Many of you may have heard about ship register, ship registration, ship registry, flag state, flags of convenience etc.. While a few are synonyms, the rest are not..
This article discusses the various aspects of ship registration, the types of ship registers, the conditions required to be part of a ship register, what is a flag of convenience and flag state..
In very simple terms, a ship register or ship registry gives a ship a nationality, a flag, an identity..
Yes ships also have nationality and this nationality or port of registration is shown on the stern of a ship as shown below..
In this example, the marking on the stern tells the world that the ship called CAPE ORCHID has been registered in Port Elizabeth in South Africa (you can see the South African flag) and is identifiable by IMO Number 9238571..
Ok, so what is an IMO Number now..??
International Maritime Organisation (IMO) needed a method to enhance maritime safety, achieve pollution prevention and facilitate the prevention of maritime fraud..
Therefore in 1987, they adopted resolution A.600(15) which became mandatory on 1st January 1996..
Under this resolution, each ship was assigned a permanent number (like a passport or ID document for people) for identification purposes..
Irrespective of which flag the ship flies or trades under, this IMO number would remain unchanged and would be reflected on all the documents, certificates relating to the ship and will never be reassigned to another ship..
As per SOLAS regulation XI-1/3, all ships are required to show this IMO number on a permanent basis, marked in a visible place either on the ship’s hull or superstructure..
As it deals with human life, for sake of quick response, passenger ships are required to display this number on a horizontal surface which would be visible from the air..
This unique number with the prefix IMO followed by a 7 digit number is assigned to the ship upon construction and is currently administered by IHS Maritime..
Any self propelled, sea-going merchant ships of 100 GT (Gross Ton) and above upon keel laying needs to have the IMO number.. Below types are excluded :
- Ships without mechanical means of propulsion
- Pleasure yachts
- Ships engaged on special service (e.g. lightships, SAR vessels)
- Hopper barges
- Hydrofoils, air cushion vehicles
- Floating docks and structures classified in a similar manner
- Ships of war and troopships
- Wooden ships
Which ships need to be registered..??
Any ship over 100 GT irrespective of whether it is a cargo vessel, fishing vessel, passenger vessel etc, has to be registered..
This registration grants the ship physical and legal protection of that flag/flag state which may be applied to vital areas such as safety of cargo and life of those on board the ship..
But ships need not necessarily be registered under a country’s own flag, for example a British ship need not be registered mandatorily under the British Flag or UK Ships register.. It may be registered with registries other than the British Registry..
Upon registration, the ship will be assigned an Official Number by the register that the ship is registered with.. The Official Number is different from the IMO number above in that, if the ship changes its port of registration, then there will be a different Official Number where as the IMO number stays the same..
Freedom is the guiding principle of the law of the sea and as per these principles,
- a ship of any nation can navigate the oceans freely;
- the ship’s national state has exclusive dominion over the ship; and
- no other nation can exercise dominion over that ship.
Types of ship registration
There are various types of ship registration
Traditional : Traditional registers are ship registers that are administered by an individual country as a national registry for the registration of their own ships flying their own flag, owned, operated and manned by nationals of that country..
In a traditional registry the owner of the ship should necessarily be from the country of registration and the place of business should be in the country of registration..
This registration and linking to a national registry also means that these ships may be requisitioned at time of war for the transportation of goods and people in the service of the nation..
Open : Open registers are ship registers that allow ship owners of other nationalities to flag and operate ships under their flag..
FOC : Flag of convenience is a type of open registry but slightly different in that FOCs may also offer some additional features such as an attractive fiscal regime, substantially lower administrative fees, more accessibility to the registry, flexible to loose maritime safety policies and lower costs for the ship owners..
FOC is a pejorative term used for an open registry and an FOC usually has no genuine link between the state and the ships that are flagged under that state..
For example, the ship is not owned by anyone from that country of registration, the ship is not operated by anyone from that country and the country of registration has no crew members or any other kind of administrative, technical or social connection with that ship..
Because of this, organisations like the ITF (International Transport Workers Federation) find it difficult for unions, industry stakeholders and the public to hold ship owners to account as they may not follow the various regulations set..
The following countries have been declared as FOCs by the ITF’s fair practices committee :
|Antigua and Barbuda||Lebanon|
|Bermuda (UK)||Marshall Islands (USA)|
|Equatorial Guinea||North Korea|
|Faroe Islands (FAS)||Panama|
|French International Ship Register (FIS)||Sao Tome and Príncipe|
|German International Ship Register (GIS)||St Vincent|
Second National Register : These registries were set up as a kind of counter measure by countries which have a national registry but were losing out their ships to other countries with open registries or FOCs..
Second National registers exist parallelly with the national register but offer substantially less operating cost for the ship owners while trying to combine the formal image of the traditional or national register
Off Shore registers are slightly different to the Second National Register and these are operated by autonomous regions of a particular country or countries considered as an overseas territory of a particular country..
Similar to Second National Register, ships registered under the Off Shore registers may enjoy the protection of the home nation, but they may be more cost-effective..
Why should I register my ship and what are the benefits of ship registration
Well firstly, without being registered with any of the above mentioned registers, a ship cannot trade commercially..
Apart from this commercial benefit or requirement, different ship owners register their ships with different registers for preferential treatments on tax (tonnage tax), certification and security..
Tonnage tax is a special tax regime for shipping companies under which a notional profit is calculated based on the number and size of ships operated and on which a standard corporate income tax rate is applied..
Under a tonnage tax regime, the tonnage rate used for the notional profit calculation is set in such a way that the profit and consequently the actual corporate tax paid is minimal..
While for the last few decades FOC registers have been offering lower tax and wage rates and also a not so strict registration requirements, through adopting tonnage tax regimes traditional shipping nations are hitting back by offering more attractive financial and regulatory environments..
Only ships sailing under a national flag may be registered for tonnage tax and the ship operator needs to be a resident corporate body liable to tax regimes and the corporate body should necessarily be present in the country of registration thereby creating the much needed “genuine link” between the flag state and the ship..
Conditions & Requirements to register
Each country of registration (also called Flag State) have their own conditions and requirements for allowing a ship to be registered under their nationality and allowing the ship to fly their flag..
As an example, you can read the eligibility criteria to join the UK Ship Register here and also the requirements to register a Merchant Vessel with the UK Ships Register..
Some registers like the Panama ships register may allow provisional registration valid for a 6 month period after which the required documents like the bill of sale or the ship builder’s certificate (for new vessels) must be submitted to the Registry office for permanent registration..
Below is the list of the Top 25 countries in terms of flag registration based on DWT..
A ship is allowed to sail only under one flag and may not change its flag during transit or while at a port unless there has been a real transfer of ownership or change of ship registry..
The flag state also has its own duties to follow and is expected to effectively exercise its jurisdiction and control in administrative, technical and social matters over ships flying its flag..
These duties include
- Maintaining a register of ships containing the names and particulars of ships flying its flag
- Assuming and exercising jurisdiction over each ship flying its flag, its crew including master and officers, any and all other matters concerning the administrative, technical and social matters of the ship.
- Ensuring that there are set processes in terms of the safety at sea of all its ships in relation to
- the construction, navigational and handling equipment on board and seaworthiness of ships;
- the manning of ships, working conditions of the crew, crew training, following all legal and international instruments applicable;
- the understanding and correct use of international code of signals, effective maintenance of communications and the prevention of collisions
- safety surveys by qualified ship surveyors at prescribed intervals
- presence of appropriate and required navigational charts, nautical publications, navigational equipment and instruments for the safe navigation of the ship;
- the employment of appropriately qualified crew including master and officers who are fully conversant with all applicable international regulations concerning SOLAS, COLREGs, MARPOL, Radio Communications etc
Some countries may also implement certain acts that may be seen as “protectionist” such as the Jones Act of United States of America which are directly related to ship registration..
The Jones Act which was passed in 1920 was meant to promote shipping by US owned and operated vessels.. As per this act all goods loaded and delivered in the USA (coastal trade) must be shipped only on US built and US flagged ships crewed with a minimum of 75% US crew..
This act is seen as protectionist by many and has given rise to controversy especially in the wake of Hurricanes Harvey and Irma and the supply of essential items to Puerto Rico and many people including a few prominent US citizens have been calling for the repeal of the Jones Act..
So what is your opinion..??
- Which type of registry would you prefer..??
- Is a Flag of Convenience good or bad..??
- Is the Jones Act an act of protectionism..??