Rise of the ‘Third Umpire’ in the Shipping Industry

1 December, 2014 |

Rise of the ‘Third Umpire’ in the Shipping Industry

Classification societies have played a major role in shaping the shipping industry and they have for decades played an incredible role of setting and maintaining the standards at the highest level. The classification societies are so deeply ingrained in the DNA of the industry that for every ship they set technical rules, confirm that designs and calculations meet these rules, survey ships and structures during the process of construction and commissioning, and periodically survey vessels to ensure that they continue to meet the rules until the end of their life. Simply put, without class certification the vessel cannot be deployed for business.

To understand the significance of a third umpire in the shipping industry one must first understand what brought about the advent of the third umpire in games such as cricket, tennis, rugby, soccer, etc. In the game of cricket there usually were two umpires on the field who make decisions on the game as it progresses. Whatever decision the two umpires made was final and usually unchallenged even if they were considered controversial by the players or spectators. This however changed with the appearance of video cameras and television, i.e. advanced technology, which at the time made it possible to replay the game instantly on a screen, especially when a decision needed to be made. A third umpire now sitting outside the field with access to television monitors could easily review the game, if required in slow motion, at various angles, and give a much more accurate decision especially when umpires on the field were unsure or made the incorrect decision. The third umpire in cricket was first officially introduced in 1992 and his decision is now considered final.

Simply put, without class certification the vessel cannot be deployed for business.

Although there has always been competition between classification societies, as a group they have enjoyed the unchallenged respect of ship owners. The reason for this is – for solutions to problems, answers to questions, advice and for almost everything else, the first place the ship owner turned to, is class. As a result the classification societies developed not only excellent classification and certification services but also in many cases extensive consultancy expertise. They developed a reputation of being objective and logical, with a glowing aura of being fair, unbiased and impartial. With authorisation to inspect ships, oil rigs, etc. and issue certificates on behalf of the state under whose flag the vessels are registered they evolved to be in many ways the undisputed ‘guardians of the industry’.

Lately however classification societies have realised that it is increasingly lucrative to have other revenue streams besides their core area of ship classification and certification. This has meant subtly promoting their consultancy business and developing advisory business streams in areas such as energy efficiency, fuel saving, operational optimisation, new ship design, etc.

Now this brings us to the earlier question as to how the third umpire is relevant in the shipping Industry. In the game of cricket the third umpire monitors the game just as closely as the two other umpires on the field. The advantage the third umpire has is the access to tools that make the decisions more accurate and therefore less controversial.

Niche companies with their more accurate tools and capabilities are now called upon to play the role of the third umpire in the industry.

With classification societies appearing to be chasing other business streams for revenue, ship owners no longer seem to have the confidence and devotion they once had. They are now looking at alternate sources to find answers to their questions, solutions to their problems and general advice. The latest technology has given much smaller companies the capability to offer these services in their own specialist areas. These companies have developed tools specifically to help ship owners who are either sceptical of the advice offered by classification societies or find their extended services controversial. There is now an increasing trend and in fact several cases of ship owners opting for such boutique companies over well-established classification societies for the services and assistance they seek.

For instance, companies that specialise in performance management are increasingly approached by ship owners as first choice to measure or monitor performance which in the past would have almost automatically fallen into the lap of classification societies. Niche companies with their more accurate tools and capabilities are now called upon to play the role of the third umpire in the industry. Such companies are now frequently contracted for projects such as measuring the impact of energy saving devices retrofitted, paints applied or modifications made. In most instances they partake as independent entities between a ship owner and supplier with their findings being accepted as accurate and impartial. What is quite striking is ship owners have not limited themselves there, they now have also started engaging white shoe consultancy firms from outside the shipping industry, virtually unheard of earlier.

Unfortunately does this mean that classification societies after enjoying nearly a century of reverence and loyalty are slowly being relegated to play second fiddle, just as the two umpires who despite new technology are still required to be on the cricket field. In their core area of classification and certification their reputation for being technically objective and logical will probably continue, however no matter how deep we bury our heads in the sand, to the ship owner what clearly appears to be fading is the earlier unquestioned aura of being fair, unbiased and impartial.

Can the rise of the third umpire in shipping then be considered as perhaps the industry’s own subtle way of ‘police-ing’ the so called guardians of the shipping industry?

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