Modernizing PH maritime travel

The sinking of the ferry Kim­ Nirvana off the port of Ormoc City on July 2 has once again highlighted the inadequacy of the country’s maritime industry, particularly in the ferrying of passengers in an archipelago that must be interconnected by vessels of different types.

Year after year, disaster after disaster, the need for a reliable and safe crossing between the country’s 7,100 islands has grown increasingly urgent as the death and casualty toll rises.

More than 60 people died when the Kim­Nirvana, a vessel that can best be described as an oversized outrigger carrying close to 190 passengers and crew members, and tons of cargo, capsized shortly after leaving the port of Ormoc.

Various witnesses said one of the outriggers broke and the cargo shifted as the vessel tried the turn after leaving port. Coast Guard authorities were looking at human error and bad weather as possible causes of the tragedy.

Although it was slightly raining, there were no gale warnings issued and other vessels managed to leave port and sailed to their destinations safely.

Poor design, overloaded

Maritime experts pointed to the poor design of the Kim­Nirvana, a 33­ton wooden-hulled motorized vessel with a lower deck for cargo and upper deck for a maximum of 180 passengers.

Hundreds of people die each year in sea accidents involving overcrowded, overloaded, aging, and poorly designed and maintained vessels—a maritime safety record that has prompted foreign governments to warn their citizens visiting the country against taking interisland ferries.

US advisory

The governments of the United States, United Kingdom, Canada and Australia have advised their citizens not to take interisland ferries in the Philippines because they are “often overloaded, lack necessary lifesaving equipment, are not adequately maintained and have incomplete passenger manifests.” This, they say make sea travel in the Philippines hazardous.

With the significant loss of lives in sea accidents—the Philippines holds the world record for the worst peacetime maritime disaster in history (an estimated 4,000 people died when the 24­year-old Doña Paz collided with the tanker Vector in Tablas Strait in 1987)—it has become imperative to modernize the Philippine steel passenger and Ro-Ro (roll­on, roll­off) fleet to replace old, substandard vessels that are unsafe and ill­suited to ply interisland routes.

Due to their age and lack of international classification, the current fleet of aging interisland vessels are impossible to adequately insure and pose a real threat to human life. It is entirely possible to modernize the  fleet with a few changes to regulations and route assignments.

Two main Maritime Industry Authority (Marina) circulars that set the minimum age, quality and class standards for passenger and Ro-Ro vessels will not only significantly improve the safety of life at sea for interisland traffic, but also open up routes to market players who are better able to meet the challenge of modernization.

Political will
With the same political will that modernized the domestic product tanker industry three years ago, modernizing the interisland passenger and Ro-Ro fleet is very possible.

The passenger and Ro-Ro vessels that have been plying the country’s interisland routes are in a sorry state. Ro-Ro vessels, which have been transporting people and cargo across the seas as the backbone of the country’s interisland trade and commerce, are substandard, ill-maintained, and very old with an average age of over 30 years.

To find a solution to improve the sad state of our Ro-Ro industry, we must first identify the problems of the industry.

Key facts

Most of the Ro-Ro vessels in the Philippines are imported secondhand from Japan. In Japan, once a Ro-Ro reaches 20 years old, it is no longer allowed to trade in Japanese waters. Hence these “retired” Ro-Ros are sold (usually to Philippine and Indonesian buyers). Therefore, the majority of our Ro-Ro fleet is over 20 years old.

The secondhand Ro-Ro vessels from Japan were built generally for calm inland waters. A one­meter wave is already dangerous for these types of vessels. These Ro-Ros would ply well for the likes of Laguna de Bay or Taal Lake, which are sheltered waters. However, they are in great peril when they sail the open waters in the Philippines, which are connected to the South China Sea.

Filipino owners tend to add another deck to these secondhand Ro-Ros to accommodate more passengers. (Note that in the 2014 sinking of the passenger ferry Sewol on its way to Jeju Island in South Korea where more than 300 passengers, mostly vacationing high school students died, it was revealed that a deck was added to the vessel to increase passenger capacity.)

Marina does not adhere to the international standards of a prestigious classification society, which is a nongovernment organization that establishes and maintains technical standards for the construction and operation of ships. The society will also validate that construction is according to these standards and carry out regular surveys to ensure compliance with the standards.

The International Association of Classification Society (IACS) is an organization composed of 13 classification societies and is headquartered in London. The members include the classification societies from the United States, China, Croatia, the United Kingdom, Poland, Russia, Italy, India, South Korea and Japan.

In the early ’90s, Marina accredited seven local classification societies, none of which are members of the IACS. Likewise, Marina has its own technical department that classed vessels according to its own rules.

Since the retired vessels were bought from Japan, they are not classed by the IACS­accredited Japanese society. In short, the secondhand vessels brought to the Philippines are not classified by the IACS.

A basic requirement of insurance companies is that a vessel must be classed and maintained (mandatory regular inspection) by any IACS member. As a matter of fact, when accidents happen, the first thing the insurance companies look for is the Class Maintained Certificate issued by a classification society.

This certificate indicates that the vessel has been maintained in accordance with the rules of the classification society. Without this certificate, the insurance company will not pay the claim.

When Filipinos import secondhand Ro-Ros, they are “classed” by any of the seven local classification societies recognized by Marina. These local classification societies have their own rules, which are not on a par with the standards set by IACS. In other words, they are very lax.

Marina does not require any hull insurance for Ro-Ro vessels. Their only requirement is that each passenger be insured for P200,000. They do not require insurance for third-party liabilities such as passenger medical needs, death benefits, oil spill pollution and cleanup costs, damage to properties, collision liabilities and wreck removal.

Third-party insurance, therefore, is a must. It covers third-party liabilities that are so important. A vessel is a moving object and can easily damage properties. It is imperative that all Ro-Ro vessels carry the same insurance cover that Marina requires for tankers, other oil and gas carriers, and big passenger Ro-Ro vessels.

Third-party liability insurance is so important that even the Land Transportation Office requires this of all cars and buses annually.

Headlines of Ro-Ro and ferry vessels sinking in the Philippines appear with appalling regularity. One cannot help but wonder if the deaths and accidents could have been prevented with a more modern fleet.

When one reviews Marina maritime incident summaries from 2006 to 2014, one is struck by the fact that all of the four vessels which had sunk due to extreme weather were more than 20 years old. The 2014 sinking of MV Maharlika II was caused by water coming in from the steering gear. The vessel was 30 years old when it capsized. Eight died and two were missing in the accident.

All of the 22 Ro-Ro vessels that encountered engine problems have been in operation for at least 20 years. While there is no academic study highlighting the correlation of vessel age with maritime incidents, it is significant that national maritime agencies, like the one in Japan, do not allow Ro-Ro vessels to operate past a certain age.

Ensuring compliance

Classification societies also increase the frequency of surveys to ensure the compliance with operating standards for older vessels. These highlight the reality that maritime operators, managers and entities recognize that older vessels have more maintenance issues and grow less safe over time unless aggressively maintained.

At a certain point, it makes less economic sense to keep investing in maintenance instead of just selling the vessel and buying a new one. As pointed out earlier, the Philippines is frequently the buyer of these old vessels, ones that likely had less maintenance in the last years of operation since owners planned on selling them anyway.

Once sold, the incentive for aggressive maintenance diminishes even more. Without clear government guidelines to ensure vessel quality, the value of human lives factor less in the algebra of profit and loss.

Toward modernization

There is a minimum price to pay for safety, which is nonnegotiable. Every year, there is a Ro-Ro accident that results in death. Inasmuch as the average age of our Ro-Ros is over 30 years old, the only way to modernize our fleet is to completely renew existing Ro-Ros over a reasonable period of time. Moreover, it can be uneconomical to repair the present Ro-Ros to make them compliant with the rules of IACS members.

The government’s success in the complete modernization of our tanker fleet, which was completed in January 2012 is proof that with political will, it can be replicated in our Ro-Ro fleet. We believe that the issuance of memorandum circulars by Marina (similar to what was issued for the tanker industry) will achieve complete modernization of our Ro-Ro fleet.

Brand new Ro-Ros

Two Ro-Ro shipping companies have started the modernization process: One company has ordered five brand new small Ro-Ros for shorter routes, three of which have been delivered. These smaller Ro-Ros are built in China. Another company has completed the signing of shipbuilding contracts with a Japanese shipyard for five big Ro-Ros for longer routes.

The first vessel is expected to be delivered in November 2015. All these Ro-Ros were specially designed to ply Philippine waters. This goes to show that the private sector is ready to invest tens of millions of dollars in new Ro-Ros appropriate for Philippine waters, as they find it viable.

When one considers that the Land Transportation Regulatory and Franchising Board sets maximum age limits at 15 years for passenger buses, it is even more compelling to set maximum age limits for our interisland fleet. Not only will the newer vessels be more efficient and have less likelihood for marine pollution, they will also be better at protecting life at sea.

Once this modernization is set in place, it is highly likely that governments will lift international travel advisories against interisland sea travel, opening the floodgates for tourists from their countries to domestic destinations inaccessible by air travel.

Two circulars

The issuance of the two circulars by Marina has been recommended to make modernization a reality. The first would require that no secondhand Ro-Ro vessel of 5,000 gross tonnage and below will be imported unless it is 15 years old or below, and that it be fully classified by an IACS member.

The second circular would require that within five years, or by Dec. 31, 2019, Ro-Ros of  5,000 gross tonnage and below, may be allowed to operate provided:

They are not more  than 35 years old

Fully classed

With Protection and Indemnity (P and I) insurance, a third-party insurance to cover oil spill, collision of vessels, death and removal of wreckage.

During the period, no major alterations on any Ro-Ro vessel will be allowed unless: (a) it is  approved by and under the supervision of an IACS member; and (b) class-maintained throughout. Marina can continue to use its supervisory powers by conducting periodic inspections of the Ro-Ro vessels and their crew.

Shipbuilding boom

With these circulars in place and provided, Marina remains strict in its implementation, we can foresee that all old Ro-Ros will be scrapped and substituted, as it will be simply uneconomical to maintain them. Furthermore, we expect a shipbuilding boom within the next five years, as a result of the shipowners’ compliance with the new Marina circulars.

With modernization, which is expected to be completed in six to seven years, the general public can expect comfortable and safe travel between islands.

(Arben E. Santos is the president of Southwest Maritime Corp. He has been in the maritime industry for more than three decades.)