
Source: Office of Maritime Administration, US Department of Transportation,
http://www.marad.dot.gov/library_landing_page/data_and_statistics/Data_and_Statistics.htm
Tonnage by Country of Registry, 2006
The share of open registry ships operated under a "flag of convenience"
grew substantially after WWII. They accounted for 5% of world shipping
tonnage in 1950, 25% in 1980, 55% in 1995 and 67% in 2007. The usage
of a flag of convenience refers to a national owner choosing to register
one or more vessels in another nation in order to avoid higher regulatory
and manning costs. This enables three types of advantages for the ship
owners:
- Regulation. Under maritime law, the owner is bound to
the rules and regulations of the country of registration, which
also involves requisitions in situation of emergency (war, humanitarian
crisis, etc). Being subject to less stringent regulations commonly
confers considerable savings in operating costs.
- Registry costs. The state offering a flag of convenience
is compensated according to the ship's tonnage. Registry costs are
on average between 30 to 50% lower than those of North America and
Western Europe.
- Operating costs. Operating costs for open registry ships
are from 12 to 27% lower than traditional registry fleets. Most
of the savings are coming from lower manning expenses. Flags of
convenience have much lower standards in terms of salary and benefits.
The above graph shows that the countries having the largest registered
fleets are offering flags of convenience (Panama, Liberia, Greece, Malta,
Cyprus and the Bahamas) and have very lax regulations. Ship registry
is a source of additional income for these governments. Even the landlocked
country of Mongolia is offering ship registry services.