Why governments are turning up the heat on flag states
All countries have the right to run open registries. But with rights come responsibilities
Raise your game or have it raised for you
THE International Transport Workers’ Federation launched its campaign against flags of convenience in 1948. Nearly 80 years later, around three-quarters of the world fleet opts for what are more politely referred to as open registries.
Throughout that period, Lloyd’s List’s established editorial stance has been to support shipowners’ freedom of choice.
The practical advantages of open registries — not least fiscal — are just too big for an industry-focused publication to remain neutral. Even if that were not so, owners have already pretty much voted with their feet.
Meanwhile, much of the sting has been taken out of the ITF’s worst charges. Consciences have been squared by an annual de facto levy of $250 per seafarer, paid into a trade union-administered welfare fund that does commendable work for seafarers.
But across the decades, we have not ignored the glaring abuses that the shoddier flags have facilitated and perpetuated, generally as a result of their built-in laxity and sometimes even wilfully.
An enduring scandal has been seafarer abandonment, which is proliferating at a rate that rightly exposes shipping to shame.
Earlier this week, we published an analysis of seafarer abandonment broken down by country of vessel registration. The worst offenders turned out to be Tanzania, Cameroon, Comoros, Palau, and St Kitts and Nevis.
Four of this group of five are signatories to the Maritime Labour Convention. That gives them the obligation to ensure a financial security system is in place to cover wages, food and other supplies, as well as the cost of repatriation.
They are manifestly not meeting these requirements, and pleading lack of resources is frankly not good enough. If you set up shop as a flag state and pocket the resultant fees, you need to keep your end of the bargain.
But it’s questionable how much the instigation of a shipping register even helps the economies of the usually poor and sometimes even landlocked places.
The offices tend to be in big maritime centres far removed from the capitals of the flags they ostensibly represent. Far more of the money generated in these endeavours ends up in private bank accounts than ever filters down to desperately needed enhancements in welfare provision for their citizens.
The standards — or lack thereof — of some FoCs has reached the attention of the US Federal Maritime Commission, which last week announced plans for a probe into the issue.
“By offering to register and flag vessels with little or no oversight or regulation, countries may compete against one another to gain revenue from the associated fees and to minimise the expenses associated with inspecting vessels and ensuring compliance with appropriate maintenance and safety requirements,” the FMC said in its customary officialese.
The motivation here is likely to spring from the Trumpian protectionist agenda rather than bleeding heart liberalism, and the obvious tart response is that this is none of America’s business.
But the FMC appears to have reached the right conclusions, if perhaps for the wrong reasons. To paraphrase an infamous tourist board marketing slogan, the nature of shipping is such that what happens in Vegas doesn’t always stay in Vegas.
Another concern we have persistently highlighted is security. The “no questions asked¨ stance adopted in some quarters has seen some flags become crucial enablers of the rise of the dark fleet* of tankers determined to circumvent sanctions on Russia, Iran and Venezuela.
Many dark fleet vessels are no strangers to the practice of flag hopping, which adds an additional layer of opacity to already opaque management structures.
A drive towards far tougher international demands on flag states is an obvious way of putting the squeeze on such dangerous and often dubiously insured ships.
There are probably legal hurdles to a simple ban on allowing them entry to ports, at least outside of times of war. But laws and international rules can always be changed, and in the interim, extending port state control to the point of overt harassment could do much the same job.
It would be ironic if the security anxieties of governments, especially right wing populist governments, bring about what a human lifetime of trade union activism backed by the threat of dockworker industrial muscle has failed to pull off. But it doesn’t take a major stretch of the imagination to see that happening.
The political pressure is clearly building. At this point, more reputable open registries could help avoid creating a rod for their own backs by gently encouraging the bottom feeders to do better.
To reiterate our starting point, we haven’t suddenly joined the ranks of ideologically driven FoC bashers. But our message is instead this: raise your game, or you might find your game is being raised for you.
* Lloyd’s List defines a tanker as part of the dark fleet if it is aged 15 years or over, anonymously owned and/or has a corporate structure designed to obfuscate beneficial ownership discovery, solely deployed in sanctioned oil trades, and engaged in one or more of the deceptive shipping practices outlined in US State Department guidance issued in May 2020. The figures exclude tankers tracked to government-controlled shipping entities such as Russia’s Sovcomflot, or Iran’s National Iranian Tanker Co, and those already sanctioned.
