Page 1

CyprusMail Founded 1945

Shipping 2019 CyprusMail

Shipping 2019

SPONSORED BY:

Free with the Sunday Mail 6/10/2019


R E L A X AT I O N . S T Y L E . E L E G A N C E . Our stylish resort has been specifically tailored with luxurious amenities, for your ultimate comfort and relaxation. Overflowing with Mediterranean simplicity and heart-warming hospitality, our facilities and accommodation are teamed with contemporary decor, traditional elements and a luxurious finish, creating the most unforgettable stay.

CONTACT US ON RESERVATIONS@PARKLANECYPRUS.COM EXPLORE THE DESTINATION AT PARKLANECYPRUS.COM

PARKLANE IS INDEPENDENTLY OWNED BY PARKLANE HOTELS LIMITED AND IS OPERATED UNDER LICENSE ISSUED BY FRANCHISOR ENTITY


CyprusMail Shipping

03


contents A mood of caution Signs of stagnation in the Cyprus shipping industry can be fought by having the right people

06

Steering a sector that never sleeps Interview with Natasa Pilides, heading the newly formed deputy shipping ministry

Enormous prospects for blue growth Deputy shipping ministry looks ahead

12 16

One voice built on trust Speaking to the director of the Cyprus Shipping Chamber, which marks 30 years in 2019

18

The invisible work force The contribution and working conditions of the world’s seafarers

22

Greening a blue industry New regulations mean increased work for industry and prices for consumers

26

Paperless paradise The adoption of blockchain technology is gaining momentum

32

Cyprus Mail Editor: Jean Christou Magazine Editor: Katy Turner

Producing the personnel needed for shipping to grow Local education institutions training those who will work in the shipping sector

40

Not just for men Shifting the gender culture within the maritime industry

Contributors: Annette Chrysostomou, Melissa Heckers, Andria Kades, Kyriakos Iacovides, John Ioannou, Evangelos Koulis, Jonathan Shkurko, George Christou

44

Art Director: Maria Iacovidou

Long wait to see removal of sector’s biggest hurdle Turkish ban on ships with Cyprus links holding back the sector

Artwork: Toulla Petrou, Akis Nicolaou

48

Advertising: Agathe Venizelou, Julia Michael

From sea to sky The same factors that allowed the development of the shipping industry could help support aviation

52

Printed by: Proteas Press Ltd, Nisou Industrial Area, Nicosia. Tel: 22 479000, info@proteaspress.com.cy

Is there really a better alternative than Cyprus? World-class services and shipping expertise

56

Published by: The Cyprus Mail, 24 Vasiliou Voulgaroctonou, Nicosia. Tel: 22 818585, mail@cyprus-mail.com

04 CyprusMail Shipping


CyprusMail Shipping

05


A mood of caution Shipping continues to be a strong contributor to the Cyprus economy but there are signs of stagnation. It’s all about having the right people reports John Ioannou

A

ptly titled Sea Change, the 16th bi-annual Cyprus Maritime Conference, opening in Limassol on October 6, will focus on the challenges facing an industry still struggling to recover from the massive crash of 2008 that began with a credit storm, continued with the collapse of aggregate demand and ended in the structural crisis that many are still dealing with today. While the major indexes have all posted healthy gains since the last Maritime Cyprus conference in 2017, the mood is still one of caution. The Baltic Dry Index (BDI), which records the cost of moving bulk cargoes by sea and has long been regarded as a global bellwether for the overall health of the shipping industry soared to a five-year high in September 2019, topping 2,500 points. The Clarksea Index, a broader register that includes tanker and offshore markets also posted healthy growth of 8% year-on-year, moving slightly above trend since the start of the crisis. The slower pace of newbuilding deliveries, increased scrapping of older tonnage and improved demand for freight have all impacted positively, but with a long road ahead. “Despite progress, it still seems shipping has a way to go,” Clarkson’s Research said in its July

06 CyprusMail Shipping

2019 report. Analysts have good reason to be prudent, as this tenuous growth risks being choked off by challenges such as Brexit, China’s slowing economy and US-Iran tensions. “In isolation, many of these issues seem manageable but collectively they impact, particularly


broader institutional investor sentiment,” Clarkson’s continued. Nevertheless, shipping continues to be a strong contributor to the Cyprus economy and accounts for a stable 7% of GDP, a respectable figure but one that has not increased as predicted since 2017. The Central Bank of Cyprus estimates industry revenues from ship management companies reached €528 million in the second half of 2018, up a modest €22 million from the start of that year. The number of shipping-related companies registered in Cyprus also increased from 168 in 2018 to over 200 in February 2019, but it is unknown how many are actively operating and shipping as an employer has remained static, contributing little in the way of job growth. There are other signs of stagnation, with the Cyprus flag shrinking in relation to other registries and the government considering dras-

‘We have focused too much on ship management and not enough on developing new services like chartering, ship finance and marine insurance’

tic measures to shore up demand. “We believe abolishing initial registration fees will boost the shipping registry,” said Deputy Minister of Shipping Natasa Pilides. “If we don’t reduce fees, perhaps instead of an increase in ship registrations we could see a reduction.” Private sector experts also feel that Cyprus has failed to reach its potential as an integrated shipping hub, content to sustain the established cluster of mostly German ship management companies without serious efforts to attract ancillary services that may spark another burst of growth. “We have focused too much on ship management and not enough on developing new services like chartering, ship finance and marine insurance,” former Head of Business Development at Fleet Management and president of Youngship Cyprus Sotiris Kampanellas said. “If we want

THE CYPRUS SHIPPING INDUSTRY The Cyprus shipping industry has the

third largest

merchant fleet in Europe It has the eleventh largest merchant fleet in the world The fleet exceeds

23 million gross tonnage

Source: https://www. cyprusprofile.com/en/sectors/ maritime-and-shipping/

The number of companies increased from 168 in 2018 to over 200 by February 2019 The industry contributes more than €1 billion annually to the economy, which translates to 7 per cent of GDP The sector employs around 3 per cent of the Cyprus workforce

It employs 55,000 seafarers It employs 9,000 personnel onshore, more than half of whom are Cypriot graduates In the past six years, there has been an increase of 65 per cent in the number of shipping companies registered with the Cyprus shipping taxation system, boosting revenue by 25 per cent

CyprusMail Shipping

07


‘The sheer pace of change within the shipping industry is truly staggering… the importance of our people is also why we have invested so heavily in our state-of-the-art POCR, but recognising that such technology is there to enhance – not replace – human performance

Crew members on board the British flagged Stena Impero, which was seized by Iran earlier this year

to catch up with the competition, we must think of ways to become a complete shipping services centre. There is also a lack of support for shipping technology start-ups, so they tend to leave for competing maritime centres like Singapore, London and Athens. By developing these services and keeping them here on the island we will enhance our position and give new impetus to the established cluster”. One company that has bucked the trend both globally and locally is Orient Ship Management (OSM). Headquartered in Norway, OSM manages over 500 vessels, 30 office locations and some 11,000 seafarers. OSM Cyprus was established in 2008 at the onset of the crisis, and in the decade since it has powered ahead, offering bespoke management ser-

vices to clients from a broad range of shipping market segments. OSM’s success owes much to its unique culture – a Scandinavian model of management with an emphasis on flexibility, approachability and egalitarianism that contrasts greatly to the strict hierarchies and rigid traditional operating cultures of the mostly German cluster. OSM also provides exceptional advancement opportunities to its employees, leveraging talent within the organisation to optimise client satisfaction. OSM’s chief commercial officer Tommy Olofsen boils it down: “It’s all about people: getting and having the right people with dynamic attitudes towards change”. Companies like OSM understand intuitively that it is neither the strongest nor the most intelligent

who will survive, but those that can adapt the quickest. Indeed, the most pressing issue for the industry right now is the International Maritime Organisation’s (IMO) decarbonisation sulphur cap, whereby ships will be prohibited from burning cheap polluting fuels beyond January 1, 2020. Achieving compliance will be a massive challenge, as ship owners can either install carbon scrubbers – which might cost up to €3 million for a medium-sized vessel – or run their engines on cleaner fuels with lower sulphur contents that are significantly more expensive. Many firms are still strapped for liquidity after a decade of dry credit markets and low freight rates and are unable to find the cash for scrubber retrofits, so switching to low sulphur fuels and passing on the cost is their only continued on page 10

08 CyprusMail Shipping


CyprusMail Shipping

09


continued from page 8

option. As such, the potential for serious disruption to oil prices is high, given that global shipping accounts for about half of all global fuel oil demand. Captain Heinrich Schoeller, founder and chairman of Columbia Ship Management summed up these concerns: “Ship owners have to invest considerable amounts of money in the near future for ballast water treatment plants and for the conversion and operation with low sulphur fuels as from January 2020 to ease the accusations that the shipping industry is the biggest air polluter. The shipping industry always had its ups and downs and is a mirror of the world economy. After the financial crisis in 2008, the world economy has not really recovered and the same applies of course for the shipping industry.” The silver lining is that much older tonnage will not be able to cope with the new requirements so this may boost scrappage rates, cutting the global oversupply of vessels and bringing cargo rates up further. The de facto trade war between China and the USA and the geopolitical turmoil centred around Iran has also unsettled the industry. Retaliatory seizures of vessels by the UK, USA and Iran have ratcheted up tensions in the Persian Gulf – a

10 CyprusMail Shipping

critical world seaway – and caused alarm among ship operators who have often been granted safe passage during regional conflicts. CEO of Interorient Shipmanagement Themis Papadopoulos articulated this unease: “The recent events surrounding the seizure of ships by governments citing sanctions and violations of other regulatory infringements creates a very worrying picture… the politicisation of shipping is something that we, as an industry, must stand united against. Shipping should be allowed to go about its daily business free from being used as an extension of foreign or economic policy”. Sea-changes can also bring opportunities, and one huge potential growth area for a traditionally technophobic sector is digitisation. Spurred on by the vision of unmanned vessels as showcased by ship automation pioneers like Maersk and Rolls Royce, early adopters are investing heavily in high-tech digital controls rooms to monitor global fleets and mine data for insights on improving safety and efficiency. One such example is OSM’s recently inaugurated Maritime Operations Centre, which digitally


Many firms are still strapped for liquidity after a decade of dry credit markets and low freight rates and are unable to find the cash for scrubber retrofits, so switching to low sulphur fuels and passing on the cost is their only option. As such, the potential for serious disruption to oil prices is high

connects all vessel activities with real-time visibility and transparency. OSM believes they have struck the perfect balance between human expertise and pioneering technology: “Together with tech start-ups we’ve looked at finding new ways to fully unlock the value of the data we gather for the benefit of our customers, ” explained COO & President of OSM Bjoern Sprotte. “Over the past six months we’ve been trialling the service on ships under full technical management, and the results have exceeded our expectations.” Columbia are not far behind with the introduction of their state-ofthe-art Performance Optimisation Control Room (POCR), from where they monitor their entire global fleet to optimise operational efficiencies using cutting edge tech. They, like OSM, understand that technology must serve people, not the opposite: “The sheer pace of change within the shipping industry is truly staggering… the importance of our people is also why we have invested so heavily in our state-of-the-art POCR, to enable us all to provide our clients optimised services of the very highest quality, but recognis-

ing that such technology is there to enhance – not replace – human performance,” said Columbia CEO Mark O’Neill. Nevertheless, control rooms like this are clearly the harbingers of automation and bear a striking resemblance to Rolls Royce’s prototypical futuristic Shore Control Centre designed to pilot and monitor fleets of unmanned ships across our seas. Companies like OSM and Columbia may be trying to get ahead of the curve, gaining valuable early experience to ride the coming wave of autonomous vessels that experts predict will cause massive disruption and render the traditional ship manager obsolete. As the title of this year’s Maritime Cyprus 2019 asserts, the seas are indeed changing but this may be no bad thing. After all, smooth seas do not a skilful sailor make, and those who can adapt and evolve to overcome today’s challenges will emerge stronger as tomorrow’s maritime leaders. John Ioannou has worked in crew management and human resources for over 20 years

CyprusMail Shipping

11


Steering a sector that never sleeps The shipping sector which has proved to be a bastion of strength even through times of crisis, is sailing through waters with a newly formed structure under the flagship of the deputy shipping ministry, headed by Natasa Pilides. Andria Kades meets her

T

he Cyprus shipping industry, which contributes around seven per cent of GDP, acquired its own deputy ministry in March 2018 but a year and half later, its chief Natasa Pilides said there is a long road ahead. With the aim of bringing all relevant government services in one place and giving the sector a unified voice, she said the task hasn’t been intimidating but rather “very positive. There’s difficulties in every new thing you try to do”. Located in the heart of Cyprus’ shipping industry in Limassol, it is the only ministry – deputy or otherwise – to be located away from the capital. Though a government department, it operates differently than most. “We have 24/7 service which is tried and tested and is very much improved compared to before. We offer technical support, there’s mobile phone numbers available on our website that clients can use to reach us at anytime, day or night.

12 CyprusMail Shipping

It’s crucial to operate on those terms in the shipping industry because clients never sleep and neither should we.” Being close to the shipowners is critical, Pilides added, as they are the source of information the government needs to stay abreast of the needs of the industry. A complete organisational overhaul has been carried out and since then, the website has been re-launched, new online services added – including online verification of ship registration certificates, an automated seafarers system – and records are being digitised. “If you look at the companies registered under our tonnage tax system, of course they’ve had quite a good rate of increase. They were 168 when we became a deputy ministry and now they’re 215 so there’s been quite a bit of increase there,” Pilides said. Meanwhile gross tonnage on the Cyprus registry broke all records since


Maintaining high standards is paramount, not only for the island’s competitive reputation but also because it counts towards maintaining Cyprus’ white flag position both for the Tokyo MOU and the Paris MOU

2010, reaching 24.5 million while revenue from ship management companies reached €1.03 billion in 2018, a nine per cent increase on the previous year. Since the inception of the deputy ministry, the registration policy for vessels has been changed to become more flexible, in what Pilides described as a more qualitative means of assessing which vessels are accepted as opposed to having them defined as ineligible purely because of their age. “Under no circumstance are we becoming less strict. It is still maintaining quality but using different factors to assess whether a vessel is eligible or not.” Maintaining high standards is paramount, not only for the island’s competitive reputation but also because it counts towards maintaining Cyprus’ white flag position both for the Tokyo MOU and the Paris MOU. A financing scheme rolling out this autumn aims to have a broader impact, targeting specifically ferries and encompassing funding companies approaching Cyprus to upgrade their vessels. This could be by either improving their environmental considerations, emissions or even im-

proving access for people with disabilities, Pilides said. Additionally, the island is currently working on extending its much touted tonnage tax system for another 10 years, making its pricing more competitive, with more announcements expected soon. There are however more longterm plans. According to Pilides, “the crucial thing for Cyprus to focus on is that there’s a whole range of different services around those (shipping) companies.” It is not only enough to provide excellent services to shipping companies but we must also ensure that the framework facilitates firms which service such companies. “If we want to be an advanced and mature shipping cluster we want to be offering everything from technological services to do with cyber security, telecommunications, satellite systems, software systems and we have a lot of those companies now based in Cyprus, to specialised insurance services, specialised brokerage services, bunkering, synergies with LNG and other alternative fuel.” It’s not just a matter of attracting ships under the registry, Pilides said. Technology is now central to the development of the industry around the world and the fact that there is an EU Horizon 2020 project for marine and maritime technologies is crucial “because if that is developed in a way that can actually encourage tech companies and startups to produce solutions to the industry, I think this can create more opportunities for jobs. “I think the most important thing for Cyprus is to look at how shipping is a real contributor to the economy and how to build on that and the reason why shipping is important for the economy is that it employs a lot of people across a range of activities and that is growing more and more as time passes,” Pilides said. Indeed, where jobs are concerned, the government has invested in the island’s maritime academies with

CyprusMail Shipping

13


remarkable progress over the years. Pilides said the change in numbers went “from virtually zero, like literally zero, to 300 students last year so we expect this year to be round about the same numbers which is a big success and we hope to be able to maintain those numbers.” To that end, it was decided that grants which were previously only available to Cypriot students for their onboard training have now been extended to EU individuals too “so hopefully that will also be helpful and we’re trying to make some changes to the legislation like to introduce English lessons in some of the areas which are in Greek and some other improvements which are going to make Cyprus more competitive.” According to Pilides, the deputy ministry is responsible for Cyprus’ blue growth strategy which relates to supporting sustainable growth in the marine and maritime sectors. Policies are mainly formulated at the International Maritime Organisation (IMO) with the EU having some of its own competencies but by next year many ‘groundbreaking rules’ are coming for the reduction of sulphur emissions as part of an ambitious IMO strategy, as well as the reduction of carbon dioxide emissions by 2050. “For both those things Cyprus is very vocal, for carbon dioxide (emissions) we’ve contributed two papers to the IMO on our suggestions on how to meet those goals and what groundwork needs to be done so as to prepare for 2030 which is the first phase of reducing the carbon dioxide emissions and we’re very committed to not only making suggestions but also taking part in all the working groups that are going to formulate the suggestions.” All the work both domestically and abroad has been carried out by 160 staff, most of which were absorbed from what was previously known as the department of merchant shipping. A small number of new professionals were hired while currently

14 CyprusMail Shipping

key positions are looking to be filled including three managerial posts covering three separate units – the competitiveness and regulation unit which has its own sub-departments such as taxation and law as the department drafts its own legislation; the flag state control unit which includes safety, security as well as the environmental department; while the third unit is port state control and coastal management which deals with the administration of seafarers and also handles maritime academies. “We make every effort to make sure we don’t have duplication but for sure we do need some extra positions as we grow,” Pilides said, which includes staff for inspections and the deputy ministry’s involvement in formulating international policy abroad, particularly in maintaining its presence on the IMO’s council since 1987, preparing papers, defending positions and liaising with various stakeholders within the industry. Shipping is showing no signs of slowing down and neither are the people behind it. The edge to remain competitive has only got stronger since the inception of the deputy ministry which gets things done faster, ready to keep moving forward, full steam ahead.


CyprusMail Shipping

15


Enormous prospects for blue growth S

‘We’ve worked hard to cement our reputation as a well-established and quality registry, committed to safety, security and excellence’

16 CyprusMail Shipping

hipping is often described as the ‘invisible industry’ although it is responsible for carrying more than 90 per cent of world trade, and World Martime Day, marked each year on September 26, is an opportunity to remember it, Deputy Shipping Minister Natasa Pilides said in a statement to mark the day. “For those involved in the shipping industry, World Maritime Day is an opportunity to reflect on the challenges and opportunities with which we are all faced, and to motivate ourselves and those around us to continue working towards materialising the enormous prospects that blue growth can offer,” she added. The Shipping Deputy Ministry, she said, is committed to a blue growth strategy to support sustainable growth in the marine and maritime sectors as a whole. To achieve this, a Cyprus Integrated Maritime Policy is being developed while multiple research and innovation programmes are being supported, especially those with a focus on technology. “Something we are particularly excited about is the creation of a new Centre of Excellence for marine and maritime innovation here in Cyprus, which has secured €40m of funding from the Cyprus Government, the EU and the private sector,” Pilides said. An increasing number of marine technology and innovation companies in Cyprus have already expressed an interest in participating in the programme in collaboration

with shipping companies within the island’s cluster. The department is working towards providing an increasingly digital service offering, enabling a more user-friendly, client-orientated approach. 24/7 support is already offered in addition to a fast, efficient and cost-effective ship registration process, which has recently been updated and is in the process of being automated. Records are being digitised and a new website includes additional e-services such as verification of CLC, Bunkers, Wreck, Athens Convention certificates and registration certificates. “We’ve worked hard to cement our reputation as a well-established and quality registry, committed to safety, security and excellence,” Pilides said. “Testament to this is the flag’s consistent inclusion in the White List of the Paris, Tokyo and other MoUs for Port State Control, as well as the top quality 24/7 service provided by our technical experts.” At the same time as developing Cyprus as a maritime cluster, the island also takes an active role in all IMO discussions, “ensuring a positive contribution to international shipping in areas such as environmental protection, the enhancement of safety standards and seafarers’ working conditions and the smooth integration of technology within maritime processes and business models in a way that increases efficiency while ensuring security”.


Setting a Luxury, SuStainabLe Living experience in the heart of LimaSSoL city centre Sophisticated Smart Architectural Design Spacious Living Areas Green Luxury Landscaped Terrace Efficient Building Specs Gated & Secure Premises Concierge Services

Neocleous Family Office, 195 Arch. Makarios III Avenue, 3030 Limassol, Cyprus. Tel: +357 - 25 268 600 Fax: +357 - 25 268 601 Email: info@ekaligardens.com www.ekaligardens.com CyprusMail Shipping 17


One voice built on trust Evangelos Koulis speaks to the director of the Cyprus Shipping Chamber, which marks 30 years in 2019

T

he biggest achievement of the Cyprus Shipping Chamber (CSC), which celebrates its 30th anniversary this year, can be encapsulated in one word – trust. Director of the Chamber Thomas Kazakos has no doubt that the trust earned from shipping stakeholders was the main reason for its success. “The trust we have earned among our business associates over the last 30 years has been the single most important ‘ingredient’ for tackling some of the most pressing issues the industry has faced so far,” he said. He cited four main challenges that the Chamber met successfully. The closing of the chapter of maritime transport in 2002, accession of Cyprus to the European Union in 2004, the approval by the European Commission of the tonnage tax system introduced in 2010 and the establishment of the Deputy Ministry for Shipping in 2018, which gave the sector a government body specifically dealing with shipping-related matters. “Trust and close cooperation among the private sector, the Chamber and the political parties were vital in achieving these results,” said Kazakos. In terms of a ‘real’ challenge though, Kazakos said, the Turkish embargo on Cyprus-flagged ships since 1987 had been the Achilles heel of the Cyprus flag and it has still not been resolved. The Chamber has been liaising with the Cyprus government and other organisations to resolve the issue but with no success.

“It’s a lose-lose situation for Cyprus and the whole region,” he said, adding that “the benefits of lifting the ban will be enormous.” The Cyprus registry would take off if there was a solution to the Cyprus problem. “Another 2,000 ships from our existing membership could register under the Cyprus flag quite fast,” Kazakos forecast. Although the embargo has stifled the growth of the registry, shipping is still one of the top three industries of the island, contributing seven per cent of GDP – a far higher percentage than in other countries – and employing some 60,000 people, including 9,000 shore-based personnel. The Cyprus Registry is the third largest in the EU and the eleventh largest in the world with Limassol being the largest third-party ship management centre in Europe. As the shipping industry operates internationally, Kazakos pointed out, it was in fact a direct foreign investment in the country while the fully-fledged residency of shipping companies in Cyprus contributes to the growth of many other sectors such as banks, law firms, real estate, auditing firms, schools etc. “The contribution of the shipping sector to society in Cyprus has been immense and even during the most difficult times shipping companies have stayed and supported the society and economy of Cyprus,” he said. The CSC was founded in January 1989 by 17 shipping company executives operating in Cyprus so that all

‘Real challenge’: Thomas Kazakos

shipping companies would be under an organisation and have “one voice.” It was known as the Cyprus Shipping Council which was renamed CSC in 2008, keeping the same functions. Today with more than 200 members, the Chamber consists of all the major ship-owning, ship-management, chartering and other shipping-related companies based in Cyprus. Since its creation, the core objectives of the Chamber have been to promote the interests of the Cyprus shipping industry and to build the standing of the Cyprus Flag – an ongoing endeavour – as a reputable Registry. At the same time, the organisation acts as a lobbying group for the promotion and safeguarding of the legitimate interests of its continued on page 20

18 CyprusMail Shipping


CyprusMail Shipping

19


continued from page 18

member-companies both at a national and an international level. In terms of the services to its Members, the Chamber’s role has been to facilitate the smooth operation of the shipping companies in Cyprus with services ranging from advice and information on regulatory issues to taxation and day to day issues. For 30 years, the Chamber has been the ambassador of Cyprus shipping, always having an input in policy decisions either by the Cyprus government or other internationally recognised shipping bodies and organisations. Today, it ranks as one of the largest national shipping associations in the world. But the CSC does not rest on its laurels and Kazakos acknowledges there are still plenty of challenges to be met. There is the renewal of the specialised shipping taxation system at the end of 2019 and the faster implementation of national shipping policies, for which Kazakos said “the ministry is doing a very good job but we always ask and push for more.” The Blue Growth project is a work in progress and promotes investment in training schools for the maritime sector, academic courses for shipping and education in general in which the Chamber is heavily involved. In addition to that is Blue Growth at large, for which the Chamber is working with the private and public sectors and academia on the Cyprus Foundation for the Sea (Cyfos) and will soon be operational. Kazakos pointed out that “Cyfos is the brainchild of a few people from the industry who argued that there is a need for a coordinating body among the existing elements in the industry when it comes to innovation, the training syllabus and other issues and the Chamber is heavily engaged in this project as that is the future”. The arrival of the Deputy Ministry for Shipping, which many thought would signal the side-lining of the CSC, has been a boost for the in-

20 CyprusMail Shipping

dustry, said Kazakos, noting that the Chamber had long supported its creation. “Leaving aside all the tangible results, it has had a positive effect as ship-owners, ship managers and everyone else involved in shipping in Cyprus now knows there is a government body that specifically deals with shipping-related issues,” he said. “It is more reassuring and encouraging for the whole industry.” Complacency has no place in shipping as Kazakos was quick to point out. “Thirty years is just the beginning. Every organisation is as strong as its members and as such, I would like to personally thank all our member-companies, the board of directors and our business associates for being committed and trusting us to represent the shipping industry’s interests. They have been our biggest critics but at the same time our biggest supporters”. As regards the future, although there is still work to be done, “we are definitely heading in the right direction, but what we need now is to work and cooperate even closer to achieve more and truly become one voice,” said Kazakos.

The Blue Growth project is a work in progress and promotes investment in training schools for the maritime sector, academic courses for shipping and education in general


CyprusMail Founded 1945

FRIENDS AT

INSIDE

25

me say Iconic, so s tic, Friend problema 25 years celebrates

LUES OPERTY VA

PR

s rtment say d Land depa farious in lan nothing ne valuations

s Centre Page

le TV and lifesty to supplements ugh see you thro the week Established

Page 4

Established 22, September

2019

Hospital nd offers seco chance for als sick anim

6

GE LIVING - PA R FIGHTS ON

4

OS MAYO OWER? PAPH WHISTLEBL

September

26, 2019

CYPRUS

WORLD

Democrats begin Trump ent impeachm

a Swapping f vest bulletproo colada for a pina

13

Feature

Some EU nationals struggling to prove EU residency

18

Sport

FINALLY GO

ys in Petrides sa f o s e g a st l fina t war reforms bu ts p of words eru rs o ay m g n o m a ony over hegem

ING HOME

UK is . And the get a deal to getting a ed committ it does require deal, but and flexibility tivity coin xit crea both sides - to Bre to ughout s HE UK' warned from se it takes twothe reads… thro event, would lay told the ‘Cyprus sia. The minister k that a a phra es, which o,” Barc tale during l of Cyprus in Nico authoriti at the end of and Inforthis wee outcome tangday Mail. Mal the Press Barreads a fairy Sun Psyllides be helpful rday at the and Culture and no-deal minutes, st maiden d hard By George on r round Within n all the A fore the islan held on Satu the day. , who declined of Educati k reading all yea could hit ng from hal- clay had laid dow island the year’ event istry Min Petrides t on whether the ge boo on d by the in everythiorts to tour- “disruptions” the case of t out from organise ce aims to encoura SLATION rm to commen ing at the in the EGI claim stay ct flights wen RY PAGE 3 s loumi exp be refo expe Offi ld of a cal ion can observer day. Seven SEE STO the radi es he wou d reports ngering a hard Brexit. ban data mat ism, but on Wednes authoriti y ministry ami re the end of dorides) scaremo would of local rnment he was aca airport rts (Christos Theo The EU Cyprus be read uffle befo optithe gove effo gers at Larn between should rior reshyear, said he was to force the Europe k passen UK’s repatriation sharing Currency ome of month, Inte s the . to pressure ion to bow and the UK. the the outc Thomas Coo within a plummet miss Constantino as part of mistic on . Stranded orts an Com s demands for valuations may s would ister nesairp rms Mint two on Wed l- the refo g to aymaker use eto the UK' l. e's the nex this thin ia- island’s ides said UK holid dea parl “I want r it is, ther . Petr as various municipa a better a lightning visit not be able to ing itted to counor whateve coming through day, er ady seek lead be subm said, expressing ring the ism, nesbe During the next time on Wed to alre neighbourgeneration ities are Gates ente tour fall er should n t,” he reality is with to Cyprus hen Barclay try, impacting h comes ibly mene that it would not ’s next lead lor Joh "And the a woman. It's high mergers dienities poss LABOUR shadow chancel day, Stepin a brief in- a third of whic com onmun preempting hop m to party expe ering should be an." an, ingnt victi said. besqueezed with the Sun- from the UK. he a wom female tale way of have a wom end up gath esirable as aky onnell has d himself out of the list, e of the "Bec tund and : ced”. r to McD som cy mee ly said on esso terview a g rule he osed ly succ Pilin able,” Praising also ex- McDonnell atically redu l after ), Emi benches Corbyn's Labour ynersupp had dram f I felt is indescrib of my day Mai President Nicos said we should es dust. w that most mud the Labourey), Angie (Ra Daw nns. es of ing Jeremy tal cons icipalitie ign said, cure “I kno it. unio citizens “The relie de from the look to ing with party's d’s comhighlighted a seri some mun retain or s and foresto- pect detrimen (Long Bail ), you name fantBut not , which she “Asi astic." ome the hy. alities and to to the islan erry n Anastasiade she said. incredible es but donkey milkcompletely. could bec leader. seeking own ‘king- nicipe with the philosop just bee Radare (Thornb quences Nicos Chri was just every day. io 4's king which tradim- MPs who new ale set They've minister hands it her eczema ping badly, wor all the pain create a be agre s their Butler... rview with BBC hisexpa car market, UK elected fem ncellor has also ent . plannd Shkurko so much slee want to l authority,” they will a bit red in with than We ing out doulides r it’s business- significantly in sands of first cha was inte still be rnm ing “I an fear Jona set ow In deal were By es. see shad doms’, onnell our gove loans a ts to comes with “Whethe themselv ent type of loca hing aside hours and “My handsth and you could re the s. The thou who The it’s tourism, s for a Lab free Today, McD urage motoris icles brus . milated an long tional turmoil that was when assi [Brit- portriot students have out plan500,000 interest purchase of es, whether he said, announcem ities disish wom after a mon on my wrists whe ks, to help enconer electric veh Cyp r it’s the may the rce and that g just Petrides’ a war of words -OLD Briteczema has emo of communuse of the r to offe five years for whether s, whether it’s study in the UK bein the patches been but the crac 8d a messy divo of talk ami choose clea eE A 46-YEAR ing thei PAG severe but went from becoming red, year for earing beca ic milk his ish] basets of citizens, difficulty gett TURN TOcam een the mayors eczema had flaking had all ring from cars. to my hands gnised. oallergen es about said: Napa app and betw and flaky osion suffe ed that a hyp key milk and the righ it’s the one per qualifications recowas the electric g to The Tim ell extremely swelling i and Ayia being reform. very dry ear expl don claim as, pro, Paralimn get er, McDonn Speakin , there cracked and told The Sun. whether r fears “No nucl e and no en- salve made from Cyprus Universigone.” riots that li- And then our weak spot: party's next lead by the No 57 bus tis PapademAgriswollen, an ing the latte Pho plac , wom the seek as ss. even ever hit qua at the is take and to from to cent of Cyp illne ed got How will nce and danger painful,” essional engineer nology cured her mandisappear some days ing Dairy Scie ersity of ""If Jeremy absorbed with smaller their prof the UK at any tities will he said. fessor of the Cyprus Univ nt to “It was hardfor the kids as hold y PAGE 2 ty of Tech eld, a marketing orities ,” alliances Sun er ever TURN TO fication in – what protects culture at said it is importa this. local authits own the map rm will ideally cook dinn so painful. It hurt t Rosa Enfi ter, told The gy, nearby Enfield one poin e points is to The refo ber of munici- ager from Winches skin condition Technolo lightly in cases like to retain pans was hed something. of her in a bid cook, all of thos see the numin half, from 30 newspaper that tread very y. time I touc within a week salve for her to ble cut hegemon g on a lunchtime PAGE 4 ossi ers that ies ed palit revealed donkey milk-bas TURN TO made it imp broader pow shower. cotSpeakin on private Alfa to 15, and funds granted get dressed and prescribed two using the s a day and beneath e news show, Petrides said ks had but an was es, takand mor three time at night, “the craclling The wom by her GPpain authoriti television of the legislato local from the central rounds of steroids her ton gloves close and the swe the core ready with the ed to ease she ing away started to ds, until nothing seem ent. han tion was being the only her rnm hire he from gove ent, to and soot m made at the mergers “At the mom the €14 crea ing matter outstand He did however, PAGE 4 tried TURN TO moment. encourage conappear to among local sultations

nidou

By Lizzy Ioan

T

d a female Labour ha High time shadow chancellor leader, says

L

Man Ruthless ht City put eig goals past Watford

Back

centre

9

loc

‘it Iran says will destroy ssor any aggre ve’ after US mo

the mothe parliaments

ong Elderly am out those losing bond for over cash rkers wo n foreig

2

arclay in Stephen B gering’ n o m re ‘sca ssure re p visit to r better Brussels fo 9 umi, lo al h l dea Comment d an lies tourism Father of shuts down es at stake r of degre World

Thursday,

takes s s p u K of U d n i k h s w u p ‘A ne ’ in Brexit y t i r o h t u al a

CKLESS PROFILE: RE INSIDE Cyprus

www.cyp

mail.com www.cyprus€1.80

1945

1945 €1.20

E LIFEST YL

m rus-mail.co

key ypriot don n claims C her eczema a om w sh re Briti helped cu milk salve

the island’s leading English language daily

www.cyprus-mail.com Free Mobile App for Android and iPhone

DOWNLOAD IT NOW

find us on facebook

www.facebook.com/CyprusMail follow us on twitter

@cyprusmail CyprusMail Shipping

21


The invisible work force By John Ioannou

S

eafarers are often referred to as the world’s invisible workforce. And as representatives from seafaring organisations are again noticeably absent among the keynote speakers at the 2019 Cyprus Maritime conference, this label continues to ring true. Undoubtedly the power that drives the global shipping industry, seafarers are often ignored, exploited and marginalised. They are overwhelmingly male – only 3% are women, statistics from the International Chamber of Shipping (ICS) show – and most of the worlds nearly two million seafarers come from just five countries: China, the Philippines, Indonesia, Russia and the Ukraine. Seafaring is a high-risk profession where accidents are common and deaths are not unusual and seafarers, cut off from their families and living in the isolated community of a ship, are at greater risk of suffering from mental illnesses. Leading maritime charity The Sailor’s Society asserts that over 25% of seafarers suffer from depression and nearly 6% of deaths at sea are attributable to suicide. By comparison, around 1.5% of deaths globally were recorded as suicide by the WHO in 2017. If Marx was right and all profit is the surplus value of labour then nowhere is this more apparent than in the hyper-globalised shipping industry. Along with the serious health and safety hazards they face, seafarers also contend with unstable working conditions and short-term, irregular contracts with little or no job secu-

22 CyprusMail Shipping

rity or benefits. Seafarers also face the constant threat of being replaced by cheaper crews from other countries as ship managers trawl the world looking for low-cost educated seafarers, and regularly ‘switch crews’ when they find them. Over time Polish crew may be replaced by Russians, Russians by Filipinos, Filipinos by Chinese, and so on. The spectre of automation also looms large. Trials of automated fleets are already well underway, and as new technology is introduced on board more ranks become redundant. Not long ago ships required a Radio Officer; today satellite technology has rendered the position obsolete. The trend is intensifying: a two-year study by the World Maritime University and funded by the International Transport Workers’ Federation (ITF) concluded that new technology will cut global demand for seafarers by 22% in the next two decades. Tellingly, main shipping trade associations like the ICS and the International Maritime Employers Council (IMEC) often cite a severe shortage of seafarers and warn that demand will soon outstrip supply. Nonetheless, it is widely known that the current shipping crisis has left many seafarers unemployed. Crewell, the biggest online seafarer job portal shows 140,000 available personnel against a vacancy rate of less than 2,000 jobs. And the supply keeps on growing, as every state on the International Maritime Organisation’s (IMO) ‘white list’ is keen to develop their seafarer labour pools to cut unemployment and earn valu-

able foreign reserves from home remittances. For example, the Maritime Industry Authority of the Philippines estimates seafarer remittances at $6 billion for 2018, a figure the country aims to increase by attracting more Filipinos to the profession. All this does not bode well for the embattled seafarer, who makes a significant investment in their education and is locked into a lifelong pattern of expensive training courses. An added burden is that insurers have started forcing seafarers through increasingly tougher health checks to mitigate the risk of any expensive illness on board. Attitudes ashore towards seafarers can also be patronising and lack empathy, reinforcing their feelings of ‘otherness’. The mood during a recent WISTA crew management round table debate in Limassol was depressingly familiar, with the main panel discussions titled ‘Connectivity – Road to Disaster or Moving with the Times? – The Pros and Cons of Internet on Ships’ and ‘Lifestyle at Sea – New Initiatives Related to Welfare and Social Well Being’. Here, local shipping experts debated the implications of granting internet access to seafarers – as if it were not a given for the rest of the world – and hashed over initiatives to provide decent food, recreational facilities and psychological support. These perceptions are often reinforced by initiatives like the IMO’s ‘Day of the Seafarer’, a yearly event that asks the shipping industry to collectively pause for one day to remember the many workers at sea. On this day shore personnel wear blue


to demonstrate solidarity with their seagoing colleagues, and pictures are taken and sent on board with messages of support. While well-meaning, these initiatives can seem gimmicky and insincere when not bound within an ongoing holistic approach to seafarer support and well-being. Another serious threat that seafarers face is that of criminalisation, particularly in states lacking developed or transparent judicial systems. The arrest and detention of the crew of the UBC Savannah, a Cyprus flagged and managed vessel in Mexico last July for reporting an attempt to smuggle drugs aboard their ship is a stark reminder that seafarers can be punished simply for reporting a crime. The UBC Savannah crew, having spotted suspicious packages buried under tons of iron ore during discharging, quickly locked down the ship and immediatly notified the authorities as is standard practice under the International Ship and Port Facility Security Code (ISPS). Their integrity and professionalism did not count for much as all were promptly arrested by the Mexican coast guard and are currently jailed without charge or information regarding their trial. Cases like the UBC Savannah are common, and the criminalisation of seafarers is a global issue that unions like the ITF have long fought against. A survey by Nautilus International in 2018 found that criminalisation is a major fear among seafarers, with over 90% of participants worried about the risk of prosecution. These fears are well-founded as time and again seafarers are proven easy targets for courts looking to apportion blame and quell public outcries after serious maritime incidents. One example of such scapegoating was the capsizing of the Sewol super ferry in South Korea in April 2014 where prosecutors handed out a 36year sentence to the captain and jail terms of up to 30 years for other crew members despite the judge admitting that the owner was responsible for overloading the ship and approving

structural changes that made it unseaworthy. In stark contrast, the owner was sentenced to 10 years and other company officials received jail terms of between 3 and 6 years. In a similar case, Captain Apostolos Mangouras of the Prestige oil tanker was sentenced to two years after a 14-year legal battle that succeeded in criminalising an 81-year-old man who many believe saved the lives of his crew and avoided greater environmental catastrophe when the ship broke up and sank in heavy storms off the Spanish coast. “The Mangouras

case was one of the worst examples of the kneejerk criminalisation of seafarers… this latest piece of victimisation reminds us that we must all remain vigilant to protect seafarers from these injustices,” David Heindel of the ITF said shortly after the sentence was announced. Yet for all the hardships of a career at sea, the rewards can be great. Seafarer salaries are comparatively high and even the lowest ranking can quickly break the poverty cycle. The financially astute invest their money well and retire early; others create expensive lifestyles ashore that can only be sustained by more work at sea. Seafarers may also benefit from an elevated social status at home and are often

treated like local heroes for their contribution to the economy. Overall, conditions on ships are also steadily improving, mainly due to the introduction of the IMO’s Maritime Labour Convention (MLC) that has set minimum standards for working and living conditions on board that cover everything from resting hours to food and recreation. Now in its sixth year, rigid enforcement of MLC requirements by flag states has resulted in improved standards and forced many shoddy operators to either up their game or leave the market altogether. Meanwhile, hopes are high that the UBC Savannah case will be swiftly resolved and the detained seafarers released. Intership Navigation, the vessel’s manager, is widely regarded as a top tier employer and they, like other leading ship managers, have long understood that the basics matter: decent conditions on board, fair contract lengths and salaries and regular concern and care from experienced crewing professionals ashore. Moreover, loyalty to their seafarers and a reluctance to switch to cheaper crews secures the essential skills and experience required to remain competitive and decreases the probability of costly errors and accidents on board. This creates a positive feedback loop whereby vessels run smoothly and profitably, bolstering a firm’s reputation for safety and reliability and attracting more clients. In a nutshell, if ship managers make it their business to care about their seafarers, then their seafarers will care about the business. As Maritime Cyprus 2019 opens and the high-calibre delegates begin to arrive, we can be optimistic that the next conference in 2021 will see the global seafaring community better represented, with valuable discussions on improving crew safety, satisfaction and productivity and reducing risks like criminalisation and mental illness. Perhaps 2021 will also be the year we finally recognise the shipping industry’s most valuable asset: its seafarers.

CyprusMail Shipping

23


24 CyprusMail Shipping


CyprusMail Shipping

25


Greening a blue industry New directives to decrease the environmental impact of ships are coming into force and mean increased costs for shipping companies and inevitably the consumer reports Andria Kades

A

s the world grows increasingly aware of the threat to the environment posed by human activity, shipping has followed suit and the industry is preparing for the introduction of new rules that will see vessels reduce their impact on the environment although meeting them may drive up costs. Now gathering pace, these efforts are not entirely new. The International Maritime Organization (IMO) has been working to this end since the 1960s although changing technologies mean strategies and their imple-

26 CyprusMail Shipping

mentation also develop. Closer to home, despite Cyprus’ small size, the country boasts the third largest merchant fleet in Europe and with that comes a powerful drive to promote a blue growth strategy, while meeting IMO environmental directives and those of the EU, under which Cyprus’ jurisdiction obviously falls. According to the Cyprus Shipping Chamber (CSC) there are four pressing issues at the moment which the industry is focusing on in terms of the environment and the protection


of marine species. They are: reducing the sulphur content of fuel oils used on board ships, reducing greenhouse gas emissions from ships, controlling the transfer of potentially invasive species through ship ballast water and reducing marine plastic litter from ships. “There are really some ground breaking rules that are coming in in 2020 for the reduction of sulphur emissions and then there’s quite an ambitious strategy for the reduction of carbon dioxide emissions by 2050,” for both of which Cyprus has been very vocal, Deputy Shipping Minister Natasa Pilides said. Where sulphur content is concerned, ships will be banned from using fuels with a sulphur content above 0.5 per cent as of January 2020, compared with the current limit of 3.5 per cent. Companies have different options to choose from in order to become compliant. FML Ship Management Ltd, for instance, has chosen to change over to compliant fuel, with a sulphur content that does not exceed 0.5 per cent, according to director Sunil Kapoor. The aim of the firm is to phase the change to compliant fuel and offload all remaining non-compliant fuel well before the deadline. Other options available, as per IMO regulations, are to use other sources of cleaner fuel such as liquefied natural gas (LNG) or methanol. Ships can only continue to burn high-sulphur fuel if they are fitted with scrubbers – or sulphur cleaning devices. Alternatively, they have the option to use onshore power supply while at berth. “The decision on how to comply with the requirement is a commercial one and it is up to each company to assess its fleet and make the appropriate decisions,” CSC Marine Manager Alexandros Josephides said. Enforcement of the regulations lies in the hands of flag and port states and failure to comply will result in fines or vessels being detained.

Where greenhouse gases are concerned, the IMO has ambitious plans including reducing emissions by at least 50 per cent by 2050 compared to 2008, with the view of completely phasing them out. Similarly, the goal where carbon dioxide emissions are concerned is to reduce them by at least 40 per cent by 2030 and 70 per cent by 2050, compared to 2008. It is worth noting that ships are the most energy efficient and environmentally friendly mode of transport, compared to other means such as aviation, trucks and railways, despite

sea and cargo carried on a per voyage basis to gather annual data for an emissions report to be submitted to an accredited shipping verifier. The CSC suggests the two schemes be aligned to “remove administrative burden from companies and governments operating under both,” and avoid jeopardising the efforts in place, Josephides said. Shipping companies in Cyprus and elsewhere are concerned how these regulations will affect their competitiveness. Lavar Shipping said that “EU regulations are stricter than IMO

the fact that they carry 90 per cent of global trade, according to Josephides. However, there appears to be an overlap between the IMO, which is the global body responsible for the shipping industry, and the EU which has its own regional responsibilities that Cyprus is subject to. For instance, the IMO has a data collection system, in force since January 1, 2019, requiring ships to monitor and report their carbon dioxide emissions. Though this is simple enough, a regulation set by the European Commission which came into effect on January 1, 2018 on reducing greenhouse gas emissions requires ships to monitor carbon dioxide emissions as well as fuel consumption, distance travelled, time at

regulations, therefore competitors outside the EU have a competitive advantage on international projects.” As Pilides said, there are always teething problems that come with any kind of change. “For us, both platforms are really important because if we have a position it needs to be debated and decided at EU level but then one of our main beliefs and arguments is that all policies should be on a level playing field and they should be international not regional. “Of course we want to do our utmost to protect the environment and that’s the primary priority without any doubt but we need to be doing enough work so that it is implemented in every country because if there is a country that is not implementing

CyprusMail Shipping

27


the rules then there’s automatically solutions for people to get out of the regulations and it doesn’t really solve the problem.” Indeed, Kapoor states that companies based under EU jurisdiction “are under much more scrutiny, paperwork and bureaucracy. All these delays and the extra workload cost money and thus increase the operational costs of doing business.” These undertakings, however costly, barely scratch the surface. In September 2017 the international convention for the control and management of ships’ ballast water and sediments came into force aiming to control the spread of invasive species in the water that damage biodiversity. The concern surrounding ballast water – necessary for safe and efficient shipping operations – poses “serious ecological, economic and health problems due to the multitude of marine species carried in ships’ ballast water,” ranging from

28 CyprusMail Shipping

bacteria, microbes, small invertebrates, eggs, cysts and larvae of various species, according to the IMO. These species, which are transferred in the ballast water “may survive to establish a reproductive population in the host environment, becoming invasive, outcompeting native species and multiplying into pest proportions.” Currently port states, flag states and other stakeholders gather, prepare and submit data as part of an experience-building phase but ships will also have to be equipped with “expensive ballast water management systems” to comply with the convention requirements, Josephides said. Last but not least is plastic. Images of marine life dying because of plastic in the ocean are widespread and the effects cannot be stressed enough. “Garbage dumped at sea can actually be as harmful as oil or chemicals. Plastics in particular can take years to degrade and marine

life can easily confuse plastics with food. This threatens biodiversity and dangerous toxins can enter the food chain, ultimately being consumed by humans,” Josephides added. Shipping has its own regulations to reduce marine plastic litter from ships. Lavar Shipping outlined their garbage management plan which includes waste segregation. According to IMO regulations “it is not permitted to dispose of garbage at sea and ship’s garbage including plastic must be minimised, recycling should be undertaken and discharged to port reception facilities,” Josephides said. Citing the World Economic Forum, the CSC pointed out that 90 per cent of plastic found at sea originates from land, making the problem of plastic litter from ships far less than shore based sources. Nonetheless, Josephides stressed that “the shipping industry has a special responsibility to play its part in eliminating any pollution of the sea” and fully supports the work undertaken by the IMO. However, “necessary measures must be taken by governments to provide adequate port reception facilities to receive waste from ships calling at their ports and terminals. At the moment the quality and availability of reception facilities worldwide is unreliable. It is the CSC’s view that adequacy of reception facilities is key to properly implementing the regulation.” Cyprus wholeheartedly supports all strategies aimed to protect the environment and marine life, Pilides said, however she outlined that more stakeholders, beyond the shipping industry, need to be brought on board with actions aimed at solving the problem. “It’s also good to know that it’s not just the shipping industry that needs to be involved because the fuel that shipping uses is produced by oil and gas companies, not the shipping companies, so it’s not a discussion that needs to be happening


However, ‘necessary measures must be taken by governments to provide adequate port reception facilities to receive waste from ships calling at their ports and terminals’

just within the shipping industry and it’s important to raise awareness on a wider level and that’s also something that we are trying to do within the EU, within the IMO and even within Cyprus.” Kapoor is far more forthright in highlighting discrepancies he feels the shipping industry is paying for. “We can observe a fragmentation as to how much pressure is put on each sector and too much pressure is put on the shipping sector. According to the IMO, annual greenhouse gas emissions from shipping amount to approximately three per cent of global manmade emissions. The rest of the emissions come from sources like cars, trucks, trains, planes, power plants, oil refineries, industrial facilities etc.” Using the 2020 sulphur regulation as an example, Kapoor said “the IMO rushed into enforcing this decision and put the shipping industry under so much pressure without proper lobbying and guidelines. On top of that, oil refineries which not only play a major role in this, but are also a big contributor to the greenhouse gases, were not targeted at all. “In my opinion the change should have started from them, they should have been pressurised to find cleaner fuel and when they are ready to supply it then force the shipping sector to comply with it and take the necessary steps. My point is that, all of us have the responsibility to protect the environment, but the efforts should come from everyone and everyone who is contributing to environmental pollution should be targeted in an equal and fair way.” Lavar also stressed that every industry “has a part to play when it comes to the environment” with responsibility not lying squarely on the shipping industry, especially as it is actually powered by the oil and gas industry. The company, however, outlined that controlling some of the current practises will inevitably benefit cur-

rent and especially future generations. “The current heavy oil that has been the primary marine fuel for over a century is a by-product of the oil refining process, and traditionally, this bunker fuel has been the means by which many global oil refiners, especially those that only have atmospheric distillation capability, and no hydrotreaters, or vacuum capability, get rid of their high sulphur content residues. These are residues that cannot be blended with other mediums / fuels. Controlling and stemming this practice is good for all of us and especially our kids and grandkids.” Cost of course, is a recurring theme. According to Kapoor, all of these new regulations “demand new technologies and investments which are very costly to install. This extra cost to the shipowner will be reflected in higher freight rates and consequently as higher prices to the end consumer. Additionally, the limited supply of the new grade fuel will push the fuel costs up, at least in the short term, resulting in rising freight rates, with much of these costs being passed to consumers.” Lavar too said without a doubt there will be an increase in cost, however it is not all bad news. “Whether this is reflected as an additional €5 or €10 or even €25 on a 50” at screen TV we are sure that the (global) market will absorb the effect.” In the long term it reduces the environmental impacts and the risk of an environmental disaster that could possibly have a huge impact on a company, and there is also the advantage that clients prefer responsible companies, Lavar added. Indeed, stakeholders agree this is for the betterment of the planet and future generations. Cyprus and its shipping industry have embraced these wholeheartedly, overhauling their systems with the government now setting its eye on connecting blue growth to keeping the industry green.

CyprusMail Shipping

29


30 CyprusMail Shipping


CyprusMail Shipping

31


Paperless paradise By reducing the amount of paperwork involved in shipping, the adoption of blockchain technology is gaining momentum finds Kyriacos Iacovides

B

lockchain technology will spark the most drastic changes in the shipping business since containerisation, industry sources are predicting. Although still at a relatively early stage of development, all signs seem to suggest that it will not be too long before it is established, with some of the world’s largest carriers having joined the TradeLens blockchain platform, co-owned by IBM and container giant Maersk. Digital ledger technology, or blockchain, could eliminate or drastically reduce the paperwork which is such a big part of shipping. Large amounts of documents accompany shipping transactions, including bills of lading, sales contracts, letters of credit, charter party contracts, port documents etc. These documents pass through a host of different parties for the carriage and delivery of the cargo to materialise and payments to be made, processes that are long and continued on page 34

32 CyprusMail Shipping


CyprusMail Shipping

33


continued from page 32

time-consuming. “Blockchain could turn the whole process into a paperless paradise by which all the related parties in each transaction (i.e. sellers/buyers of cargo, shipowner, charterer, banks, agents, customs, port authorities etc) with the use of public and private keys could come in contact with each other, perform physical transactions, exchange and store information in encrypted format and perform their contractual obligations, give and accept instructions and securely exchange payments,” wrote the Opensea.pro blog. The TradeLens ‘ecosystem’, as it is known, was launched in early 2018 by Maersk and IBM with the aim of using blockchain for the global

Paperwork would be reduced

supply chain. It includes port and terminal operators, cargo owners, customs authorities, freight forwarders, brokers and transportation companies among others. Thanks to the platform, all partners have the ability to collaborate on a shared view of any transaction that is sealed and stamped electronically – once the information is stored it cannot be changed or deleted by any of the users. Interest in the TradeLens ecosystem is growing fast. When it was launched in January last year, apart from Maersk and a subsidiary only one shipping carrier was signed up. Initially, rival carriers were discouraged from signing up because the platform was owned by a competitor but the

Cyprus shipping industry ready for By Jonathan Shkurko Blockchain technology has made strong inroads into the shipping industry all over the world, and Cyprus is following suit. A draft bill to regulate blockchain technology is expected to be ready before the end of the year, Finance Minister Harris Georgiades said in July. House President Demetris Syllouris said the move will have a massive impact in various sectors in Cyprus. “Full implementation of this technology across the public and private sector is expected to radically change the structures of modern societies, the way they are organised and their operation,” he said. Blockchain technology could be simply explained as a list of records called blocks, that are linked using cryptography. One of the main advantages of these blocks is the fact that they are resistant to data modification, making the system more open, transparent and reliable. It also helps speed up transactions, since no middle man is required to conduct them and two parties can efficiently and quickly operate between

34 CyprusMail Shipping

themselves. Advocates for blockchain claim that, once implemented, it will provide a more trustful, open and cheaper solution to the mass of documents that accompany each container load of goods, especially when it comes to the shipping industry. “We are confident to say that the Cyprus Shipping industry is ready to implement blockchain technology, since we have seen a number of our member-companies already implementing blockchain technology during the development stage of their products and services,” Director General of the Cyprus Shipping Chamber Thomas Kazakos said. “The industry is aware that blockchain technology provides practical solutions to many of our daily business functional issues. To that end, service providers and end users have realised that and welcomed this new technology with enthusiasm.” That enthusiasm is shared by Soulla Louca, Director of the Blockchain Initiative at the University of Nicosia, one of the leading universities in the world for blockchain and digital currency academic programmes. “Blockchain in the shipping industry

could help all the parties involved, especially when it comes to speed up otherwise exhausting and prolonged procedures, such as waiting for certificates and authorisations from port authorities,” she said. One of the main benefits of introducing blockchain to the shipping industry is cutting down on bureaucracy. In fact, international shipments, maritime companies and customs officials are often forced to fill out as many as 20 different types of documents, most of them still paper-based, to move goods from exporter to importer. Most of these documents, however, do not provide enough data quality and this can usually lead to time-wasting and setbacks in financial settlements. “Blockchain technology could revolutionise the shipping industry at large and at international level and bring multiple benefits to importers, exporters, transporters, ship owners and governments,” said Kazakos. “It is already noted that blockchain

technology speeds up document flows and it can eliminate bureaucracy issues, making transactions more efficient.


‘The rest of the industry has seen this momentum and recognised the potential. We feel this carrier adoption is a strong validation of the model and the technology roadmap’

benefits, it appears, eventually outweighed these considerations. By July this year two top five carriers were recruited, taking the total number of ocean carrier lines using the platform to 15. IBM Blockchain Vice President, Global Trade Todd Scott believes large ocean carrier commitments have set TradeLens “for an even bigger year in 2020.” He said: “Over the past year we have received commitments from organisations around the world and, in turn, have seen steady growth of our TradeLens ecosystem.” Ecosystem growth was carefully tracked. “We are currently exceeding our targets for network members and we have seen a 50% increase in interest from network participants

over the last 90 days,” said Scott, adding: “My experience has been that Blockchain solutions tend to fail when there isn’t a specific plan to build the ecosystem. Without broad scale use the business problem never gets fully eliminated.” The benefits of using a blockchain solution are plain to see. It afforded participants greater security when sharing and distributing sensitive information, but that was just one component of the platform, which, according to Todd, played a crucial role in preventing document tampering, increasing data verifiability and streamlining actioning of multiorganisational workflows. And then of course there was TradeLens’ “immense” capacity to reduce or even

blockchain “We have seen cases where blockchain technology eliminated printed documents from the company procedures and achieved a speed up of operations, thus optimising costs and contributing to a more environmentally friendly way of doing business.” Louca also praised blockchain’s ability to speed up transactions. “I know personally of ships that had to wait anchored in the port of Limassol waiting for certificates to arrive. Those certificates are vital as they are required for the ship to keep conducting their businesses,” she said. “Blockchain technology will automise the creation and the supply of those certificates, helping shipping companies avoid prolonged stays in ports that end up costing them a fortune.” Louca also recognises that the Cypriot government has already taken significant steps in implementing blockchain. “A lot has already been done, especially regarding the land registry, where blockchain plays a big part in simplifying and cataloguing tons of data. I think the shipping industry could also equally benefit from the implementation of the technology, especially in the long run.”

Kazakos is confident blockchain will become an integral part of the shipping industry in the near future. “The majority of the Chamber’s membercompanies, have already included in their strategy the modernisation of their operations.

“We feel confident that the local Shipping industry has acknowledged the opportunities that lie ahead that contribute to the modernisation of operations and will continue the already ongoing process of implementing new technologies such as blockchain in their business.”

CyprusMail Shipping

35


eliminate paperwork for certain organisations. Todd explained that TradeLens was already breaking down longstanding data and processing silos that existed among trading partners, dramatically reducing the documentation required for each and every shipment. “Currently, the platform handles 13 million events and more than 100,000 documents each week, and those numbers are growing. We’re working with more than 150 ecosystem participants, including shipping agents, forwarders, customs officials, and more,” he said. Different parts of the supply chain view blockchain differently. Ports and terminal operators “have been particularly enthusiastic about the innovation potential presented by being able to better manage the flow of relevant inbound data,” said Scott while acknowledging that freight forwarders and third-party logistics companies were not as convinced. “They are also seeing great benefits, though the makeup of these organisations varies dramatically, we’re continuing to work with them as to how TradeLens can help them to better serve their customers,” he said.

36 CyprusMail Shipping

There will also be ‘smart contract’ technology within the platform. Opensea.pro blog explained how ‘smart contracts’ work. “These are contracts in the form of a computer program which is run and self-executed in blockchain and which will automatically implement the terms and conditions of any agreement between the parties. These charterparty and bill of lading terms and conditions will be a standard part of the software and will not be able to be changed by the parties. This way, we are moving to a digital market where a contract will be published by the Owner or the Charterer and the other party will negotiate the price/ freight directly via the blockchain network. Then, the smart contracts will be executed by a computer network that uses consensus protocols to determine the sequence of actions which result from the contract’s code and this way to automate calculations, approvals and other transacting activities.” Many changes are on the way, but Scott noted that the real benefits will be seen when the number of companies on the platform increased. “The TradeLens impact and benefits to the

industry will multiply as more members join the platform, and we are seeing this become a reality as the ecosystem continues to scale. “The rest of the industry has seen this momentum and recognised the potential. We feel this carrier adoption is a strong validation of the model and the technology roadmap,” he said. This will probably open the way for other blockchain platforms. Scott believed there was definitely room for multiple players in the space. “Every organisation involved in the supply chain efforts will have unique needs and some platforms will be bettersuited to fulfilling those needs than others.” He still felt that TradeLens was on course to be the right solution for a “substantial group of key companies that specialise in moving containerised cargo.” It is early days still and there is a long way to go before the full potential of blockchain shipping can be realised. “The shipping industry is vast, complex, and indispensable; we’re convinced that we’re only just beginning to realise the potential presented by this new technology,” said IBM Blockchain’s Vice President Scott.


Bringing

Clarity

Neocleous House 195 Makarios III Avenue P.O.Box 50613, CY-3608 Limassol, Cyprus T: +357 25110110, F: +357 25110001 E: info@neo.law

www.neo.law CyprusMail Shipping

37


Cyprus’ contribution to the changing ship finance landscape By Markus Wenker The ship finance landscape has changed fundamentally over the past decade since the turmoil in the global financial markets and the beginning of the shipping crisis. Several then-industry leading banks have exited or significantly scaled down their shipping activities amid soaring losses. As a result, banking regulation has become tighter, putting even more pressure on the remaining active banks to focus on existing relationships and larger companies with strong balance sheets, thereby raising the bar for many small and medium-sized companies to access cost-efficient bank finance. At the same time, new banks have entered the market and, in parallel, an active market for alternative but more expensive debt finance offered by debt funds has emerged. The ship finance market therefore became more fragmented, especially in terms of offering, which is now more versatile for the owners. The implication of this more diverse lender mix is that shipowners now not only have to more carefully choose the type of financing that suits their needs, but to consciously decide on the level of debt that is within their individual comfort zone and risk appetite as a wide range of financing from low to very high leverage is available. In times where the industry continues to suffer from low returns and a market characterised by volatility

38 CyprusMail Shipping

and uncertainty, financing becomes more expensive, and the equity investment is at increased risk, unless there is secure cash flow through period employments to financially strong counterparties or liquidity reserves set aside to cover potential shortfalls. With Hellenic Bank at the helm, Cypriot banks have acted upon this market opportunity, and put Cyprus on the European ship finance map over the last few years. The expansion into ship finance serves Cypriot lenders well as it offers a unique proposition: on one hand, the addition

of ship finance complements the government’s efforts to expand and elevates Cyprus as a shipping cluster with the associated positive impact on the local economy; and on the other it helps banks to diversify their portfolios and reduce their dependency on the local economy, benefitting both depositors and shareholders. Markus Wenker, Head of Ship Finance, Hellenic Bank Public Company Limited


The only full-service provider for the maritime industry By Phivos Stasopoulos For more than three decades, Hellenic Bank Shipping has been the only local full-service provider of banking services for the maritime industry in Cyprus. Dedicated to exclusively servicing the shipping business community and capitalising on the long standing tradition of the bank’s affiliation with the maritime sector, Hellenic Bank Shipping offers a full spectrum of integrated financial services and comprehensive solutions to meet the needs of international shipping companies including ship owners, crew and ship managers, ship brokers and charterers and marine insurers.

HB Shipping Centre’s specialised transaction banking products and services include: Accounts and Deposits in all major currencies Cash management services Spot and forward foreign exchange deals Escrow accounts and conditional payments Letters of Credit and Bank Guarantees Credit and Debit Cards Integrated Electronic Banking Services

l Web Banking – transactions are carried out in real time, 24 hours a

day, 365 days a year, from anywhere in the world, with maximum security

l

API Banking – as an innovator and as an originator, HB created an open platform and enables partners to benefit from Banking as a Service – BaaS and to conform to the Payment services Directive 2 (PSD2)

l Mobile Banking – banking on the go with amazing features such as money transfer, balance checks, payment of bills and more Phivos Stasopoulos, General Manager, Business Division, Hellenic Bank Public Company Limited

CyprusMail Shipping

39


Producing the personnel needed for shipping to grow With the shipping industry continuing to contribute massively to the Cypriot economy local education institutions have cottoned on to the need to train those who will work in the sector By Annette Chrysostomou

T

he shipping sector in Cyprus has long been a cornerstone of the economy and now it is booming, with Cypriot education finally waking up to it. A deputy shipping ministry was established just last year, an acknowledgement of the growing importance of the sector but it has become clear in recent years that the Cyprus shipping industry is in need of graduates ready to work in the industry, advisor to the deputy minister Andreas Karamitas told the Cyprus Mail. “There is an awareness in Cypriot society that personnel is needed,” he said. The ministry is supporting the sector in any way it can, he added. “We give them [educational institutes] money from our budget, and empower people. For example, on October 9 the biggest international maritime exhibition will take place in Cyprus.” There have been many more shipping companies registered in Cyprus in the past few years, and more employees are needed, but Cypriots have been slow to respond added, associate director of the Larnaca-based Cyprus Maritime Academy Kyriakos Patsalides. “Cypriots did not have it in mind, potential students were not informed about this field. Everybody was thinking about oil and gas but these foreign companies actually did not em-

40 CyprusMail Shipping

ploy any locals yet, they bring their own personnel with expertise,” he said. Shipping companies on the contrary need people and the private and public sector are now aware of it, with secondary and tertiary educational institutions offering different types of related subjects.


modate them. The companies they work for often pay for them.” Things have changed over the past years, Hadjiannis believes. After the economic crisis, more students and their parents are interested in employment, while before many students studied what they liked, something which parents supported. Another change the crisis has brought is a willingness to be more flexible when it comes to which town the young people study in. “It was practically unheard of for students from Larnaca and Nicosia to study in Limassol, and this has changed.”

–Z O F

SHIP M

A N AG

EMEN

T

than in offices. The CIM has a long tradition and started a programme in shipping administration in the 80s, but the syllabus has since been totally revamped. According to deputy director of the institute Yangos Hadjiannis it is a massive success and has actually made the Limassol campus more successful than the Nicosia one. “All the shipping companies are in Limassol,” he said, “and we are partners with the big companies such as Columbia.” This, he believes, is of tremendous importance, as the firms have gotten to value the tertiary education institute and are willing to offer jobs to the graduates. “There is an almost 100 per cent employability,” he explained. The first MBA course started in 2015, after a consultation with companies to determine what they were looking for. It is mainly for those with a different first degree who need to divert in order to find a job and those who already have a job and want to expand their knowledge. “Half are already professionals in the industry. All our classes are in the evening to accom-

THE A

In Limassol, often dubbed ‘the maritime capital’ of Cyprus, public technical schools offer courses on the subject, and more is on offer in private higher education institutes. There are basically two ways to go about getting a maritime education in higher education. One is provided for by the Cyprus Institute of Marketing (CIM) and Frederick University, a programme that is geared to lead to managerial positions in the shipping industry and which is offered in Limassol. The other path, offered by the Cyprus Maritime Academy, is more practical and leads to jobs on ships rather

FOR REVOLUTION New digital technologies now offer revolutionary possibilities to access ship, cargo and crew data. Keeping our clients informed 24/7 – or whenever they want. PARTNER. SHIP. REDEFINED.

CyprusMail Shipping

41


Where locals are still conservative, he thinks, is when it comes to technical programmes. Students would still rather study management and aim for a job in an office than work on a ship which is seen by many as a last resort. Patsalides of the Cyprus Maritime Academy, which offers a much more technical-oriented programme, sees changes in these attitudes and says that as long as students understand that the goal of the programme is to get a job on a ship people are interested, and most are willing to complete the training, which includes time at sea. “The goal is one: to start working on a ship. Working in an office is not a choice,” he said. Well, at least not for some time. Only after five to eight years experience will a company offer the employees a managerial position. “They need to understand that companies are looking for really experienced personnel to work in their offices.” The Cyprus Maritime Academy was launched by Intercollege under the umbrella of the University of Nicosia in 2016 to encourage more people into the booming shipping industry. It is unique in its approach, making the most of the input from the industry, while offering not only a Bachelor degree but also a secure and well-paid job at the end of the four-year course. Of the 50 students who start the programme about 10 will drop out, either for financial reasons or because

42 CyprusMail Shipping

they haven’t understood the part about working on a ship. The experience on board is for many the hardest part of the course so the Academy has timetabled the first two-month stint on board after the first year as a filtering process. Together with their academic performance, this ensures that only those who are up to it go on to the second year. According to Patsalides, it is necessary so the students get to know what their job will be like. Because of this, industries are not willing to invest before the cadets start their second year. From then on, however, students can apply to receive 65 per cent of their tuition, around €18,000. As the ships where students are trained are usually not docked in Limassol but may be anywhere in the world, the student’s fare to the vessel is also paid for. Last but not least, they also have a job after the successful completion of their studies. The cadets are required to work on board one of the ‘adopting’

company’s ships for a period of three years. During this time, a small amount will be deducted from their pay on a monthly basis, which will go towards the repayment of the financial support provided to them during their studies. The job security is something that attracts the students. Unlike students at public institutions in Greece, where graduates have to find companies willing to employ them, the Larnaca academy brings the industry in contact with the students during their studies. Both the CIM and the Maritime Academy acknowledge working in the shipping industry can be a dream job, but there may be drawbacks for those not suited to the work. “These are professions than can assure the future of any young person with high rewards, with the possibility to visit many places and meet different cultures and people, but they are for people with a strong will and character to manage the challenges of this unique industry,” executive director of the Cyprus Maritime Academy Stelios Mavromoustakos said. “It is not for everyone. It is easy to get a job and can be exciting with a lot of travelling,” CIM’s Yangos Hadjiannas added. “It is not a typical Cypriot office job, it usually involves working with people from other nationalities”. What programmes are available to study Maritime Academy in Cyprus which is under Intercollege Larnaca offers two programmes which last for four years, including one-year training on board a ship. After the initial twomonth internship another two, each five months long, follow in years 2 and 4. The first course on offer is the Nautical Science programme aimed at training officers on merchant ships. The deck’s department officers are responsible for the navigation, manoeuvring and safe handling of the ship, communications between ship


–Z O F

SHIP M

A N AG

EMEN

T

on cruise ships as well as in hotels. The four-year Bachelors in Shipping Management at the CIM aims to develop the intellectual skills necessary in international shipping and teaches subjects aimed at understanding the organisation and structure of sea transport and grasping the importance of economic practices. The Cyprus Institute of Marketing also offers a Masters in Business Administration with Shipping, which can be completed in 12 months (full-time) or in 24 months (part time). The MBA considers trading patterns and shipping organisation in their legal, financial and managerial context. Frederick University offers both competency and academic pro-

THE A

and shore, the handling and delivery of cargo, and the operation of lifesaving devices. Upon completion of the study in Marine Engineering, the second course offered, graduates can get jobs as engine officers. These officers, under the orders of the chief engineer, are responsible for the proper running, maintenance and repair, where needed, of the mechanical and electrical installations of the ship. In addition to these programmes, the hospitality students who study at Intercollege Larnaca can complete their internship on a ship instead of at a hotel. For this they receive compensation and after their studies are qualified to work in hospitality-related jobs

grammes. The BSc is the oldest, most established and the most grounded, Sotiris Jeropoulos, programme coordinator of the BSc of Maritime Studies said, “simply because we have had time to improve.” It has started before the year 2000. There are also three postgraduate programmes at the Limassol campus of the university, the MSc in International Trades and Shipping Management, MA/LLM in Maritime Law and Shipping Business and MSc in Marine Engineering and Management. Apart from those, Frederick also has two competency programmes, which fill in some academic gaps but where students also spend six months on a ship to carry out specific tasks on board. The Engineer of the Watch programme is the only one of its kind and bridges the gap from mechanical engineering to marine engineering, while there is also a Second Engineer and Chief Engineer professional competency programme, which brings students from a basic engineer level to higher levels. All programmes are accredited locally and internationally.

FOR SUSTAINABILITY Preserving the environment is one of the most important upcoming challenges in shipping. We´re already educating and training our crew in best practices – from energy-saving engines to avoiding pollution. PARTNER. SHIP. REDEFINED.

CyprusMail Shipping

43


Not just for men Melissa Hekkers reports on shifting gender culture within the maritime industry

W

orld Maritime Day’s theme for 2019 will be ‘Empowering Women in the Maritime Community’. A fitting topic as currently, women represent only two per cent of the world’s 1.2 million seafarers, with 94 per cent of them working in the cruise industry, a low representation that’s seen in Cyprus too. “On a global level, there’s an ongoing effort in promoting the shipping industry, with opportunities that are available to women as well as men, because traditionally the industry has been predominantly male dominated,” admits Natasa Pilides, Cyprus’ Deputy Shipping Minister. It’s with this vision that her ministry, the International Maritime Organisation (IMO) and associations such as the Women’s International Shipping & Trading Association (WISTA) have been making a concerted effort to help the industry support women to achieve a representation that’s in keeping with twenty-first century expectations. Yet Pilides is quick to point out that all shipping careers are not at sea. “On the one hand, there are work opportunities that are available on shore, for example we have 9,000 people working within the maritime industry and within companies that are based in Cyprus, but if you take the number of seafarers on vessels that are Cypriot, the percentage is very low, so regardless of gender issues one of the things we’re trying to do (as a ministry) is to promote work at sea because it’s something that

44 CyprusMail Shipping

has a lot of prospects and is very well remunerated.” “We say shipping, but shipping is a huge industry, with different sectors,” adds co-founder and owner of Aphentrica Marine Insurance Brokers, President of WISTA Cyprus and Member of the Board of the Cyprus Shipping Chamber Anna Vourgos. “A lot of women in shipping are in the crewing department, they’re in purchasing departments, in accounting, HR and legal but there are fewer in the core of shipping; in engineering, naval architecture as well as seafarers and that’s because (when it comes down to sea-going posts) it becomes

a different choice, a different career. Women need to create a different equilibrium if they want to enter into that area. It’s a different choice for a woman naval architect to get up and go to a dry dock for three months while a ship is being built,” says Vourgos. “We need to distinguish when we say women in shipping, do we mean all the women that are employed in shipping and shipping related professions or are we specific on encouraging women to be marine engineers, naval architects and seafarers? We should encourage them to do anything they want, as long as it’s


–Z O F

SHIP M

A N AG

EMEN

T

For Andromachi Demetriou, a 24-year-old third officer who has been working at sea for the past six years, we are indeed living in an era where stereotypes are breaking. “If we’ve reached an era where companies have 50 per cent of women in their crew, it means that they saw something in women… We still have a long way to go, there are still men who believe that women shouldn’t be in this profession. I was once rejected to work on board a ship because I’m a woman, but I respected

THE A

their choice”. Vourgos believes “the perception that we need to change is not that shipping is male dominated; that’s a fact. We need to see why it is male dominated and the perception we need to change is that shipping is for men. Once the perception that women can do it is changed then we need to go deeper into the root of it and change the culture that wanted women not able to do it and change the culture of companies to provide equal opportunities,” she concludes.

that and years later, when I found out that the company now hires women, that’s when I told myself that a new era has begun,” she says. “But at certain points you feel the difference because we’re different in nature and that’s not a bad thing. I feel it’s a privilege to be doing what I’m doing. If I can’t lift something because it’s too heavy, if I find it challenging to work on an open deck under 50C for long periods of time or if my body is ‘weaker’ at certain times of the month, I feel the difference but I try and reach a balance and in the future if I have a family I want to believe that if a man can be away from their family so can a woman.” Although Cyprus has a significantly higher number of female seafarers than other countries, Pilidou says the profession itself needs to be viewed differently to enhance its value and to bring about further change regarding gender disparity. “Seafaring doesn’t have to be a profession for life, but it gives people very valuable experience which they can use if they want to be technical managers of different tenders at companies within the maritime industry, and these companies have a lot of presence in

FOR PEOPLE It’s all about the people. Our well-trained crew differentiates us from many and is still one of the most important aspects of running a ship. PARTNER. SHIP. REDEFINED.

CyprusMail Shipping

45


Cyprus… at the moment those professions are often filled by non Cypriot people because we don’t have enough people that have the experience to staff these companies. It’s important to have diversity within the industry because different people bring different skills to professions and there’s no reason why it should be either just men or just women, it’s a case of giving equal opportunity… there are also many opportunities onshore which are not related to previous perceptions so it’s also a case of what each person considers useful and what they want to do in their life”. The life of the seafarer of the next decade is seen as very different to what it would have been in the past and one where some of the physical challenges have been removed, the posts relying more on intelligence. “There’s a whole move towards automated vessels and someday not so far away from now there will be ves-

46 CyprusMail Shipping

sels that are largely autonomous, so the number of people required onboard a vessel will be smaller and at the same time, the skill of those people will be perhaps different to what they were before. Due to technology, the skills that are and will be needed

are much more advanced in a certain way and working environments will also be much more comfortable, safer etc.,” says Pilidou. Naturally different countries face different problems in regards to gender, “sometimes we forget that we happen to be in more a privileged part of the world, we forget what it used to be like, there are some other countries where they’re 20-30 years back in terms of making progress. And so, in some countries it’s still about basic rights rather than privileges, and here in Cyprus we’re not talking about rights, we’re talking about privileges because we’re already in the industry,” says Vourgos. Over the last decade the shipping cluster has become a lot more complete, providing more opportunities for a wider range of professions. “We have quite a growing number of companies, a growing number of employees, growing number of activities and a growing sector in technology, shipping finance, insurance… There’s a lot of different things that people could get involved in and of course that opens up more opportunities to the population in general but women as well,” adds Pilidou. “One of the things we’re trying to do is to attract more young people to join our maritime academies. The ministry offers


Over the last decade the shipping cluster has become a lot more complete, providing more opportunities for a wider range of professions

scholarships and gives grants to students that are doing their on-board training.” For Vourgos, initiatives to change perceptions and cultures has to start from within the family. “Up until the age of about 12 they are all children, there’s no differentiation between boys and girls, but then, at the age of 14-15, when they get to high school and the issue of what they’re going to do in their lives, it all seems to be segregated and this is what we need to change, the gender differentiation starts from within the family,” says Vourgos. “We attain these percep-

tions from the environment we grow up in, whether that is a home, a school, the society, the country we live in and going forward, it’s the culture that needs to change”. And the IMO itself believes ‘there is ample evidence that investing in women is the most effective way to lift communities, companies, and even countries’. “Women bring different things to the table, they bring a different nature… all industries, not just shipping, benefit from different qualities brought to the table and this is what we should be focusing on,” says Vourgos.

CyprusMail Shipping

47


Long wait to see removal of sector’s biggest hurdle By George Christou

T

he adverse consequences of the Cyprus problem on shipping is rarely discussed, even though it is the main obstacle to the growth and expansion of the sector. People in the industry occasionally mention that Cyprus shipping would take off in the event of a settlement, because Turkey’s embargo on Cyprus-flagged ships – the main

obstacle to the growth of the register – would automatically be lifted. What makes the success of the sector even more remarkable – it contributes 7 per cent of GDP – is that it has been achieved in spite of the embargo, first imposed by Ankara more than 30 years ago, even before the Cyprus Shipping Chamber had been established. The restrictive measures continued on page 50

48 CyprusMail Shipping


CyprusMail Shipping

49


continued from page 48

were first introduced in 1987 and prohibited all Cyprus-flagged ships calling at Turkish ports on the pretext that Turkey did not recognise the Republic of Cyprus. This illegality was compounded in 1997 when Turkey’s government expanded restrictions to all ships, regardless of their flag, that sailed directly to Turkey from a Cyprus Republic port as well as ships linked to the Republic by ownership or ship management. In other words, Turkish ports were out of bounds for any ships linked to Cyprus. There were attempts to have the embargo lifted after Cyprus became a member of the European Union but these failed, with Turkey refusing to bow to pressure from the Union to honour its conventional obligations. As the Cyprus foreign ministry explained on its website, “the measures imposed by a country which is linked to the EU by an Association Agreement and a Customs Union and which seeks membership to the EU, seriously hinder private and public interests of the European Union, notably those of the EU ship owners and ship managers.” The legal acts governing Turkey’s relations with the EU “contain substantial provisions which impose on Turkey the legal obligation to lift its embargo against

50 CyprusMail Shipping

Cyprus shipping,” said the ministry. The Cyprus government tried to apply pressure on Turkey via the EU when the Ankara Agreement Protocol was signed in July 2005 but while clear references were made to Turkey’s obligations in subsequent

agreements with the Union, these were never honoured. Several incidents illustrating the enforcement of Turkey’s restrictive measures against Cyprus shipping, affecting EU interests, were reported to the Republic, which in turn reported them to the EU. Nothing has come of this apart from a reference to the restrictions being included in the European

Commission’s annual progress report on Turkey’s accession drive. The only measure taken against Turkey by the European Commission was the anodyne step not to close Chapter 14 on Transport Policy in the accession negotiations. The Commission’s 2013 progress report states that “as long as restrictions remain in place on vessels and aircraft registered in Cyprus or whose last port of call was in Cyprus, Turkey will not be in a position to fully implement the acquis relating to this chapter (on transport policy).” Even before Turkey’s accession negotiations were put on ice the threat of not closing a chapter was never going to change Ankara’s position. With the settlement of the Cyprus problem looking very unlikely, it seems the island’s shipping sector will have to live with the embargo, thinking of what might have been if it were lifted. Director of the Cyprus Shipping Chamber Thomas Kazakos, speaking to this paper a while ago, gave a forecast of how shipping would be boosted if the embargo was lifted. “If the Cyprus flag is now about 1,000 ocean-going vessels, another 2,000 ships from our existing membership could register under the Cyprus flag quite fast,” he said. This may be a long wait.


CyprusMail Founded 1945

Keep up to date with Cyprus, world and sports news throughout the day on your mobile or tablet

FREE

MOBILE APP FOR iPHONE OR ANDROID

CyprusMail Shipping

51


From sea to sky Shipping, yes, but Cyprus also has the potential to become a preferred jurisdiction for aircraft registrations within the EU By Andreas Christofides

C

yprus is widely recognised as a leading forum in the international maritime industry. This global success story may sometimes overshadow the significant advantages and benefits that Cyprus offers in other sectors. Aviation is one such example. Aviation experts will say a country’s gold standard for registering aircraft, be it commercial or private, is high regulatory standards, a high level of service, a quality reputation, and an attractive simplified tax regime. Cyprus, whose aviation industry is bursting with potential, had as of December 31, 2018 some 120 aircraft registered, according to official figures. These include 13 planes, 62 light aircraft, 28 ultralights and 15 helicopters. To highlight Cyprus potential, Ireland, which is also one of Europe’s well-known aviation forums, is used for comparison. In the detailed table (overleaf) a comparison is made in terms of the relevant legislation along with requirements and restrictions, registration fees, airworthiness fees, timeframes and other advantages. When it comes to advantages, both Ireland and Cyprus have much in common from the corporate tax rate of 12.5% to an extensive network of double-taxation treaties and VAT exemptions in a number of areas. Other factors that make Cyprus an attractive jurisdiction is its EU membership and the fact the island’s fi-

52 CyprusMail Shipping

nancial system transacts in euros. Cyprus possesses a well-trained and versatile labour force including qualified professional, technical and clerical staff with wide experience and fluency in English and other languages who are available for employment at a reasonable remuneration. Cyprus also has experienced service providers including corporate services, auditors, tax and legal advisers. There are no thin capitalisation rules, and the administrative procedures for registering a Cyprus company are very simple. The government is totally committed to the development of the economy, infrastructure and the protection of foreign investment.


Cyprus also has experienced service providers including corporate services, auditors, tax and legal advisers. There are no thin capitalisation rules, and the administrative procedures for registering a Cyprus company are very simple

The table overleaf highlights why Cyprus is at the very least as equally equipped as Ireland to accommodate the needs of the aviation industry. Its favourable unique leasing scheme for private aircraft is worth exploring in depth. This involves the lease of an aircraft with a possible option to purchase at an agreed price. It essentially reduces the percentage of the cost of an aircraft used for pleasure/private purposes that is subject to VAT to reflect the proportion of its usage that takes place outside the EU. The scheme is available for any private aircraft owned by a company registered for VAT in Cyprus that is leased to any physical or legal person established, permanently resident or ordinarily resident within the Republic and not engaged in any business activity. It does not require detailed records to be submitted on the use of the asset. Instead it bases the percentage of the cost subject to VAT on two simple factors, namely the type of aircraft and its maximum take-off weight. Similar schemes in other EU countries are more complex and generally result in a higher overall tax cost. The percentage of the cost subject to VAT is based on the type and the maximum take-off weight, using three aircraft types and four weight bands. In order to benefit from the scheme, the prior approval of the VAT Commissioner must be obtained. The application for approval must be accompanied by a copy of the lease agreement, together with documentation supporting the purchase price or value of the aircraft, the requisite noise certificate, manufacturer’s type certificate, Certificate of Airworthiness and Airworthiness Review Certificate. The lease agreement must be between three months and five years. There is an initial payment to the lessor of at least 40% of the value of the

aircraft and subsequent lease payments must be payable on a monthly basis. The lessor is expected to make a profit from the monthly lease payments of at least 2.5% of the initial value of the aircraft. If the lessee is entitled to purchase the aircraft at the end of the lease period the price must be at least 2.5% of the value of the aircraft, giving an overall profit on the leasing agreement of 5% of the value of the aircraft. The profit of the leasing company is subject to corporate income tax at 12.5%. The aircraft must also fly to Cyprus within two months from the date of commencement of the lease agreement. The VAT Commissioner may allow an extension of this time limit under conditions. The aircraft can be registered anywhere in the world. If any private aircraft is used solely and exclusively within Cyprus airspace, then its leasing is considered to be a taxable transaction and is taxable at the standard rate applicable in Cyprus and is calculated on the total value of the lease. To sum up; the tax incentives combined with its strategic location, the economic and the other advantages, including the excellent infrastructure, highly skilled workforce and lower costs compared to other EU jurisdictions, render Cyprus one of the most attractive options for registering, operating and owning aircrafts as well as for cross-border aircraft leasing. Andreas Christofides, Advocate – Associate at Elias Neocleous & Co LLC. The content is provided for informational purposes only; it is not legal advice and may not be relied upon as such. You should not act or refrain from acting on the basis of any content included in this publication without seeking legal or other professional advice. The contents of this article contain general information and may not reflect or address your situation.

CyprusMail Shipping

53


IRELAND

CYPRUS

1.

Irish Aviation Authority Act, 1993, as amended and statutory instruments pursuant to this legislation. In particular, Irish Aviation Authority (Nationality and Registration of Aircraft) Order, S.I. No. 107 of 2015. The Irish Aviation Authority is responsible for the registration of civil aircrafts in Ireland. The Irish Aircraft Registration Department maintains the register of civil aircraft registered in Ireland.

Civil Aviation Law No. 213(I)2002 (as amended) (in this section the “Law”). The Department of Civil Aviation is the competent Authority responsible for registration of civil aircrafts in Cyprus and for maintaining the Cyprus Aircraft Register.

2.

i. No weight restriction of the aircraft;

1. Only aircrafts which meet the following conditions can be entered in the Cyprus Aircraft Registry: (a) aircrafts not registered in a foreign registry; (b) aircrafts whose airworthiness is attested by certificate in accordance with Article 16 of the Law (certificate of airworthiness) or the renewal of said certificate in accordance with Article 16 of the Law (airworthiness inspection); (c) aircrafts whose environmental compliance is attested by noise certification; (d) aircrafts whose owner with a stake greater than 50% or holder of the rights to acquire them or the lessee (in case of leasing of at least six months) or other such party entitled, who is: (aa) a natural person of Cypriot nationality, or a national of an EU or ECAA member state, even if not residing or staying in the Republic; or (bb) a body corporate which - has been incorporated under the law of the Repub lic or the law of an EU or ECAA member state; - has its registered office and main place of business in the territory of the Republic or the territory of an EU or ECAA member state; and of which – - more than 50% of the assets and capital are held by Cypriot nationals or nationals of EU or ECAA member states; - the majority of those with power of attorney or personally liable are Cypriot nationals or nationals of EU or ECAA member states. 2. In the event that the aircraft has its usual headquarters or area of operations abroad, and the owner or charterer thereof has neither residence nor office of operation in the Republic, the Minister shall be entitled to reject the application to register the aircraft in the Cyprus Aircraft Registry, or, depending on the case, to order the deletion of the aircraft from the Cyprus Aircraft Registry, if he should deem that under the circumstances, the aircraft should be registered in the registry of another country. 3. An Aircraft that does not meet one of the conditions of paragraph 1, may, by reasoned decision of the Minister, be exceptionally registered in the Cyprus Aircraft Registry. 4. The owner and operator of the aircraft shall apprise the Cyprus Aircraft Registry immediately of any and all changes in the above registry conditions.

Relevant legislation provisions for registration and competent authorities

Other Registration Requirements & Restrictions

ii. The Aircraft must be an EASA (European Union Aviation Safety Agency) accepted type; iii. No age restriction of the aircraft; The following aircrafts can be registered on the Irish Register (Article 7, Aviation Authority (Nationality and Registration of Aircraft) Order 1996): i. An aircraft owned by a citizen of Ireland or of another EU country having a place of residence or business in Ireland. ii. An aircraft owned by a company registered in and having a place of business in Ireland, and having its principal place of business in Ireland or another EU state. iii. An aircraft chartered by demise, leased or on hire to, or in the course of being acquired under a lease purchase or a hire purchase agreement by any of the above.

Transfer In accordance with Article 12 of the Law, aircraft registered in foreign registries, may, insofar as deleted from them, be transferred to the Cyprus Aircraft Register, provided they meet the conditions of Article 11 of the Law (aircraft registration). The transfer shall have the same legal consequences as the registration. For the transfer, the procedure followed is the same as for the registration and an application for registration should be submitted.

54 CyprusMail Shipping


CYPRUS

IRELAND 3.

Registration Fees

4.

Airworthiness fees

The Registration fee is calculated based on the airraft’s type and certified maximum take-off weight (MTOW).

The fee for registration at the Cyprus Register is comparable and more easily ascertainable:

The Irish Aviation Authority’s website provides a calculator for the calculating the relevant fee: https://www. iaa.ie/commercial-aviation/aircraft-registration-2/feescalculator

i. ii.

The fee for the issuance/ renewal of an Airworthiness Certificate depends on, among others, the basis of the aircraft’s type and authorised maximum total weight. The Irish Aviation Authority’s website provides a calculator for calculating the relevant fee:https://www.iaa.ie/ commercial-aviation/aircraft-registration-2/fees-calculator

The fees for the issuance/ renewal of Airworthiness Certificate depend, among others, on the type of the aircraft and its maximum total weight. In general the following fees apply for the issuance of an Airworthiness Certificate: (a) a fee up to EUR0.51 per kg of the maximum total weight of the aircraft for the performance of the relevant search (if applicable); and (b) a fee of: - EUR256.30 for aircrafts of which the weight does not exceed 2,730 kg. - EUR427.16 for aircrafts where the weight exceeds 2,730 kg but does not exceed 5,000 kg. - EUR17 for each additional 100 kg or part of it.

For an aircraft of a maximum all up weight of up to 15 tons: EUR85.43. For an aircraft of a maximum all up weight of over 15 tons: EUR170.86.

In general the following fees apply for the renewal of an Airworthiness Certificate: (a) a fee up to EUR0.51 per kg of the maximum total weight of the aircraft for the performance of the relevant search (if applicable); and (b) a fee of: - EUR128.15 for aircraft where the weight does not exceed 2,730 kg. - EUR170.86 for aircrafts where the weight exceeds 2,730 kg but does not exceed 5,700 kg. - EUR213.58 for the first 5,000kg for aircrafts where the weight exceeds 5,700kg. - EUR8.54 for each additional 100 kg or part of it. When a certificate is issued with a validity period of more than one year, the fee payable will be increased by 20% for each additional year.

5.

Attractive features / advantages

• The corporation tax rate of passive income is 25%. The

corporation tax rate on trading income is 12.5%. Extensive double tax treaties network; No withholding tax on lease rental payments; Straight – line tax depreciation (12.5%) over 8 years; 0% VAT on international aviation leasing; No stamp duty or transfer taxes on the transfer of aircraft or aircraft parts; • Exemptions from withholding tax on interest and dividend payments;

• • • • •

Cross border lease s: generally no Irish VAT on rental income because the place of supply is where the lessee is located, usually outside Ireland; No Irish VAT on the acquisition of aircraft, provided the aircraft are physically located outside Ireland at the time of transfer. However, there could be VAT on the importation of an aircraft into the EU.

6.

Time frame for registration

At least 20 working days from receipt of all required items for process to complete

• Corporation tax is set at a flat rate of 12.5% with the

ability to reduce to as low as 2.5% via Notional Interest Deduction (NID); • Extensive double tax treaties network; • Reciprocal rules in place with many jurisdictions; • No withholding tax on lease rental payments; • No transfer fees on the transfer of aircraft or aircraft parts; • Nil withholding tax on outbound interest and dividend payments; • 0% VAT on supply, modification, repair, maintenance, chartering and hiring of aircrafts, used by airlines operating for reward mainly on international routes; • 0% VAT on supply of services to meet the direct needs of aircrafts. • 0% VAT on transportation of passengers from the Republic to a place outside the Republic and vice versa using an aircraft; • 8% annual wear and tear allowance on the cost of acquisition deductible from the chargeable income; • Cyprus Tax system is in full compliance with EU and OECD requirements. Varies and is assessed on a case by case basis.

It is noted that if the aircraft is not intended for private use, additional licensing requirements may apply as regards, among others, Flight Operations, Safety, Air crew, Airworthiness and Aircraft maintenance.

CyprusMail Shipping

55


Is there really a better alternative than Cyprus?

By Eleni Sofocleous

C

yprus finds itself in the enviable position of offering world-class services and shipping expertise, a position that makes it an ideal solution for the shipping groups and owners affected by new substance requirements who are now on the lookout for a new home.

Cyprus tonnage tax regime Cyprus has the most modern, competitive, flexible, fully approved tonnage tax systems in the EU, combined with an excellent infrastructure. The tonnage tax allows shipping companies (shipowners, ship-managers and charterers) to be taxed on the basis of net tonnage of their fleet rather than corporation tax. The Cyprus flag is the third largest in Europe and the eleventh largest in the worldwide. Moreover Cyprus is the largest third party ship-management centre in the EU and one of the largest in the world. Economic substance rules The ‘economic substance rules’ that have been developed by the EU and the OECD seek to press those

jurisdictions to incorporate companies that can prove ‘adequate substance’ in their activities that are classified as ‘geographically mobile’. There is a real danger now that the EU will place several countries on the black list of ‘non-cooperative jurisdictions’, but the caveat is that ‘adequate’ is loosely defined and deliberately left ambiguous in order to morph to the needs of each case. The rules have nonetheless came into force on January 1, 2019 for Bermuda, British Virgin Islands (BVI), Cayman Islands, Isle of Man, Jersey, Guernsey, Mauritius, Bahamas and Seychelles. There is still considerable uncertainly on what the rules stipulate for these countries and how these will be implemented, despite the fact that economic substance legislation is in force. The EU is the chief negotiator here and oversees implementation, striving to create a ‘level playing field’ among them by eliminating any potential advantage stemming from more lax tax requirements. The previous ‘BEPS’ tax initiative has had real and meaningful impact, which lends credence to this initiative, and there is mounting evidence that the jurisdictions themselves will engage in some sort of ‘policing’ continued on page 58

56 CyprusMail Shipping


A safe harbour in a cyber storm! We have shipping experts in every team We support you to face the challenges of the current environment by providing one port stop services. • • • • • • • • •

Cyber Security & Privacy Technology, Strategy Governance & Operating Model Enterprise Architecture Technology Transformation BI, Data Management, Analytics & AI Shipping Funds Digital Upskilling Loan Restructuring Tax & Assurance services

www.pwc.com.cy

© 2019 PricewaterhouseCoopers Ltd. All rights reserved CyprusMail Shipping

57


continued from page 56

among them to safeguard the level playing field these rules are meant to create. For the shipping world in particular this issue carries extra significance. Shipping groups and owners can no longer put their vessels at stake, flagging in zero-tax jurisdictions now attracts considerably more attention, and these preferential regimes will simply be exposed to more regulation. It is also safe to assume that there is substantial reputational risk associated with their stay in such jurisdictions, not to mention practical issues that usually arise, such as disruptions in facilitating banking transactions.

Companies can have similar tax benefits to zero-tax jurisdictions, but at the same time be OECD compliant

Cyprus is an ideal solution A real alternative to companies operating in those jurisdictions is their change of tax residence or legal seat to Cyprus. This enables these companies to benefit from the Cyprus Tonnage Tax Regime, a fully approved system. Using this regime, companies can have similar tax benefits to zero-tax jurisdictions, but at the same time be OECD compliant, be in an EU territory with a fully approved tax regime, backed by a world-class service sector. All that is needed is for these foreign companies to tax migrate to Cyprus (that is being tax resident in Cyprus by means of management and control carried out in Cyprus), or re-domicile (move their legal seat) to Cyprus. Both options can be implemented in a frictionless manner and at low cost without the need to resign agreements, changing mortgages, moving assets or changing pledges. The process is done by highly skilled professionals with depth of knowledge in the field, developed over decades of experience. Eleni Sofocleous is Senior Manager, Tax Advisory at PwC Cyprus

58 CyprusMail Shipping

l The ‘substance rules’ have been developed by the EU and the OECD and seek to press jurisdictions to incorporate companies that can prove ‘adequate substance’. l The rules came into force on January 1, 2019 for o Bermuda, British o Virgin Islands (BVI) o Cayman Islands o Isle of Man o Jersey, Guernsey o Mauritius o Bahamas o Seychelles l For the shipping world this issue carries extra significance. Shipping groups and owners can no longer put their vessels at stake. l A real alternative to companies operating in those jurisdictions is their change of tax residence or legal seat to Cyprus.

l Such move will enable them to benefit from the Cyprus Tonnage Tax Regime; companies can have similar tax benefits to zero-tax jurisdictions, but at the same time be OECD compliant, be in an EU territory with a fully approved tax regime.


R E L A X AT I O N . S T Y L E . E L E G A N C E . Our stylish resort has been specifically tailored with luxurious amenities, for your ultimate comfort and relaxation. Overflowing with Mediterranean simplicity and heart-warming hospitality, our facilities and accommodation are teamed with contemporary decor, traditional elements and a luxurious finish, creating the most unforgettable stay.

CONTACT US ON RESERVATIONS@PARKLANECYPRUS.COM EXPLORE THE DESTINATION AT PARKLANECYPRUS.COM

PARKLANE IS INDEPENDENTLY OWNED BY PARKLANE HOTELS LIMITED AND IS OPERATED UNDER LICENSE ISSUED BY FRANCHISOR ENTITY


CyprusMail Founded 1945

Shipping 2019 CyprusMail

Shipping 2019

SPONSORED BY:

Free with the Sunday Mail 6/10/2019

Profile for Cyprus Mail Co Ltd

Shipping 2019 By CyprusMail  

Advertisement