With more than 110 ship registries in operation, the question of which flag under which to register a ship may be one that a new or inexperienced ship owner may ask. A great many ship owners now choose to register their ships in a country other than their own.
This practice began way back in the 1920’s when American ship owners became disenchanted with the escalating labour costs and the increasing number of regulations they had to meet when flying the American flag. As a result, many American ship owners began to register their ships in Panama which has now become the largest ship registry in the world.
When deciding on a registry, an owner may be inclined to think that the registry with the largest fleet must be the best. However, if that were the case then all shipping would be registered in Panama. Panama has nearly twice the gross tonnage of shipping under its flag compared to its nearest rival Liberia.
The level of service provided to a ship owner under a particular flag will usually be the prime consideration for selecting a ship registry. With over 90 per cent of global trade being carried by sea, shipping is a huge and highly competitive business. Ship owners need to keep their costs down to be competitive in the market place, and need a registry that will support them where required.
However, there are also other considerations that a responsible ship owner should take into consideration. Registries operate in different ways; some are administered by a governmental department, whilst others may be operated by private agencies.
Some registries, known as a traditional or national registry are only open to ships of its own nation. Others registries allow the registration of ships owned by foreign nationals and are known as open registries, or in some instances flags of convenience.
Flag-of-convenience registries may be cheaper to use, but in the long term may cost the ship owner more. Ships under such flags tend to be subject to more inspections by port state control, thus meaning additional time that a ship may be required to stay in a port or even under detention.
Responsible ship owners are looking for a registry with a good reputation for the type of ship that he is operating in the area the ship intends to trade. The registry should be available to provide worldwide assistance 24/7, and have staff consisting of experts in their respective fields of shipping rather than just clerks and bureaucrats. The registry needs to be reliable and convenient to use, and have the reputation that enables a ship owner to qualify for and obtain any necessary financing.
Above all, a registry needs to provide quality customer service, and be on hand to answer or give advice on any technical and regulatory matters. To have such ability, a registry not only needs experts in the maritime industry, it also needs quality maritime software to back them up. With the increase in regulations and reporting requirements, the days when a registry could manage using register books and spreadsheets are long gone.
Today when selecting under which flag to register a ship, a ship owner needs to take into consideration far more than just the costs and any tax breaks that he will receive. More than ever, the ship owner needs the support, advice, and guidance of a reputable and professional ship registry.