Quality Over Quantity

 

It's the story of the year among flag states. Once seen as a sanctionable fleet, the Panama Ship Registry is now among the world's best in terms of compliance rates and has deleted hundreds of ships in the process.

"We made a 180-degree turn," says Ramón Franco, a year after being appointed General Director by Panama's President, José Mulino. "We were perceived as a registry with a sanctionable fleet, so we chose to delete tonnage and lose ships and thereby demonstrate to the world that we are a responsible and transparent registry."

The transformation, still ongoing, has been a huge success. After all, it's a 100+-year-old registry, founded in 1917, and basically wrote the rules of the game. It's most important asset – like every organization and especially government agencies – is its reputation. "We've improved our image," Franco adds, "and we continue to invest in our quality improvement programs."

It's still the biggest flag state with approximately 15 percent of the global fleet, but the vision has changed. "We're reinventing ourselves," says Franco. "We don't want to be seen as the biggest registry only, but as the best registry in terms of excellence. We're emphasizing quality over quantity."

There's one remaining hurdle – the Paris MOU's White List. Panama currently sits on the Grey List – in the middle in terms of ratings, which are issued on a rolling three-year basis – and is determined to make the leap. It's already on Tokyo's White List, and Franco is confident: "It's a technical issue, and our numbers have improved."

ORGANIZATION

The Panama Ship Registry is actually part of the Panama Maritime Authority (PMA), the agency responsible for the regulation and promotion of the maritime industry in Panama. It's one of four so-called Directorates – Ports, Seafarers, Public Registry and Merchant Marine. The registry falls under the Merchant Marine rubric, and Franco's actual title is a long one – General Director of Merchant Marine, Panama Maritime Authority.

"It basically means the Director General of the Merchant Marine is the head of the Panama Ship Registry," he explains.

The Ports Directorate is responsible for – you guessed it – the nation's bustling ports. It's also involved with things like tariffs and port fees and, of course, the all-important issue of navigation and safety in national ports.

The Seafarers Directorate is responsible for – you guessed it again! – the training and certification of Panama's 600,000+ seafarers, a huge number for a small country. And the Public Registry handles ship mortgages, titles of ownership and liens/encumbrances.

The PMA is not to be confused with the Panama Canal Authority, which regulates traffic and rates through the 48-mile-long "path between the seas." They are separate government entities, both committed to promoting Panama's position as a global maritime and logistics hub.

HISTORY & MISSION

Founded three years after the opening of the Panama Canal in 1914, the Panama Ship Registry was originally intended for Panamanian-owned and operated ships only.

In the years that followed, it went through many different iterations and name changes, eventually becoming an open registry with ships from all over the world. It offered numerous advantages – competitive fees, a global network of offices, the backing of the Panamanian government as well as commercial and technical benefits.

Its mission: "Provide nationality and jurisdiction to ships through legal certainty and high quality standards."

By 1993 it had become the world's largest ship registry. It's also become an important source of revenue for the Panamanian government – as is the Panama Canal Authority – although revenues from the canal far exceeded those from the registry.

Today there are more than 8,500 vessels in the registry, ranging from large ore, bulk and tank carriers to container ships, cruise ships, car carriers, fishing vessels and offshore workboats – all attracted by the numerous benefits offered by the Panamanian flag.

Maintaining high standards when you're the world's biggest registry is not an easy thing, and that was the challenge facing Franco when he took over last year. Standards had begun to slip, enforcement was lax – there was too much emphasis on growth and too little on quality control. A cultural change was needed.

He was the perfect person for the job. Experienced but still young, full of energy and enthusiasm, descended from a long line of lawyers and eager to serve his country. He was also President of the Panamanian Maritime Law Association and a distinguished private sector lawyer, so he brought a lot of credibility to the table.

He also brought his own plan of action, consisting of the three new pillars of organizational transformation, improving the customer experience and – most important – ensuring a safe and reliable, sanction-free fleet. He's accomplishing all three.

He says the transition from the private to the public sector was challenging – "It's like playing soccer and now you're playing basketball." But he navigated it successfully, learning a lot along the way, and currently supervises a staff of roughly 200, divided into four areas – commercial, support (quality management), compliance and technical. He's proud of his team. They stand by him and he stands by them: "There's nothing I'd ask them to do that I wouldn't do myself."

And that's the mark of a true leader.

"NUMBERS CHANGE, QUALITY REMAINS"

So the road ahead is clear. While much has been accomplished, there's always more to be done. And Franco is an early bird. He's at his desk before 8:00 am each day, having risen three hours earlier. He doesn't get home to his wife and young children till 8:00 pm at night. He loves coming into the office, being with his team and facing new challenges.

Asked what his biggest challenge is right now, Franco says there are really two challenges. One is the compliance challenge, which has been effectively remedied and is improving every day, and the other is the technical challenge of returning to the Paris MOU's White List. He'll get there, no doubt, and he'll do it while growing the registry at the same time.

"The numbers always change, but the quality remains," he observes. And that's a maxim to live by.

TONY MUNOZ is Founder, Publisher & Editor-in-Chief of The Maritime Executive.