Wednesday, October 28, 2009

A Brief Survey Of Commercial Shipping Registration

Or- What Flag is it This Week?
Shipping News Feature

WORLDWIDE – The story we ran recently of the tax advantages offered by registering vessels in the Faroe Island offers only a glimpse into the murky waters of flagging in some of the world’s more obscure countries. Shipping lines have long favoured the more exotic and far flung parts of the world for registering their fleets, principally dependent upon tax regimes and ship regulation.

As the global recession has bitten so many of the world’s fleet owners have had to reconsider what they get for their money and a brief look into what the current situation is reveals the usual confused picture. All freight professionals will be familiar with the story. A company in one country buys the vessel and sells on to another based elsewhere who puts it in the hands of a management company in a third. Another state is used to flag the ship whilst diverse territories may supply crew and officers.

Just this week Maersk announced it was withdrawing seventeen of its fleet from the Isle of Man registry to be reflagged in the company’s home nation of Denmark. This is possibly linked to the need for the further investment Maersk has required during a difficult time, although whether the same Danish investors will be quite so pleased to read that the company is planning to replace up to a hundred Danish Officers with Filipinos as reported in the Philippine press this week, is somewhat doubtful. Maersk issued a five year bond to raise €750 million on Friday which was six and a half times oversubscribed.

Meanwhile another well known flag seller, has been courting Indian authorities with a view to getting more vessels onto their books.The St. Kitts & Nevis International Ship Registry (SKANReg) this week authorised the Indian Register of Shipping (IR Class) to carry out surveys and issue statutory certification for vessels on its register. Several Indian based owners have apparently been lobbying for the approval so they can gain the advantages they perceive will come with the Caribbean flag.

Whilst this has been going on yet another state infamous in the annals of vexillology is in the news again. Panama has withdrawn from the directive it issued recently to expel any vessel from its registry which was detained by the Paris MOU to the end of the year. This was an attempt to avoid a further appearance on the organisations blacklist. The Panama Maritime Authority has now said offenders will merely face temporary cancellation. The threat to deal harshly with maritime surveyors who miss deficiencies will however remain.

The Paris MOU is an organisation of 27 maritime administrations covering the European coastal States and the North Atlantic basin from North America to Europe. Its mission is to ensure that ships entering the ports it covers are inspected and shown to be suitably equipped for crew and meet environmental and safety standards. There are currently 69 banned ships on the Paris MOU blacklist of which 15 bear Panamanian registration. 78 ships are currently under detention at Paris MOU 23 of which are flagged in Panama.