ShippingWatch

Mads Zacho foresees double-digit number of vessels under Danish flag

Few vessels in J. Lauritzen's gas fleet sail under the Danish flag today. However, if the positive political trend continues, a double-digit number of vessels could come under the Danish flag, says CEO Mads P. Zacho to ShippingWatch.

J. Lauritzen
Photo: J. Lauritzen

The Danish International Register of Shipping (DIS) has welcomed two new entities, gas vessels Helena Kosan and Linda Kosan from J. Lauritzen. More could be on the cards for the carrier in the future, which besides four bulk vessels, only has two newly flagged gas vessels under the Danish flag, CEO Mads P. Zacho tells ShippingWatch.

"Now we are looking into it and there will likely be opportunities to once again rely on the Danish flag. My hope is that in the long term, we can get an increasingly larger share of our fleet under the Danish flag if this positive political development continues, and I would like to see this as the way we go," he says.

Zacho will not put an exact figure on how many vessels could end up under the Danish flag, although he suggests there could be significantly more than today.

"We could end up with a double-digit number of vessels sailing under the Danish flag."

In recent years, not least with the help of a new growth package presented in November 2017, the authorities have removed several barriers which previously prevented the carrier from registering vessels under DIS, says Zacho, explaining why J. Lauritzen has chosen the Danish flag for the two gas vessels.

A shorter list

A long list of technical requirements for Danish-flagged vessels had always made it costly to swap flags. For example, one requirement was that officers have separate sleeping and living areas, meaning the vessel has to be renovated. Others concern the transport of food.

"The list of requirements has now become shorter and has been adjusted in accordance with the requirements set out by the IMO. The Danish regulations highly resemble that of other flag states, meaning that you don't need to dock your vessel and renovate it for 100,000's of dollars to be able to register it under the Danish flag," says Zacho, pointing to the latest effort to remove the registration fee, which until now has been a one-off cost arising when flagging Danish.

In the long term, there is potential for balance between Singapore and DIS

MADS P. ZACHO, CEO, J. LAURITZEN

There is also a commercial decision behind the flagging-out – as these two vessels are now on new charter contracts, requiring them to be under an EU flag. Besides the two Danish-flagged vessels, the rest of J. Lauritzen's gas fleet is registered in Singapore, Malta and the Isle of Man. J. Lauritzen has strong activity in Singapore and therefore, according to Zacho, it is natural to have vessels in the country's ship register in the future.

"In the long term, there is potential for balance between Singapore and DIS," he says.

Zacho himself is planning to keep the two gas vessels under the Danish flag, also when the current contracts expire.

"It is my immediate expectation that we will let them remain under the Danish flag. There is no incentive to flag them elsewhere, now that the registration requirements in Denmark have come so close to that of the other competitive flag states."

More pragmatic

Although the Danish authorities have undertaken several initiatives to attract both Danish and international carriers to DIS, there are still some factors which make it more expensive to flag in Denmark than other places. This includes costs for training and insurance.

Zacho stresses that J. Lauritzen is not arguing against the requirements, but says that they make it "a little more expensive to flag Danish," as he says.

"When we say that there are still some challenges, it is more of a friendly hint to the Danish Maritime Authority to continue the highly positive development, where they consider the everyday life of shipowners and have become much more pragmatic and are looking more at the impact of those requirements rather than being highly formalized about it," says Zacho.

"We are on the way to becoming one of the great flag states, and that is the right progression. It is important for us carriers to have an authority in flag states which we can discuss and debate and develop solutions with, and we are well underway with that goal," he says.

Lauritzen Kosan has a fleet of 31 vessels.

English Edit: Lena Rutkowski

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