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16 Apr 2018

US-China trade war would hurt global shipping business

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"The tit-for-tat exchange of tariffs between the United States and China gives the impression the world’s two biggest economies are headed down the road towards a trade war, which would have hugely damaging economic consequences. But this could be averted if they continue quiet backroom discussions to open up their markets, particularly China’s. The US imposition of tariffs on a range of Chinese imports – which amounts to a tax on imported goods – is the first step in a series of measures announced by the Trump administration. So far, China has responded by announcing tariffs on US imports. The next stage would be for the US to restrict Chinese investment into America. Presumably, if this happens, then China would respond in kind. In other words, the tensions between the US and China could go beyond taxes and directly disrupt global supply chains as investment is targeted. The Trump administration seems positive towards protectionism and that picture unfortunately became clear when the pro-trade US President Donald Trump’s chief economic adviser Gary Cohn resigned on 6 March because of the tariffs imposed on steel and aluminium. The tariffs on steel and aluminium will have a limited impact on most international bulk trades. Nevertheless, they could trigger something bigger that would negatively impact global shipping in a much wider way including container shipping trades. Since 2009, implementation of trade-restrictive measures amongst global trading partners has become more widespread according to World Trade Organisation (WTO). Fortunately, trade-facilitating measures have kept up well to limit some of the damage done. Just yesterday, the African Continental Free Trade Area (ACFTA) proved to be the latest of its kind. Above all, transparency and predictability in trade policy remain vital for all actors in the global economy as the WTO puts it. BIMCO’s Chief Shipping Analyst Peter Sand comments: “Free trade provides prosperity and peace. It’s a fundamental principle to cherish and safeguard. All trade-restrictive measures are in principle bad for shipping. Open economies are all better off from trading, as they make use of their resources in the most optimal way. The result of a trade war is more expensive goods of lower quality and little variety. This goes for all products and commodities.” Steel and aluminium tariffs may be ‘dish of the day’ and the impact on shipping is still unknown, but soon major trade action against China is also likely to come from the US. Despite the fact that there is good reason – violation of intellectual property rights – the result is the same. It is damaging for the involved countries. The US is running large trade deficits with the EU as well as China. In addition to significant trade deficits in goods with Mexico, Japan and Canada. But starting a trade war is the wrong way to handle the situation. Any disruption to supply and distribution chains, which are a key part of world trade, could have a lasting impact. In the worst-case scenario, companies may have to relocate factories or distribution centres. Investment decisions affect employment and taxes raised, and are in some ways more disruptive than tariffs, which can be reversed more easily. This escalation would be damaging for the US and Chinese economies since global companies, such as Apple, invest in both countries. This would affect not only US businesses but also American consumers. Retailers such as Walmart import goods from China, so prices would go up and living standards would be squeezed. And since US goods are sold worldwide, if they are reliant on parts from China, consumers here in the UK and in the rest of the world would also be affected. The same applies to Chinese consumers and producers, particularly since about half of Chinese exports are made by enterprises with foreign investors. The US is targeting hi-tech manufacturers to disrupt President Xi’s flagship industrial strategy, the Made in China 2025 plan, which seeks to make Chinese manufacturing globally competitive by introducing more artificial intelligence and automation. The ability of emerging economies such as China to “catch up” with rich economies depends on their being able to access and adapt the best technology in the world. This lies at the heart of the problem. The US has launched these trade measures in retaliation for China’s poor record on intellectual property rights protection, which includes requiring foreign companies to transfer their technology as a condition of investing in China. So, there is a lot at stake for both countries. But a trade war wouldn’t result in better protection of US technology or give American firms better access to Chinese markets. Nor would it help China invest in America. A perennial Chinese complaint is that its companies are blocked, particularly in the technology sector, which is crucial for its economic growth. After an initial round of tariffs on steel and aluminium was unveiled, US and Chinese officials met to discuss ways to open markets wider and create a more level playing field. Opening up China would improve the US trade position. After all, its huge trade deficit could be reduced either by cutting back on imports – or, a much better option, expanding exports. China may be reluctant to open up its relatively closed markets to foreign competition. It firmly believes its industries need protection against the dominance of multinational companies. But it has some of the biggest companies in the world, such as Alibaba, Huawei, and Tencent. And more competition may well improve China’s growth prospects by increasing productivity, especially in sectors where there are less efficient state-owned enterprises. But far from the US and China coming to the table and forging an agreement to open up trade, more rounds of trade barriers could be announced with growing economic damage and no resolution in sight. President Trump may even show his dissatisfaction with the body that oversees international trade, the World Trade Organisation, which he has described as a “disaster”, and pull America out. That would potentially overturn the whole worldwide trading system with dire consequences. So it’s critical that a US-China trade war is avoided at all costs."

16 Apr 2018

The Nairobi Convention: navigating obstacles to shipwreck removal

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"Canada recently became the latest in a growing number of states to adopt the International Maritime Organization’s Nairobi International Convention on the Removal of Wrecks. With abandoned wrecks still creating hazardous obstacles for ships at sea, could the convention create a more unified approach to their removal worldwide? According to the International Maritime Organization (IMO), an increasing number of shipwrecks have been abandoned in the ocean without being salvaged, creating a hazardous obstacle for operating vessels. “Depending on its location, a wreck may constitute a hazard to navigation, potentially endangering other vessels and their crews,” says Jan de Boer, a senior legal officer at the IMO’s legal affairs and external relations division. “Second, depending on the nature of the cargo and the fuel still on board, is the potential for a wreck to cause substantial damage to marine and coastal environments.” High-profile disasters continue to cast a media spotlight on national authorities, compelling them to deal with shipwrecks effectively and in an environmentally friendly way. But without a coherent, unified framework that determines when wrecks constitute a hazard, who is liable for clear-up, and to what extent, getting them out of the sea can take significantly longer depending on where incidents occur. The IMO therefore hopes the Nairobi Convention on the Removal of Wrecks, which came into force in 2015, will provide a more unified approach to wreck removal. Giving powers to coastal authorities First adopted by the IMO in 2007, the Nairobi Convention will provide the legal basis for member states to have dangerous wrecks removed from their exclusive economic zone (EEZ), the body of water extending 200 nautical miles from their shoreline. “In general, the awareness regarding hazardous wrecks has increased tremendously, resulting in the conclusion of a specific IMO Convention on this issue,” says de Boer. “The Nairobi Wreck Removal Convention provides for uniform international rules and procedures to ensure the prompt and effective removal of wrecks and payment of compensation for the costs therein involved.” “The Nairobi Convention will provide ratifying states with a unified system for wreck removal in the EEZ.” A state’s EEZ actually begins beyond its territorial waters, which stretch just 12 miles from the shore. Nations therefore have the right to explore and exploit natural resources in the EEZ, but lack sovereignty over them, making it harder to deal with abandoned shipwrecks in the area. Expected to fill this gap in existing international regulations, the Nairobi Convention will provide ratifying states with a unified system for wreck removal in the EEZ, covering how shipwrecks are located and reported, measures to facilitate dealing with them, and warnings to mariners. Crucially, it presents a clear definition for what constitutes a wreck and the criteria that should be used to determine it as ‘hazardous’, such as proximity to shipping routes, traffic density and frequency, the vulnerability of ports, and the potential damage that could result from cargo or oil released into the marine environment. Bringing shipowners to account The cost of wreck removal has often been covered via a shipowner’s membership of a mutual protection and indemnity (P&I) club. Nevertheless, there have many cases of shipowners and insurers refusing or being unable to pay due to liability issues. One example de Boer cites is the IUGO, a Romanian-built cargo ship which sank near the Netherlands in 2000. The €9.6m cost of removing the wreck was never recovered as the owner, a one-ship operator, evaporated after the incident. The P&I insurer invoked a ‘pay to be paid’ clause that forced the state to cover the costs. Under the new convention, registered shipowners are now financially and practically responsible for locating, marking and removing wrecks in an affected state’s EEZ, with only a few exceptions. If they don’t carry out these actions by a certain deadline, or if a wreck proves an imminent threat, the affected state can intervene directly at the shipowner’s expense. When flying the flag of a ratifying state or entering or leaving its territorial waters, registered owners of ships weighing 300 tonnes or more must have an insurance certificate to cover their liability. States also have a right of direct action against insurers to ensure they receive compensation. “Registered shipowners are now financially and practically responsible for locating, marking and removing wrecks.” “The aim of these provisions is to ensure that any ship, whether it is registered in a state party or not, maintains a certificate of insurance issued by a state party,” says de Boer. “The regime avoids difficult legal disputes and lengthy legal proceedings while rights, duties and liabilities are clarified,” he says. Canada has recently started implementing the Nairobi Convention as part of its newly introduced Wrecked, Abandoned or Hazardous Vessels Act. According to Transport Canada, gaps in the country’s existing laws have resulted in insufficient federal powers to address abandoned vessels. “This has contributed to incidents of high-profile problem vessels such as the MV Miner, the Kathryn Spirit and the Farley Mowat),” says a spokesperson from Transport Canada. “It has also contributed to negative cumulative impacts from a large number of smaller vessels and pleasure craft found along all our coasts and shorelines. “The proposed legislation will strengthen owner responsibility and liability for their vessels, including costs for clean-up and removal; address irresponsible vessel management, including prohibiting vessel abandonment; and enhance federal powers to take proactive action on problem vessels.” Will the convention be effective? Since the Nairobi Convention came into force in 2015, the number of signatories has gradually risen from 10 to 40 (at time of writing). However, this still makes up less than a quarter of the IMO’s ranks. According to de Boer, the IMO Legal Committee is therefore urging states to ratify the Nairobi Convention at their earliest possible opportunity. Nevertheless, one of the biggest issues will be whether states are willing to apply the convention in their territorial waters, in addition to their EEZ. In some locations, shipwrecks are common in shallow waters close to the shore, and are more dangerous for the higher volumes of traffic travelling into and out of ports. At the 101st session of the IMO Legal Committee, the International Group of P&I Clubs reminded contracting states that without ‘opting in’ to this territorial condition, they will not be able to rely on insurance certificates for incidents occurring in their territories. Almost 50% of contracting states have not done so, and this could lead to disparities in national regulation regarding shipwrecks. “In some states, such as the Netherlands, the main shipping lanes are just outside the territorial waters in the EEZ where many accidents happen,” says de Boer. “It all depends on how the actual situation is in each state, but the International Group statement in itself is true, hence the encouragement to apply the convention within the territory of states.” Critics agree that the convention is still a step forward, and has benefits in both directions. Under the convention, states’ actions must be ‘proportional to the hazard’, and shipowners will therefore be able to protest these actions if they are deemed unreasonable. Providing a stricter liability regime could also reduce the number of wrecks overall, as states are more likely to provide ports of refuge to ships in an emergency if they are confident that they are insured. Nevertheless, the overriding sense is that the effects of the Nairobi Convention are unlikely to be seen overnight. The first wreck removal, or rather the first true test for the convention, has yet to be addressed. “The recent incident with the product tanker Sanchi off the coast of China (which is a state party to the convention) could become relevant in this respect,” de Boer says."

14 Apr 2018

Global union leaders converge to condemn ICTSI

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"Global unions have once again condemned multinational port operator International Container Terminal Services, Inc. (ICTSI), for continuing to lower the standards in the global port industry. Several international unions and the International Transport Workers’ Federation (ITF) general secretary, Steve Cotton, are in Melbourne this week to celebrate the 20th anniversary of the infamous Patrick Stevedores dispute, where dock workers were locked out of the waterfront in what was later determined to be an unlawful act. Steve Cotton said today: “Twenty years on from the iconic Patrick dispute where hundreds of workers were locked out of their workplace for weeks on end, it seems ICTSI has learnt nothing. “The right of workers to join a union and collectively bargain was upheld then and the same applies now. “Twenty years ago, we learnt that global solidarity between workers and their unions can make a difference with Patrick Stevedores eventually forced to reopen their gates and allow workers back on the job. “Yet ICTSI continues to intimidate its workforce and strip every hard-fought benefit that has been built up over dozens of years of collective bargaining by unionised labour. “The ITF has documented a pattern of labour rights violations from across ICTSI’s global network. Dock workers illegally sacked in Madagascar, workers paid poverty wages in Makassar, discriminating against union members in Melbourne, a worker fatally crushed in Jakarta. “Unions in South Africa have publically opposed ICTSI’s entry into Africa, the world’s fastest growing port market. Unions protested today in Melbourne, with the ITF calling on ICTSI to end the exploitation of its workforce, targeting of trade unionists, and undermining of their rights across the company’s global operations. “The ITF together with unions across the world, in every part of ICTSI’s global supply chain, will continue to campaign until ICTSI stops undermining the wages and conditions of its workforce. “The Patrick dispute showed us the power of global solidarity. If unions across the world – including those in the United States, Europe and New Zealand – had not stood shoulder to shoulder with their Australian brothers and sisters we may well have seen a different result. “We’ve learnt that lesson. The ITF, the newly amalgamated Construction Forestry Maritime Mining and Energy union, and our global affiliates stand in solidarity. We will tackle whichever operator we have to tackle, track whichever shipping company we have to track from any port, to pressure ICTSI to respect workers’ hard fought rights. “The ITF is committed to working with port operators who provide good jobs, have good industrial relations practices at their ports and prioritise the growth of their business through the development of long-term, functional relationships with unions as their social partners.”"

13 Apr 2018

UN body adopts climate change strategy for shipping

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"Member nations of the United Nations body charged with regulating shipping on the high seas adopted a first-ever strategy Friday to blunt the sector’s large contribution to climate change — bringing another major constituency on board in the international quest to cap the planet’s warming well below an increase of 2 degrees Celsius (3.6 degrees Fahrenheit). The strategy embraced by a committee of the International Maritime Organization would lower emissions from container ships, oil tankers, bulk carriers and other vessels by at least 50 percent by the year 2050 vs. where they stood in 2008. The group also said that emissions from shipping should reach a peak, and begin to decline, as soon as possible. “IMO remains committed to reducing GHG emissions from international shipping and, as a matter of urgency, aims to phase them out as soon as possible in this century,” the group said. Nations meeting at the United Nations International Maritime Organization (IMO) in London have adopted an initial strategy on the reduction of greenhouse gas emissions from ships, setting out a vision to reduce GHG emissions from international shipping and phase them out, as soon as possible in this century. The vision confirms IMO’s commitment to reducing GHG emissions from international shipping and, as a matter of urgency, to phasing them out as soon as possible. More specifically, under the identified “levels of ambition”, the initial strategy envisages for the first time a reduction in total GHG emissions from international shipping which, it says, should peak as soon as possible and to reduce the total annual GHG emissions by at least 50% by 2050 compared to 2008, while, at the same time, pursuing efforts towards phasing them out entirely. The strategy includes a specific reference to “a pathway of CO2 emissions reduction consistent with the Paris Agreement temperature goals”. The initial strategy was adopted by IMO’s Marine Environment Protection Committee (MEPC), during its 72nd session at IMO Headquarters in London, United Kingdom. The meeting was attended by more than 100 IMO Member States. The initial strategy represents a framework for Member States, setting out the future vision for international shipping, the levels of ambition to reduce GHG emissions and guiding principles; and includes candidate short-, mid- and long-term further measures with possible timelines and their impacts on States. The strategy also identifies barriers and supportive measures including capacity building, technical cooperation and research and development (R&D). IMO Secretary-General Kitack Lim said the adoption of the strategy was another successful illustration of the renowned IMO spirit of cooperation and would allow future IMO work on climate change to be rooted in a solid basis. He told delegates, “I encourage you to continue your work through the newly adopted Initial GHG Strategy which is designed as a platform for future actions. I am confident in relying on your ability to relentlessly continue your efforts and develop further actions that will soon contribute to reducing GHG emissions from ships.” According to the “Roadmap” approved by IMO Member States in 2016, the initial strategy is due to be revised by 2023. But the United States “reserve[d]” its position on the strategy, with Coast Guard official Jeffrey Lantz, who headed the delegation to the London deliberations, saying that the country views “the establishment of an absolute reduction target as premature.” The United States also objected to how responsibilities would be divided between developed and developing countries, and expressed “serious concern about how this document was developed and finalized.” Shipping in recent years has been responsible for about 800 million tons annually of carbon dioxide emissions, according to Dan Rutherford, the marine and aviation program director of the International Council on Clean Transportation, who was in attendance for the deliberations in London this week. That means shipping’s emissions are 2.3 percent of the global total. “If you counted it as a country, it would be the sixth-largest source of CO2 emissions,” said Rutherford, noting that 800 million tons of annual emissions is comparable to emissions from Germany. And ships, by burning heavy fuel oil, create not only carbon dioxide emissions but also significant emissions of black carbon, or soot. Black carbon is a short-lived but powerful climate-change driver. Moreover, if nothing is done to halt emissions growth in the industry, emissions are projected to continue to grow, and shipping would burn up a significant share of the remaining global carbon emissions allowable under the Paris climate agreement — releasing as much as 101 billion tons of carbon-dioxide-equivalent emissions between now and 2075, according to an analysis by Rutherford’s organization. “The world’s shipping industry has now, for the first time, defined its commitment to tackle climate change, bringing it closer in-line with the Paris Agreement,” Tristan Smith, an expert on shipping and energy at the University College London energy institute, said in a statement. Shipping and aviation are two major greenhouse-gas-producing sectors that have sat rather uncomfortably in the context of the global push to cut emissions under the Paris climate agreement. Both sectors are very difficult to decarbonize, since they rely on energy-dense fuels to allow ships or planes to travel great distances without stopping. Meanwhile, since the sectors have major international components, they are not the responsibility of any single country to regulate as part of a domestic climate-change strategy. Instead, addressing their role in climate change has fallen to United Nations bodies such as the IMO and the International Civil Aviation Organization. Yet despite the ambition of the current strategy for shipping, Rutherford’s group’s analysis shows that it may not be strong enough. The group says that to be consistent with the Paris agreement, shipping should emit no more than 17 billion tons of carbon-dioxide-equivalent emissions from 2015 onward but that the current agreement implies emissions between 28 billion and 43 billion tons. (No action at all, meanwhile, could have meant 101 billion tons.) Groups that were pushing for something stronger included small island nations, which have the most to lose if warming exceeds 1.5 degrees Celsius, or 2.7 degrees Fahrenheit, since sea-level rise for these countries could be devastating. The Baltic and International Maritime Council, the world’s biggest shipping consortium, celebrated the agreement. “IMO has done something no one has done before: set an absolute target for emission reductions for an entire industry. It is a landmark achievement in the effort to reduce emissions, and something that every other industry should look to for inspiration,” Lars Robert Pedersen, the group’s deputy secretary general, said in a statement. For shipping to decarbonize, current fuel oils would have to be replaced by biofuels or, perhaps ultimately, hydrogen or batteries. But such innovations so far are being tested only in smaller ships, rather than the largest vessels, Rutherford said. “The largest container ships use a tremendous amount of energy. They’re going to be harder to electrify or put hydrogen in,” he said. A large emphasis will also certainly be placed on more energy-efficient designs to maximize the work performed by current fuels. The current document is referred to as an “initial strategy.” But from here, IMO is expected to move ahead with regulations for global shipping that will gradually require these carbon-saving changes to the industry. Those could include mandatory energy-efficiency requirements, speed limits or other measures."

13 Apr 2018

Lloyd's Register Foundation workshop aims to improve safety in two of the world’s most dangerous industries.

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"Lloyd’s Register Foundation (the Foundation), a charity helping to protect the safety of life and property by supporting education, research and public engagement, held a workshop on March 19-20 to explore ways to improve safety in two of the world’s most dangerous industries – fishing and passenger ferries. The estimated average number of annual fatalities in the fishing industry is 24,000, and in the ferry industry, 3,000. Most of those deaths occur in a relatively few countries in Asia and Africa. Input was received from industry experts either currently working in or having extensive experience in Canada, The United States, The United Kingdom, The Netherlands, Sweden, India, Bangladesh, Indonesia, The Philippines, Australia, and New Zealand. Many potential areas for improvement were discussed in concentrated breakout sessions – including regulatory, vessel design, construction and maintenance, human behavioural factors, safety culture, training, competence and certification, weather, and safety equipment. The Foundation will publish two insight reports later this year, one for each industry, which will collect the expert group’s ideas and recommendations for the most impactful actions to maximise lives saved in each industry. Richard Clegg, Foundation Chief executive, said: “As a charitable Foundation we’re driven by the impact we can make in line with our charitable purpose of enhancing the safety of life and property. Our challenge in doing this is twofold: firstly, to identify those industry sectors in greatest need, and then how to design interventions that will lead to greatest benefit. The workshop and insight reports have brought together some of the best minds in the world to help us understand the problem and arrive at evidence-based recommendations. Fishing and ferries are two of the most hazardous occupations globally, and anything we can do will save real lives”. Tom Boardley, the Lloyd’s Register Group’s Director of External Affairs, said: “The initiative taken by the LR Foundation is to be welcomed; there is much work to be done in the maritime sector to ensure the best practices in the fishing and ferry sectors are applied more consistently globally. Only then will safety standards in these industries be more comparable with other parts of industry, where global regulation has resulted in much better performance and consistent improvement.”"

13 Apr 2018

ICS Applauds 'Paris Agreement for Shipping'

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"The International Chamber of Shipping (ICS) has welcomed the high level strategy for the further reduction of shipping’s greenhouse gas (GHG) emissions, adopted on 13 April by the UN International Maritime Organization (IMO). ICS Secretary General, Peter Hinchliffe said “This is a ground breaking agreement – a Paris Agreement for shipping – that sets a very high level of ambition for the future reduction of CO2 emissions. We are confident this will give the shipping industry the clear signal it needs to get on with the job of developing zero CO2 fuels, so that the entire sector will be in a position to decarbonise completely, consistent with the 1.5 degree climate change goal.” He added “The agreed IMO objective of cutting the sector’s total GHG emissions by at least 50% before 2050, as part of a continuing pathway for further reduction, is very ambitious indeed, especially when account is taken of current projections for trade growth as the world’s population and levels of prosperity continue to increase.” ICS acknowledges that some governments would have preferred to see the adoption of even more aggressive targets, but argues that a 50% total cut by 2050 can realistically only be achieved with the development and very widespread use of zero CO2 fuels. ICS believes that if this 50% goal is successfully met, the wholesale switch by the industry to zero CO2 fuels should therefore follow very swiftly afterwards. ICS says that the efficiency goal that has been agreed by IMO Member States for the sector as a whole – a 40% improvement by 2030, compared to 2008, and a 70% improvement by 2050 – is also extremely ambitious but probably achievable. But only if governments recognise the enormity of this challenge and facilitate the rapid development of new technologies and fuels. Mr Hinchliffe remarked that “The industry is very encouraged by the willingness of governments, on all sides of the debate, to co-operate and move to a position that demonstrates unequivocally that IMO is the only body that can meaningfully address the CO2 emissions of international shipping.” ICS says it hopes the IMO agreement will be sufficient to discourage those who mistakenly advocate regional measures which, as well being very damaging to global trade, would not be effective in helping the international shipping sector to further reduce its total CO2 emissions, which are currently about 8% lower than in 2008 despite a 30% increase in maritime trade. As a result of the IMO agreement, ICS now expects discussions at IMO to begin in earnest on the development of additional CO2 reduction measures, including those to be implemented before 2023. ICS says that the shipping industry will continue to participate constructively in these important discussions."

12 Apr 2018

"Indian Register of Shipping (IRClass) receives authorisation as Recognised Organisation (RO) from Netherlands"

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"Indian Register of Shipping (IRClass), a leading classification society, has received authorisation as a Recognised Organisation (RO) from Netherlands’ flag administration. The authorisation comes just months after IRClass received authorisation from Europe’s largest flag Malta in December last year. Netherlands ranks fourth according to performance ranking released by Paris MOU. To date, IRClass has secured authorisation from four European flags including Latvia and Bulgaria – all within the past year or so. The RO code agreement was signed recently at a small event attended by Roeland Nieuweboer – Director, Inspectorate for Human Environment and Transport (ILT). Mr. P K Mishra, Vice President and Regional Manager – Europe and Americas said today: “This recognition is indicative of the growing presence of IRClass within Europe – towards becoming a globally-recognised classification society, and our commitment to provide prompt and value-added services to European shipowners.” He added: “With Netherlands added to the list of flags which have authorised IRClass, we are confident of securing authorisation from the other European flags, as well as expanding our business in the Northern European countries Press Release – Indian Register of Shipping 2 including Denmark, Finland, Iceland, Ireland, Lithuania, Norway, Sweden and United Kingdom.”"

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