York that the emergence of PSC as a force saw relationships with local regulators begin to shift. “This fundamentally changed many relationships and I was assigned to represent ClassNK with the US Coast Guard (USCG) to coordinate and enhance PSC activities in the US,” Kim explains. “Efforts in this area have resulted in the development and maintenance of an extremely strong and mutually beneficial relationship with the USCG as the PSC activities continue in the US today.”
Classification societies have been impacted by the emergence of PSC with the full implications of the new relationships unfolding in the current decade.
By 2009, Kim had been appointed general manager at ClassNK’s Seattle office. The Pacific North West managerial role led on to a subsequent transfer to Los Angeles as general manager, necessarily focusing on activities around the largest U.S. port facilities at Port of Los Angeles-Long Beach (LA/LB), but also taking responsibility for San Francisco.
Combined, container volumes passing through LA/LB are more than double those handled by any other US port, while the West Coast gateways are key to the ‘Golden Shipping Route’ identified by container ship operators due to its high potential for profit margins under normal economic conditions. "With over 4,500 vessels calling at the LA/ LB facilities annually, PSC-related surveys and audits demand efficiency and timeliness, and delivering this on a day to day level can be a challenge in a blue water business that can be unpredictable," Kim says.
“Due to the nature of the cargoes, types of jobs and its location on the Pacific coast, this office has and will continuously face numerous challenges through the 21st century; we will need to continue showing agility to overcome them.”
Even so, the relationship with the USCG continued to evolve as Kim took up his new role, bringing the opportunity for ClassNK to broaden its offering to US-flagged vessels. The society sought and received authorisation from the coastguard for its surveyors to carry out the load line (LL) and tonnage (TM69) survey for US-flagged ships in 2011. ClassNK classed its first-ever US-flagged ship in 2011 with the re-classing of the 2008-built oil product tanker SLNC PAX, owned by Schuyler Line Navigation Company (SLNC).
In December 2012, the authorisation was extended enabling ClassNK to render the full range of services for survey and certification for the SOLAS, MARPOL and AFS conventions, as well as to perform ISM audits on behalf of the United States flag administration.
The USCG subsequently granted authorisation for ClassNK to participate in its alternate compliance programme (ACP), offering to US-flagged shipowners and operators more flexibility when it comes to surveys and inspections of their vessels. The ACP was developed as an alternative method for US-flagged vessels to fulfil the regulatory requirements for construction and operation. Under the programme, ClassNK can carry out a wide range of surveys and inspections on US-flagged vessels on behalf of the USCG.
Participation reflects ClassNK having satisfactorily performed a delegated function for two years from its first registration of a US-flagged vessel and demonstrating its commitment to continuous quality and vigorous verification of each vessel’s compliance with applicable standards.
All of this took place at a time when the safety and maintenance culture of North America’s vital brown water (inland waterway) operations was also becoming subject to significant regulatory change, through the development and publication of ‘Subchapter M’. This was called for by the US Congress to regulate the US towing industry following a number of high profile accidents and oil spills along US waterways.
In 2011, the notice of proposed rules for the “Inspection of towing vessels – 46 CFR Subchapter M” was published by the USCG in the federal register as required by the 2004 Coast Guard and Marine Transportation Act. The proposed rules were intended to create a comprehensive safety system for inland waterway operations in the US, to include company compliance, vessel compliance, vessel standards, and oversight in a new Code of Federal Regulations (CFR) subchapter dedicated to towing vessels.
The implementation of viable safety management systems or inspection regimes would ultimately affect more than 5,400 towing vessels in operation.
Complementary to its blue water relationship with the USCG, ClassNK identified the new rule making initiative as a substantial opportunity to make its world class technical resources available to support the US towing industry. Guidance on Sub-M indicated that US flag authorised classifications would qualify as third party organisations (TPO) to conduct audits and surveys of towing vessels.
“ClassNK initiated a study on the US brown water industry, investigating its practices and regulation,” says Kim. “We saw that this was an opening to expand our business in North America, but also that it represented an opportunity to transfer our expertise into an important inland shipping market.”
The first step was to acquire the SMSLLC. The Maine-based safety management system consulting firm has been serving US-based blue and brown water clients for almost a quarter of a century.
“For ClassNK, the SMSLLC acquisition demonstrated a firm commitment from ClassNK-America in support of the US brown water industry, and the ability to offer a clear understanding of the impact of new Sub-M and how to comply with the proposed new regulations,” Kim says.
As a result of the joint efforts of ClassNK & SMSLLC, in July of 2016 ClassNK became the world’s first third party organisation (TPO) under Sub-M to sign the agreement with American Waterways Organization to carry out the responsible carrier programme (RCP) audits. These are the agreements through which TPOs support the transition of the US inland sector to Sub-M Compliance during the initial phase period of Sub-M implementation by July 2018.
“We planned long in advance for Sub-M, and it is therefore satisfying to have become the first TPO to be recognised under the programme,” says Kim. “The consequences of Sub-M for the entire US brown water Industry present considerable and recurring opportunities for class on compliance.
The first phase of company initial verification audits of each towing safety management system will be required by the last quarter of 2017.
“Our expectation is that vessel audits and surveys will follow at a rate of 25% of each company’s towing vessels from 2018 through 2022.”