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CONTENTS


PARAGRAPH YACHTS

WHAT IS GROSS TONNAGE?

UNDERLYING RATIONALE

PROBLEMS CAUSED

SHORT-TERM SOLUTION?

LONG-TERM SOLUTION

CONCLUSION


PARAGRAPH YACHTS


Browse the website of any large brokerage and you will find numerous vessels said to have a “GT” of 499. This refers to Gross Tonnage. Owners of these are relieved from having to comply with a raft of regulations which apply to chartered vessels of 500 GT and above. Not doing so can lead to the yacht being detained and will lead to insurance policies being invalid.


To be clear, this paper isn’t suggesting that the relevant safety regulations shouldn’t apply to certain larger yachts - it’s just that Gross Tonnage creates peculiar regulatory thresholds which can lead to compromised designs. Whether or not owners are looking to shave money off compliance costs, designers certainly consider there to be a market for such “paragraph” yachts. Keep in mind, also, that many such safety regulations don’t apply to private (i.e. non-chartered) yachts - even though they require the same number of permanent, full-time crewmembers.


WHAT IS GROSS TONNAGE?


The word ‘tonnage’ here does not mean weight. It is derived from the old English term ‘tun’ meaning a large wooden barrel – used for measuring, storing and transporting wine, oil or honey. They usually held 252 gallons, but other sizes were common.  As it happens, a tun of wine weights about one long ton, which is 2240 pounds or 1016 kg, but the key point is that Gross Tonnage reflects volume – not weight, mass or displacement.


Gross Tonnage is an abstract, unitless calculation, being the vessel’s total enclosed volume but modified by a logarithmic factor based on that volume. It was a compromise which met the needs of the shipping community of the 1960s. Yet these arcane rules still govern the design and specification of certain yachts over half a century later. 


Crucially, the figure is calculated as much as it is measured. It is defined by the Regulation 3 of Annex I of the International Convention on Tonnage Measurement of Ships, 1969 (normally abbreviated to “ITC 69”) by the formula:


GT=K1V

Where:

V = the total volume of all enclosed spaces of the ship in cubic metres, and

K1 = 0.2 + 0.02 log10V (or as set out in Appendix 2 of ITC 69)


Calculating this requires a good grasp of both naval architecture and mathematics.


UNDERLYING RATIONALE


The reason why volume is used rather than weight is that, historically, ships were measured in order to calculate taxes. Aside from warships, all vessels were cargo ships of some description. And the easiest and fairest way to fund port operations and levy foreign trade was to tax ship owners according to cargo carrying capacity and, therefore, profitability. Overall vessel size was not the key factor. The same principles were applied to later passenger ships. Different countries used a variety of methods, which is why the ITC 69 was needed. This also did away with Gross Register(ed) Tonnage (GRT) - a measure of total internal capacity which is confused with GT even to this day – and at least ten other key measurements in use internationally.


PROBLEMS CAUSED


Inevitably, there is pressure on ship designers to minimise enclosed volume and reduce Gross Tonnage-based taxes and dues. Such amounts are minimal on relatively small vessels, such as yachts, but squeezing beneath a particular tonnage threshold seems to be a common aim. 


This can lead to freeboards (the distance between the waterline and the deck) being reduced to the minimum legal requirement. In turn, this reduces the available reserve buoyancy – those internal areas, above the waterline, which can be made watertight in the event of an emergency and help keep the vessel afloat for longer.


Further, crew areas are reduced to the bare minimum in terms of floor space and headroom, and engine rooms are made as small as possible with machinery crammed in. Most pertinently for yachts, sterns tend to be cut off and slab-sided, sheer (the curving of the main deck upwards towards bow and stern) is reduced or eliminated, and swathes of the upper decks are given over to sundecks. Arguably, yachts are less elegant as a result.


SHORT-TERM SOLUTION?


Help could be at hand – if only more ship registry officials knew where to look. Regulation 1(3) of Annex I of ITC 69 states – arguably, in effect – that where there are “novel” aspects of a vessel’s design these aspects can be ignored when calculating Gross Tonnage. There is a small number of precedents for this in the context of trading ships, but this loophole does not appear to have been exercised when assessing yachts. This is surprising given that the latter are usually, almost by definition, full of novel features be they aesthetic elements or technical innovations. 


While there is Regulation 1(3) is written in vague terms, individual ship registries’ determination as to what “novel” means is definitive. Article 11 of ITC 69 makes it clear that tonnage certificates must be accepted at face value by other port states. It is perhaps surprising how this apparent loophole hasn’t been exploited more – especially by those registries marketing themselves at large yacht owners. But it would be better to change the rules than bend them.


LONG-TERM SOLUTION


The shortcomings of ITC 69 have been raised with the International Maritime Organisation (IMO), over the years, in respect of various types of cargo ships. Yet the convention has yet to be amended. Ship registries and owners have observed that too little or too much tonnage tax is being paid relative to other vessels of a similar displacement – depending on the point of view. The IMO’s view is that it doesn’t control tonnage tax and is unable to disallow the use of the gross tonnage in its calculation as this is a matter for individual port authorities.


The most promising alternative has been mooted by the Australian government. Known informally as the “maritime real estate” and more formally as “Register Tonnage”, this is simply the length overall x breadth x summer draught. This seems fair as ports can charge ships on the basis of the amount of the port they take up, and the amount of dredging required.


Yacht owners will need to work with trading ship owners in order to bring pressure to bear on the IMO. The procedure for amending the ITC 69 is particularly lengthy and involved. But surely worthwhile if yacht owners are going to put an end to this bureaucratic tail waging a very expensive dog.


CONCLUSION


No one system of measurement is going to satisfy all owners. ITC 69 is a compromise which has endured where numerous previous regimes have not. From a regulatory perspective, for nearly all trading and passenger vessels size doesn’t matter: all regulations will apply. And rightly so. Crew have every right to work in a safe and comfortable environment, and third parties have every right not to suffer the effects of collisions and pollution. But large, crewed yachts are different. Very few even existed when ITC 69 was drafted. Their crew live in comfortable quarters and are well paid (competition for the most able crewmembers ensures this).


It can’t be right for yacht designers to be working around a figure to which vessel measurements form just one part, and which in any event attempts to satisfy the needs of a trading shipping community from a bygone era. It will be useful for Members to engage with ship registries at the outset regarding, via the Club Secretary, about Regulation 1(3) and what it could mean for the design of their yacht.

Thank you to all our Members who provided perspectives for this white paper.

It’s time to free ourselves from a tun of unnecessary paperwork. In this white paper, drawn up at the suggestion of, and following consultations with, some of our Members, our General Secretary considers what Gross Tonnage is, why it’s used as the primary regulatory threshold, and what workarounds could be utilised to circumvent its blunt impact.

8 February 2019

Last revised

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minutes

4

Reading time

8 February 2019

Last revised

It’s time to free ourselves from a tun of unnecessary paperwork. In this white paper, drawn up at the suggestion of, and following consultations with, some of our Members, our General Secretary considers what Gross Tonnage is, why it’s used as the primary regulatory threshold, and what workarounds could be utilised to circumvent its blunt impact.

Gross Tonnage (GT) is the key factor in determining which regulations apply, and this is vital to ensuring that insurance policies remain valid. GT is based on the total enclosed volume of the yacht and is derived from historical measurements used for taxation. The use of GT as a regulatory threshold can lead to compromised designs as owners and designers aim to minimize ongoing mangement costs. There is a loophole in the regulations that allows "novel" aspects of a yacht's design to be ignored when calculating GT, but this option has not been widely utilized. A potential alternative to GT is "Register Tonnage," which considers the physical dimensions of the yacht, and, as owners, perhaps we should engage with ship registries and pressure the International Maritime Organisation to change the regulations.

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