Quality in Shipping

Rudolf Kreutzer
Introduction

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Introduction

German bulk carrier company fined $3.2

million for ‘magic pipe’ oil discharges

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Activity

How to verify Safety and Quality in

Shipping ?

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ISM

• The ISM Code Section 12: Company verification, review and

evaluation, requires companies to conduct audits to verify that
safety and pollution prevention measures comply with the
safety management system (SMS).
• The ISM code also requires companies to periodically evaluate
the effectiveness of the SMS.

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Differences Inspection -- Audit

Inspections Audit

Physical condition = Output Physical condition = Input

Test = Output (does it work) Test = Input

Immediate repair Symptoms of a problem?

Corrective actions (Root) Causes?
Preventive actions

Control / Risk Management

The Output of an Inspection is the Input for an Audit

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Internal
R
8 ev 13.0Auditing ISM ISPS MLC

Why Audit?

Compliance with Regulations and Internal procedures

Verify compliance of regulations
Verify effective implementation of procedures
Verify suitability of procedures

Input for the management review

Contribute to continuous improvement of the

organization’s performance

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Audit Definition:

ISO 19011:2018 “Guidelines for auditing management systems”

A systematic, independent and documented process for obtaining objective evidence
and evaluating it objectively to determine the extent to which the audit criteria
(set of policies, procedures or requirements) are fulfilled

An audit is an effective and reliable tool in support of management policies and

controls, providing information on which an organization can act to improve its
performance.

IACS PR9 – “Procedural Requirements for ISM Code Certification”

"Audit" means a process of systematic and independent verification, through the
collection of objective evidence, to determine whether the SMS complies with the
requirements of the ISM Code and whether the Safety Management System (SMS)
is implemented effectively to achieve the Code’s objectives.

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Definition of an Audit

Systematic and independent examination to

determine whether quality activities and
related results comply with planned
arrangements and whether these
arrangements are implemented effectively
and are suitable to achieve objectives.

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Types of Audits

• First Party Audit: audit conducted within own Company

(Internal Audit)
• Second Party Audit: audit conducted by client in
organisation of own supplier or subcontractor (External
Audit)
• Third Party Audit: audit conducted by or on behalf of a
regulatory-/ or certifying body (External Audit).

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Introduction

• The introduction of quality aspects in recent decades went

hand in hand with the development of performance
measurement and management.
• For the shipping industry this became most apparent with the
introduction of the TMSA and e.g. the establishment of the
Shipping KPI project

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Chemical Distribution Institute (CDI)

• CDIinspections are initiated by the ship owner and inspectors

are appointed by CDI through a rotation system.
• The CDI-ISIS scheme focuses on bulk marine chemical and gas
transport and provides inspection results in a ‘’yes/no’’ format
to a series of questions, qualified by appropriate observations
and remarks.
• This approach enables a quantitative evaluation of the degree
of compliance of ships with international legislation and
industry best practices. The template functionality of the CDI
database allows the evaluation of compliance with a
company’s specific requirements as well as a preliminary risk.

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Oil Companies International Marine Forum

• OCIMF inspections are initiated by submitting OCIMF

members using OCIMF accredited inspectors.
• Several reports may be available on a particular ship.
• The OCIMF-SIRE/BIRE scheme provides text type inspection
reports for interpretation by marine professionals.

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Vetting

• “Vetting” is the commonest definition used to describe

the oil and chemical companies’ process of selecting
tankers for their cargoes
• From the Charterer’s point of view, vetting objective is to
evaluate their exposure to the risk of an incident or poor
performance when using a third party tanker

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Vetting

• Vetting is the first scheme to ensure that

a specific level of quality is maintained.
• The underlying objective for vetting lies
in the verification if tankers are
complying with the compulsory
international regulations as well as with
industry standards and is, thus, a rather
unique tool within the maritime industry

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The Vetting process

• All oil majors have their own

quality assurance schemes
• Vetting is the process of
performing a background
check
• Ship vetting is an in-depth
assessment of a ship's quality
and suitability for a task
• Liability concerns dictate how
individual companies
approach the vetting issue

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Vetting
The vetting criteria varies amongst the oil majors, but typically, in
order to be considered acceptable to an oil major, a ship must
satisfy the following criteria:
• there must be an up-to-date (no more than six months old)
SIRE report evidencing minimal defects with the ship and it’s
on-board systems and maintenance;
• the ship must have a good safety record;
• the ‘crew matrix’ and shore-based management systems must
be adequate; and
• any other ships within the same managed fleet should have a
good safety record.

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Vetting – Crew Matrix – Example Repsol

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Introduction

• The introduction of the ISM Code required companies to develop and

implement a SMS for vessels within their fleet.
• This was intended to standardise and document management processes
that would assist with the reduction in the number of accidents on board
and help to protect the marine environment.
• However, within the tanker sector, inconsistencies in the application of the
Code from one company to another soon became apparent to vessel
inspectors and oil company ship vetting departments
• To help address this imbalance OCIMF introduced Tanker Management
Self Assessment (TMSA).

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TMSA

• TMSA has to be seen in connection with the tanker vetting.

• It was developed to include also the tanker operator into the
vetting process

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TMSA History

• 2004 The first edition of TMSA was published

originally intended for tankers of more than 500 GT,
since those ships were subject to the requirements
of the 1974 SOLAS Convention, and therefore the
ISM Code.
• Four years of experience and comprehensive
feedback from the oil industry brought about the
publication of TMSA 2 in 2008. TMSA 2 was updated
to widen its application to all tank vessels,
irrespective of size.
• The third edition (TMSA 3) was introduced in April
/OCIMF/
2017. TMSA 3 revised and updated all of the twelve
existing elements and introduced a thirteenth –
‘Maritime Security’.
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TMSA History

• 2011 The first edition of OVMSA was published.

• The second edition (OVMSA 2) was introduced in
2019. OVMSA 2 revised and updated all of the
twelve existing elements and introduced a
thirteenth – ‘Maritime Security’.

/OCIMF/

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TMSA Element

No. Element
1 Leadership and the Safety Management System
2 Recruitment and Management of Shore-Based Personnel
3 Recruitment, Management and Wellbeing of Vessel Personnel
4 Vessel Reliability and Maintenance including critical Equipment
5 Navigational safety
6 Cargo, Ballast, Tank Cleaning, Bunkering, Mooring and Anchoring Operations
7 Management of change
8 Incident Reporting, Investigation and Analysis
9 Safety management
10 Environmental and Energy management
11 Emergency Preparedness and contingency Planning
12 Measurement, Analysis and Improvement
13 Maritime Security
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TMSA Element 3

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TMSA

• TMSA has to be seen in connection with the tanker vetting.

• It was developed to include also the tanker operator into the
vetting process

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TMSA

• Stage 1 represents the basic requirements for the safety

management established in the ISM Code.
• The aim of this stage is to ensure that the initial approach to
seeking a constant improvement in safety management is
represented by the strong initial link between the TMSA and
the ISM Code.
• Moreover, this link demonstrates the commitment of an
organization to effectively apply the code and therefore
comply with the minimum demands for establishing an SMS.

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TMSA

• Stages 2, 3 and 4 aim to continuously develop the safety

management performance of oil vessel operators in order to
demonstrate the companies’ continuous improvement.
• The functional aim of these stages is to compare the actual
safety management practice of an organization against the
corresponding best practice guidance provided in the content
of the TMSA.

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TMSA

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TMSA

• According to industry sources, some oil majors are defining

these cooperation stages, non officially, as listed below
• Judgement is subject to the individual oil major
Stage Cooperation Stages
Stage 1 The tanker operator is suitable for V/C

Stage 2 The tanker operator is suitable for COA

Stage 3 The tanker operator is suitable for T/C

Stage 4 The tanker operator is suitable for a joint

venture with the oil major.

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TMSA Element 11/ 11a - Example

/www.premuda.com/

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TMSA Element 11/ 11a - Example

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TMSA Element 11/ 11a - Example

/www.damen.com/

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TMSA Element 11 - Example

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TMSA Element 11 - Example

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TMSA Element 11a - Example

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TMSA

• Once the company has completed the self-assessment

process, they should have a clear idea of their safety and
environmental performance.
• The self-assessment can then be used to drive a cycle of
continuous improvement with clearly defined goals.

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Offshore Vessel Management and Self Assessment (OVMSA)

• OCIMF’s OVMSA programme has been developed as a tool

to help operators of offshore vessels to assess, measure and
improve their management systems.
• These systems encompass all activities undertaken by the
company, including technical, operational, personnel and
HSE, both onboard and ashore

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ISM and TMSA

• The ISM Code Section 12: Company verification, review and

evaluation, requires companies to conduct audits to verify
that safety and pollution prevention measures comply with
the safety management system (SMS).
• The ISM code also requires companies to periodically evaluate
the effectiveness of the SMS.
• TMSA provides a platform on which companies are able to
measure SMS performance.

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ISM and TMSA

• TMSA breaks the status of a company’s management system

down into four key stages.
• The thirteen elements of TMSA contain KPIs and examples of
best practice for each stage of the development process

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If you cannot measure it, you cannot
. control it.
If you cannot control it, you cannot manage it.
If you cannot manage it, you cannot improve it

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Key Performance Indicators
• Key Performance Indicators are not new as a tool used within the
management of companies.
• This applies especially for financial KPIs which have been used for
ages, even if they were not named KPIs, Return on Investment is
such an example.
• In addition to the financial aspects of performance measurement
in recent decades, the industry has begun to measure also quality
aspects through KPIs which promise a comparative advantage for
the respective company.

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Key Performance Indicators

KPIs are:
• a numerical, objective measurement of performance
• a key to the strategic business objective
• actionable and influenced by the relevant stakeholder/ manager
• accountable to stakeholder/ manager
• output orientated, not focused on the input or activity
• possible to calculate with limited efforts and within limited time

/MARINTEK/

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Key Performance Indicators

Main objectives in shipping are as follows:

• measure for continuous improvement
• measure for internal and external benchmarking
• measure to set incentives

/MARINTEK/

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KPI Development Process

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Key Performance Indicators and OVMSA

• Operators can measure their management systems against the

KPIs in the OVMSA, demonstrate compliance with industry
standards and use the programme to identify gaps in current
performance.
• To reflect the many new challenges offshore vessel operators
must now account for, OSMVA2 includes 85 New KPIs, and 25
KPIs have been downgraded.
• In total, there are 266 KPIs in OSMVA2 for measuring
management performance.

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Shipping KPIs

• BIMCO Shipping KPI System The BIMCO Shipping Key

Performance Indicator (KPI) System is based on a standard of 64
different performance indicators to allow for the most specific
and accurate comparison of ships – within each sector and more
broadly across the industry.
• It is a global industry system for defining, measuring and
reporting information on operational performance.

https://www.shipping-kpi.org/book/pages/introduction

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Shipping KPIs

The BIMCO Shipping KPI System is a global shipping industry tool for defining,
measuring and reporting information on operational performance. The Shipping
KPI System is used by shipping companies to:
• compare their ships performance against the industry standard and
potentially identify where efficiency improvements could be made
• communicate their ship operational performance, both internally and
externally
• gain specific and accurate comparison of both own and other users’ ships or
groups of ships
• utilise filtering of benchmarking results in terms of: age of ships, Class, DWT,
flag, ship status, ship type, etc.

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Shipping KPIs

• The Shipping KPI offers shipping organisations the ability to produce a visual representation of
how a ship or group of ships performs during a specific time period. It uses a unique standard of
Key Performance Indicators (KPIs) and the Ship Attributes that allows users to filter information
according to different type and sector of ships. This will allow the user to produce ship reports
and benchmark ships across different types and sectors.
• KPI Groups:
• Environmental
• Health and Safety
• HR Management
• Navigational Safety
• Operational
• Security
• Technical
• Port State Control
• Cost

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Shipping KPIs

The Shipping KPI Standard is built up hierarchical with 3 different

levels:
• Key Performance Indicators groups (KPI groups)
• Key Performance Indicators (KPIs)
• Performance Indicators (PIs)

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Shipping KPIs

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Shipping KPIs

• There is a mathematical relation between the last two levels. In

basic terms, Key Performance Indicators are calculated from
Performance Indicators (lowest level) using a KPI formula.
• On the lowest level you find the PIs, 63 in number, which are
based on data capture (measurements or counters) directly from
a ship or from the shipping management. Data is collected once
and re-used within the Shipping KPI Standard in order to reduce
the amount of data.

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Shipping KPIs

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Shipping KPIs

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Shipping KPIs

• The Key Performance Indicators (KPIs) are expressions of performance

within a specific area.
• The KPI can be expressed in two ways:
– Absolute
– Relative

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Shipping KPIs

• The absolute KPI Ranking is derived from a descending list sorted by the
highest to lowest performance rank returning the actual position of the ship
within its ranking criteria. For example rank 4 out of 500.
• The relative KPI Value is mathematical combination of relevant Performance
Indicator Values. The return value is a percentile position within the ranking
criteria on a scale between 0% and 100%. The KPI Value allows users to target
their performance to top 5%, 10% or similar value. For example rank 4 out of
500 translates to 99,21%

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Shipping KPIs
KPI accepted as part of the Shipping KPI performance hierarchy must be:
• Observable and quantifiable
A KPI is a mathematical formula on basis of unambiguous, observable performance measurements.
• Valid indicator of performance
A KPI expresses performance within an area which the Ship Manager needs to perform well. Also the
Ship Manager needs to have complete control of the factors affecting the performance measured.
• Robust against manipulation
A KPI must relate to a large extent to unambiguous descriptions of the needed measurements and
not leave room for “favourable interpretations”.
• Sensitive to change
A KPI will reflect actual changes in the Ship Manager’s performance well (by increase/decrease) over
time.
• Transparent and easy to understand
A KPI is interpreted by all users in the same manner.
• Compatible
A KPI is harmonized with the rest of the performance hierarchy. The KPI must be compatible with
other KPIs to prevent the decision-makers receiving contradictory control signals.

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Shipping Performance Index

• SPI001: Environmental Performance

• SPI002: Health and Safety Performance
• SPI003: HR Management Performance
• SPI004: Navigational Safety Performance
• SPI005: Operational Performance
• SPI006: Security Performance
• SPI007: Technical Performance
• SPI009: Port State Control Performance

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