Ship registry performance is not academic

Ship registry performance is not academic

The sooner we accept that ship registries are not bad simply by virtue of not being national registers, the sooner we can address the issue of poorly performing administrations.

Academics and industry professionals see things differently, as two recent articles about ship registries go to prove. In the first of these, shipping guru Martin Stopford of Clarksons described in unemotional and factual terms the singular manner in which the shipping industry has responded over the years to globalisation and the 'nation state' problem.

"As globalisation got started in the early 1950s, shipowners took a decisive step which, over the years, has played a crucial part in making it the international carrier of choice," he said.

"In a nutshell, they traded in nationality for open registries. In 1959, these flags were legally recognised by International Maritime Organization and soon other states started offering a 'flagging-out' service.

"In mid-2011, open registers reached a key landmark, with two-thirds of the world's gross tonnage on their books [652m gt]. Politically, two-thirds is a significant majority [for example, in the US, a two-thirds vote can overturn a presidential veto]. So far in 2011, open registry fleets are growing at around 5m gt per month and account for 86% of new tonnage in the fleet. Meanwhile, national flags, which still account for 30% of the fleet, have grown by a disappointing 1m gt per month.

"This trend towards open registries has now gained support from important entities such as banks, lawyers and, of course, the IMO, and it shows no sign of slowing. Shipping now operates in a world where open registries have an absolute majority. But with majority comes responsibility, and the role of open registries has changed dramatically since the dark days of the 1980s. It is an excellent example of how shipping institutions have adapted, in the quest to balance profit against safety and service."

Now to the second article, written by an academic and published in The New York Times. This claims that, thanks to flags of convenience (an out-dated term used mainly by the media and academia to describe what well-informed shipping people have for many years referred to as 'open' registries): "It is all too easy for unscrupulous shipowners to get away with criminal behaviour", forcing crews to work "like slaves without adequate pay or rest" under "appalling conditions".

This is hyperbole of the most extreme sort. "Ships used to fly the flags of their nations", proclaims the author. True. And Americans used to drive American cars.

History can teach us a lot. But the world changes, and business and commerce - including shipping - change with it, and indeed contribute significantly to change. Moreover, much of that change is for the good. Open registries emerged and developed largely because national registers were not doing their jobs properly, nor providing the service that owners and operators needed. In many cases, they are still not doing their jobs properly.

The sooner we accept that there are good and bad national and open registers, and that ship registries are not bad simply by virtue of not being national registers, the sooner we can address the issue of poorly performing administrations.

The NYT article claims that "delinquency is too easy with open registries, when owners can slip away, unpunished and unaccountable". This is a lazy generalisation. Responsible open registries are just as vigilant as responsible national registries in punishing and eliminating "delinquency".

In the same way, poor national registers are equally open to charges of turning a blind eye to delinquency as are their open registry equivalents.

The NYT article goes on to explain that more than half of all crews today are made up of four or more nationalities, and talks about the author's experience on a containership last year with a polyglot crew of Burmese, Romanians, Moldovans, Chinese, Filipinos and Scots, as if this were a cause for concern. On the contrary, shipping is the ultimate international industry, and we should celebrate its multicultural identity, rather than denigrate it for its own sake. The important thing is that ships are safe, efficient and happy places to work, and that's what good ship registries set out to achieve, whether they are national or open in nature.

The role of ship registries has changed over the years. The modern shipping industry demands proactive ship registries which can recognise difficulties, and respond to them, often before shipowners themselves realise what is required of them. It demands the highest levels of attention to safety and quality and to crew welfare, which can be monitored against independent criteria. It demands effective representation at the highest levels, and a knowledge of the major issues facing shipping today.

It is fatuous to compare a modern ship registry today with its equivalent of, say, 50 years ago, when some registries were accused of being little more than one man and his dog - often without the dog.

Responsible open registries have proved their value to shipping over a number of years, and protectionist measures such as the Jones Act in the US - and, more significantly, suggestions of an EU equivalent - only serve to fail that which they seek to protect. Should the EU establish strict cabotage rules that go against the macroeconomic realities of shipping, it will see the same flight from shipowning that the US has.

If you want to find a good flag, start looking for one which is easy to find among the list of expanding ship registries, but difficult to find in the world's port state control detention statistics.

Scott Bergeron

Scott Bergeron, is the chief operating officer of the Liberian International Ship & Corporate Registry, the US-based managers of the Liberian Registry(www.liscr.com).

This article appeared in Lloyd's List on 06 July 2011.For more information visit www.lloydslist.com