Ship Ownership in the United States
Generally, financial institutions like banks or leasing companies either:
- own a ship and lease it under a bareboat charter to a person who will operate it
- lend a ship to ship owner or operator and take back a ship mortgage as security for the loan
Shipowners are offered potentially significant tax advantages but potentially at the expense of liability to the financier (financial institutions like banks or leasing companies). Ship mortgages provide special security under United Sates law but do not take precedence over all ship obligations. There are significant differences in terms of possible liability, citizenship and other requirements between owning a ship and leasing it to someone, versus holding a mortgage secured by the ship.
Generally, a mortgagee is not liable for ship related liabilities like oil pollution. On the other hand, a ship owner is liable for such items. Ship financiers (financial institutions like banks or leasing companies) are not liable for all potential liabilities arising from a ship like oil pollution, as long as ship financiers are not participating in the management of the ship.
Furthermore, United Sates federal law shields persons who own ships from oil pollution liability and hazardous substance release liability so long as they essentially avoid participating in the management of the ship. Nevertheless, other liabilities may arise from state law or common law.
When a ship is involved in an accident or incident otherwise giving rise to third-party liability, the ship itself is at risk and therefore so is the ship owner’s property regardless of whether they stand in an innocent position with respect to that accident or incident. Furthermore, even innocent shipowners should consider the risks of third-party liabilities and take appropriate steps in due diligence, contracting and with respect to insurance coverage.
According to federal law, shipowner is strictly liable regardless of fault for oil spilled by the owned ship. Oil Pollution Act 1990, shields ship owners who do not participate in the management of the ship and who own the ship purely to protect a security interest. According to Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), shields ship owners who do not participate in the management of the ship when a ship discharge hazardous substance.
Ship financier, financial institutions like banks or leasing companies, should also consider whether the bank qualifies under the citizenship requirements of the ship’s register. For example, United States, strictly regulates the citizenship of ship owners. Citizenship requirements are checked and controlled by United States Coast Guard which also maintains the registry of ships entitled to fly the U.S. flag.
A ship owning company that owns ship in United States must be organized in United States and meet certain management citizenship tests. For example, a corporation must have a United States citizen CEO (Chief Executive Officer) and Chairman of the BOD (Board of Directors) and no more than a minority of the number of directors necessary to constitute a quorum can be non-citizens.
Furthermore, U.S.-flag ship to be able to trade in the United States coast-wise trade (Jones Act trade), ship owning corporation must be beneficially owned at least 75% by United States citizens.
Ship Ownership in the United States
Ship ownership in the United States is governed by a complex set of federal and state laws, regulations, and agencies. The primary regulatory body overseeing ship ownership and registration in the U.S. is the United States Coast Guard (USCG) under the Department of Homeland Security. The USCG is responsible for enforcing maritime laws, ensuring safety and security, and managing vessel documentation.
In the United States, ship ownership can be held by individuals, corporations, partnerships, or other legal entities. However, to be eligible for U.S. vessel documentation and to fly the U.S. flag, the ship owner must meet specific requirements. For instance, a vessel must be owned by a U.S. citizen or a company that is controlled by U.S. citizens, with at least 75% of the controlling interest held by U.S. citizens.
The process of documenting a vessel in the United States involves the following steps:
- Application: The ship owner must complete the Application for Vessel Documentation (CG-1258) and submit it to the National Vessel Documentation Center (NVDC). This application form requires information about the vessel, its ownership, and the intended use (commercial or recreational).
- Evidence of Ownership: The ship owner must provide proof of ownership, such as a Builder’s Certificate, Bill of Sale, or other relevant documents.
- Measurement: The vessel must be measured by an authorized agent or marine surveyor to determine its tonnage and dimensions, which must be documented in a Measurement Certificate or Simplified Measurement Form (CG-5397).
- Fees: Appropriate fees must be paid for vessel documentation, depending on the type of documentation requested and the size of the vessel.
- Issuance of Certificate of Documentation (COD): Upon approval of the application and supporting documents, the NVDC will issue a Certificate of Documentation (COD) that confirms the vessel’s nationality and serves as evidence of the vessel’s ownership. The COD must be renewed annually.
Ship owners must also comply with various regulations related to safety, environmental protection, and maritime security, depending on the type and size of the vessel and its intended use. These regulations may be enforced by the USCG, the Environmental Protection Agency (EPA), and other federal and state agencies.
Ship ownership in the United States is governed by a comprehensive set of laws and regulations, with the United States Coast Guard being the primary regulatory body responsible for vessel documentation. Ship owners must meet specific eligibility requirements and follow a documentation process to register their vessels and fly the U.S. flag. Additionally, ship owners must adhere to various safety, environmental, and security regulations enforced by different federal and state agencies.
Legal and Practical aspects of Ship Ownership in United States
In addition to the vessel documentation process, U.S. ship owners must also consider other legal and practical aspects of owning and operating a vessel. Some of these aspects include:
- Taxes: Ship owners in the United States are subject to federal, state, and local taxes depending on the location of the vessel, its use, and the owner’s residency. These taxes may include sales tax, use tax, property tax, and income tax. It is essential for ship owners to consult with tax professionals to ensure compliance with tax laws and regulations.
- Insurance: Obtaining proper insurance coverage is crucial for ship owners to protect their investment and mitigate the risks associated with vessel operations. Insurance policies for ships can include hull and machinery coverage, protection and indemnity (P&I) coverage, pollution liability, and other specialized coverages depending on the vessel’s use and the owner’s needs.
- Crewing: For commercial vessels, ship owners must ensure they comply with U.S. and international crewing requirements, such as the International Convention on Standards of Training, Certification, and Watchkeeping for Seafarers (STCW). This involves hiring qualified crew members, providing necessary training, and maintaining appropriate crew certifications.
- Maintenance and Repair: Ship owners are responsible for the regular maintenance and repair of their vessels to ensure safety, seaworthiness, and compliance with regulatory requirements. This includes periodic inspections, dry-docking, and maintenance of safety equipment, among other tasks.
- Port State Control: U.S. ship owners must be aware of port state control (PSC) inspections when their vessels visit foreign ports. PSC inspections are conducted by foreign authorities to verify compliance with international safety, environmental, and security regulations. Non-compliance may result in detention, fines, or other penalties.
- Maritime Liens and Mortgages: Ship owners should be aware of the potential for maritime liens and mortgages to be placed on their vessels. Maritime liens can arise from various claims, such as unpaid wages, salvage, or damage caused by the vessel, while mortgages are typically used to finance the purchase or improvement of a vessel. Understanding and managing these obligations is crucial for ship owners to protect their interests and avoid potential legal disputes.
Ship ownership in the United States involves various legal and practical considerations beyond vessel documentation. Ship owners must navigate a complex regulatory environment, manage tax obligations, obtain appropriate insurance coverage, comply with crewing and maintenance requirements, and be aware of maritime liens and mortgages. Engaging with knowledgeable professionals, such as maritime attorneys, tax advisors, and marine insurance brokers, can help ship owners effectively navigate these challenges and ensure successful vessel operations.
What is Jones Act in Ship Chartering?
The Jones Act, also known as the Merchant Marine Act of 1920, is a United States federal law that regulates maritime commerce and shipping between U.S. ports. While not directly related to ship chartering, the Jones Act has a significant impact on the U.S. shipping industry and can influence chartering decisions involving U.S. trade.
The primary purpose of the Jones Act is to support the U.S. maritime industry, ensure national security, and maintain a strong domestic merchant marine. Key provisions of the Jones Act include:
- Cabotage: The Jones Act requires that all goods transported by water between U.S. ports be carried on U.S.-flagged ships. This means that only vessels registered in the United States and flying the U.S. flag can engage in the domestic transportation of goods between U.S. ports.
- U.S. Ownership: In order to qualify as a U.S.-flagged vessel under the Jones Act, a ship must be owned by U.S. citizens or entities controlled by U.S. citizens, with at least 75% of the controlling interest held by U.S. citizens.
- U.S. Build Requirement: The Jones Act mandates that ships engaging in domestic trade between U.S. ports must be built in the United States. This requirement is intended to support the U.S. shipbuilding industry and ensure that the U.S. maintains a domestic shipbuilding capacity for national security purposes.
- U.S. Crew Requirement: The Jones Act requires that at least 75% of a vessel’s crew members be U.S. citizens when the vessel is engaged in domestic trade between U.S. ports. This requirement aims to support U.S. maritime employment and maintain a skilled and experienced U.S. maritime workforce.
While the Jones Act does not directly govern ship chartering, it influences the U.S. shipping market and the availability of vessels for charter in domestic trade. Due to the Jones Act’s cabotage, ownership, build, and crew requirements, ship charterers involved in U.S. domestic trade must ensure that their vessels and operations comply with the law. This can impact the choice of vessels and the cost of chartering for U.S. domestic trade, as the pool of eligible ships may be more limited, and U.S.-built vessels and U.S. crew members can command higher rates compared to their foreign counterparts.
The Jones Act is a U.S. federal law that regulates maritime commerce between U.S. ports, with the aim of supporting the domestic maritime industry and ensuring national security. While not directly related to ship chartering, the Jones Act can influence chartering decisions in the U.S. shipping market due to its strict cabotage, ownership, build, and crew requirements for vessels engaged in domestic trade between U.S. ports.
Who controls dry bulk shipping in the United States?
Dry bulk shipping in the United States is controlled by a combination of private companies, regulatory agencies, and various stakeholders in the maritime industry. While no single entity has full control over dry bulk shipping, the industry is shaped by the actions and decisions of these players. Some of the key participants in the U.S. dry bulk shipping industry include:
- Private Shipping Companies: Numerous private shipping companies, both large and small, operate dry bulk vessels in the United States. These companies are responsible for transporting dry bulk cargo, such as grain, coal, iron ore, and other commodities, between U.S. and foreign ports. Some of the major U.S. dry bulk shipping companies include Eagle Bulk Shipping, Genco Shipping & Trading, and Scorpio Bulkers, among others.
- Regulatory Agencies: Several regulatory agencies oversee and enforce rules and regulations governing dry bulk shipping in the United States. The primary regulatory body is the United States Coast Guard (USCG), which is responsible for vessel documentation, safety inspections, and enforcing maritime laws. Other agencies involved in regulating dry bulk shipping include the Federal Maritime Commission (FMC), the Environmental Protection Agency (EPA), and the Department of Transportation’s Maritime Administration (MARAD).
- Port Authorities: Port authorities play a crucial role in dry bulk shipping by managing and maintaining the infrastructure needed for dry bulk cargo operations. These authorities are responsible for ensuring that ports have the necessary facilities, such as bulk terminals, storage facilities, and transportation links, to handle dry bulk cargo efficiently and safely.
- Terminal Operators: Terminal operators manage the loading and unloading of dry bulk cargo at port facilities. They are responsible for the safe and efficient transfer of cargo between ships and land-based transportation modes, such as trucks or trains.
- Shippers and Cargo Owners: Shippers and cargo owners, including commodity producers, exporters, and importers, rely on dry bulk shipping to transport their goods to market. Their demand for dry bulk shipping services shapes the industry’s overall capacity and freight rates.
- Brokers and Charterers: Brokers and charterers play a significant role in the dry bulk shipping industry by negotiating and arranging charter agreements between ship owners and cargo owners. They help to match the supply of dry bulk vessels with the demand for cargo transportation, influencing market dynamics and freight rates.
- Classification Societies: Classification societies are responsible for setting and enforcing technical standards for the design, construction, and maintenance of dry bulk vessels. They play an essential role in ensuring the safety and reliability of the dry bulk shipping fleet.
Dry bulk shipping in the United States is controlled by a diverse group of stakeholders, including private shipping companies, regulatory agencies, port authorities, terminal operators, shippers, brokers, and classification societies. The industry is shaped by the actions and decisions of these players, who work together to ensure the safe, efficient, and environmentally responsible transportation of dry bulk cargo.
The Federal Maritime Commission (FMC) in the United States
The Federal Maritime Commission (FMC) is an independent United States federal agency responsible for regulating the U.S. international ocean transportation system. Established in 1961, the FMC’s mission is to ensure a competitive and reliable ocean transportation system that supports the U.S. economy and protects the public from unfair and deceptive practices. The FMC has jurisdiction over ocean-going transportation in the foreign commerce of the United States and plays a vital role in promoting the growth and efficiency of the U.S. maritime industry.
The FMC’s primary responsibilities include:
- Regulating Ocean Transportation Intermediaries (OTIs): The FMC licenses and regulates the activities of non-vessel-operating common carriers (NVOCCs), ocean freight forwarders, and marine terminal operators. These intermediaries play an essential role in the ocean transportation system, and the FMC ensures they adhere to the requirements of the Shipping Act and other relevant laws and regulations.
- Monitoring and Enforcing Shipping Act Compliance: The FMC is responsible for enforcing the provisions of the Shipping Act of 1984 and related laws, which govern the business practices of ocean carriers, OTIs, and other industry stakeholders. This includes monitoring market trends, investigating potential violations, and taking enforcement action when necessary.
- Reviewing and Approving Ocean Carrier Agreements: Ocean carriers often enter into cooperative agreements, such as alliances or vessel-sharing agreements, to share resources and improve efficiencies. The FMC reviews and approves these agreements to ensure they do not violate antitrust laws or harm competition in the market.
- Resolving Disputes: The FMC provides a forum for resolving disputes between industry stakeholders, including shippers, carriers, and OTIs. This includes adjudicating complaints filed under the Shipping Act and offering alternative dispute resolution services, such as mediation and arbitration.
- Ensuring Financial Responsibility: The FMC requires ocean carriers, NVOCCs, and other OTIs to maintain financial responsibility, such as bonds or insurance, to protect shippers and other stakeholders in the event of financial failure or other issues.
- Providing Guidance and Information: The FMC serves as a resource for the maritime industry and the public, providing guidance on regulatory compliance, market trends, and other topics. This includes publishing reports, offering seminars and workshops, and maintaining a comprehensive database of industry information.
The Federal Maritime Commission is an independent U.S. federal agency responsible for regulating the international ocean transportation system. Its primary responsibilities include licensing and regulating ocean transportation intermediaries, enforcing the Shipping Act, reviewing and approving ocean carrier agreements, resolving disputes, ensuring financial responsibility, and providing guidance and information to the maritime industry and the public. The FMC plays a vital role in promoting a competitive, efficient, and reliable ocean transportation system that supports the U.S. economy and protects the interests of the public.
Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) in the United States
The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), commonly known as the Superfund, is a United States federal law enacted in 1980. CERCLA was established to address the cleanup and remediation of hazardous waste sites, protect public health and the environment, and hold responsible parties accountable for the costs associated with site cleanup.
CERCLA’s key provisions and objectives include:
- Site Identification and Assessment: CERCLA authorizes the Environmental Protection Agency (EPA) to identify and assess hazardous waste sites that pose a threat to public health and the environment. The EPA maintains the National Priorities List (NPL), which is a list of high-priority sites that require long-term remedial actions.
- Cleanup and Remediation: CERCLA provides the framework and funding for the cleanup and remediation of contaminated sites. The EPA works with state and local agencies to develop and implement appropriate remediation plans, which may involve removing hazardous materials, treating contaminated soil or groundwater, or implementing other measures to minimize risks to public health and the environment.
- Responsible Party Liability: CERCLA holds responsible parties liable for the costs associated with cleaning up hazardous waste sites. Responsible parties can include current or former site owners or operators, generators of hazardous waste, and transporters who selected the disposal site. CERCLA’s liability provisions are designed to ensure that taxpayers do not bear the full burden of cleanup costs, and that those responsible for contamination contribute to the cost of remediation.
- Emergency Response Authority: CERCLA grants the EPA authority to respond to releases or threatened releases of hazardous substances that may pose an imminent and substantial threat to public health or the environment. This includes the power to take immediate action to contain or remove hazardous substances, as well as the authority to issue orders directing responsible parties to take appropriate actions.
- Funding Mechanism: CERCLA established the Superfund Trust Fund, which is financed primarily through taxes on certain chemicals and petroleum products, as well as fines, penalties, and cost recoveries from responsible parties. The Superfund Trust Fund provides funding for site assessment, cleanup, and emergency response activities.
- Community Involvement: CERCLA emphasizes the importance of involving local communities in the decision-making process related to site cleanup and remediation. This includes providing opportunities for public input, sharing information about site risks and cleanup progress, and working collaboratively with local stakeholders to address their concerns.
The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) is a U.S. federal law aimed at addressing the cleanup and remediation of hazardous waste sites, protecting public health and the environment, and holding responsible parties accountable for associated costs. CERCLA provides a framework for site identification and assessment, cleanup and remediation, responsible party liability, emergency response, funding, and community involvement. The EPA plays a central role in implementing and enforcing CERCLA’s provisions, working closely with state and local agencies, responsible parties, and local communities to ensure the effective management of hazardous waste sites.
Shipowners Tax Advantages and Oil Pollution Responsibilities in the United States
In the United States, shipowners enjoy certain tax advantages while also bearing responsibilities for oil pollution prevention and response. Here, we will discuss both the tax benefits and the obligations concerning oil pollution for shipowners operating in the U.S.
Tax Advantages for Shipowners:
- Tonnage Tax Regime: The U.S. tonnage tax regime allows shipowners to pay a tax based on their vessel’s net tonnage, rather than their corporate income tax. This tax treatment can result in lower tax liabilities for shipowners, as the tonnage tax is generally more favorable than standard corporate income tax rates.
- Capital Gains Tax Deferral: Shipowners may benefit from capital gains tax deferral when they sell a vessel and use the proceeds to acquire another qualifying vessel within a specified time frame. This tax advantage, known as a “like-kind exchange” under Section 1031 of the U.S. Internal Revenue Code, allows shipowners to defer the recognition of capital gains and the associated tax liability.
- Accelerated Depreciation: Shipowners can take advantage of accelerated depreciation methods, such as the Modified Accelerated Cost Recovery System (MACRS), for their vessels. Accelerated depreciation allows shipowners to deduct a larger portion of their vessel’s cost during the early years of its useful life, potentially reducing their taxable income and overall tax liability.
Oil Pollution Responsibilities for Shipowners:
- Oil Pollution Act of 1990 (OPA 90): Following the Exxon Valdez oil spill, the U.S. Congress enacted the Oil Pollution Act of 1990 to strengthen regulations surrounding oil pollution prevention and response. Under OPA 90, shipowners are responsible for ensuring their vessels have adequate spill prevention measures in place, including double hulls for oil tankers, proper crew training, and detailed response plans.
- Financial Responsibility: OPA 90 requires shipowners to demonstrate financial responsibility for potential oil spill cleanup and damage costs. This is usually achieved through insurance, bonds, or other financial guarantees. The financial responsibility requirements aim to ensure that shipowners have the resources to cover the costs associated with an oil spill, thus reducing the burden on taxpayers.
- Liability for Oil Spill Cleanup and Damages: OPA 90 holds shipowners strictly liable for the costs of oil spill cleanup and damages resulting from a spill, up to a certain limit based on the vessel type and size. Shipowners may face unlimited liability if the spill resulted from gross negligence, willful misconduct, or a violation of federal safety, construction, or operating regulations.
- Civil and Criminal Penalties: Shipowners may be subject to civil and criminal penalties for violations of OPA 90 and other related regulations. This includes penalties for failure to report a spill, inadequate spill prevention and response measures, and violations of other federal and state environmental laws.
Shipowners in the United States enjoy certain tax advantages, such as the tonnage tax regime, capital gains tax deferral, and accelerated depreciation. However, they also have significant responsibilities for oil pollution prevention and response under the Oil Pollution Act of 1990, including financial responsibility, liability for cleanup and damages, and potential civil and criminal penalties for noncompliance.
What is Certificate of Financial Responsibility (COFRs) when calling ports in the United States?
A Certificate of Financial Responsibility (COFR) is a mandatory document required for vessels entering or operating in U.S. waters, including ports, as per the Oil Pollution Act of 1990 (OPA 90) and the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The purpose of a COFR is to ensure that shipowners or operators can demonstrate financial capability to cover the costs associated with oil spills or releases of hazardous substances, including cleanup operations, damages to natural resources, and compensation for affected parties.
The COFR serves as proof that the vessel owner or operator has obtained adequate financial guarantees, typically through insurance or other financial instruments, to cover potential liabilities arising from oil pollution or hazardous substance incidents. The financial guarantees must be sufficient to cover the maximum liability limits established under OPA 90 and CERCLA, which vary depending on the type and size of the vessel.
The United States Coast Guard (USCG) is responsible for administering the COFR program. Shipowners or operators must apply for a COFR through the USCG’s National Pollution Funds Center (NPFC) before their vessels can enter or operate in U.S. waters. The application process includes providing details about the vessel, its ownership, and the financial guarantor, along with payment of applicable fees.
Once the NPFC approves the application and issues the COFR, the vessel owner or operator must keep the certificate on board the vessel at all times and present it to the USCG or other authorities upon request. Failure to obtain and maintain a valid COFR can result in significant fines, penalties, and potential denial of entry or departure from U.S. ports.
A Certificate of Financial Responsibility (COFR) is a critical requirement for vessels calling at ports in the United States. It ensures that shipowners or operators have the financial resources to cover potential liabilities arising from oil spills or hazardous substance releases. Vessel owners or operators must apply for a COFR through the USCG’s NPFC and keep the certificate on board their vessels at all times while operating in U.S. waters.
What is the cost of obtaining Certificate of Financial Responsibility (COFR)?
The cost of obtaining a Certificate of Financial Responsibility (COFR) can be broken down into two main components: application fees and the cost of financial guarantees.
- Application Fees: The United States Coast Guard (USCG) charges application fees for processing COFR applications. These fees vary depending on the type and size of the vessel, as well as whether it is an initial application or a renewal. As of September 2021, the fees range from $200 for smaller vessels (under 300 gross tons) to $3,100 for larger vessels (over 35,000 gross tons) for an initial application. Renewal fees range from $100 for smaller vessels to $1,500 for larger vessels. However, these fees are subject to change, so it is essential to verify the current fee schedule with the USCG’s National Pollution Funds Center (NPFC) before applying.
- Cost of Financial Guarantees: In addition to the application fees, shipowners or operators must also secure financial guarantees to cover potential liabilities arising from oil spills or hazardous substance releases. These guarantees can be in the form of insurance policies, bonds, or other financial instruments. The cost of obtaining and maintaining these guarantees will depend on various factors, such as the vessel type, size, and age, as well as the financial strength of the shipowner or operator and the level of risk associated with their operations. The cost of financial guarantees can vary significantly from one provider to another, and it is essential to shop around for the best coverage at the most competitive price.
The cost of obtaining a COFR consists of both application fees charged by the USCG and the cost of securing financial guarantees. The total cost can vary depending on factors such as the vessel type and size, the financial strength of the shipowner or operator, and the level of risk associated with their operations. It is important to research and compare options to ensure compliance with COFR requirements at the most competitive cost.
Process of obtaining Certificate of Financial Responsibility (COFR) in the United States
The process of obtaining a Certificate of Financial Responsibility (COFR) in the United States involves several steps, which are outlined below:
- Identify the Guarantor: The first step in obtaining a COFR is to identify a financial guarantor, such as an insurance company, that can provide the necessary financial guarantees to cover potential liabilities arising from oil spills or hazardous substance releases. The guarantor must be acceptable to the U.S. Coast Guard (USCG) and should be financially capable of providing the required coverage.
- Secure Financial Guarantees: Once you have identified a suitable guarantor, you must secure the financial guarantees, such as insurance policies or bonds, required to cover potential liabilities under the Oil Pollution Act of 1990 (OPA 90) and the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The amount of coverage required depends on the type and size of the vessel.
- Complete COFR Application: After securing the necessary financial guarantees, you must complete the COFR application form. This form requires information about the vessel, its ownership, the financial guarantor, and the financial guarantee instrument. The application form can be found on the USCG’s National Pollution Funds Center (NPFC) website.
- Pay Application Fees: Along with the completed application form, you must submit the applicable application fees to the NPFC. The fees vary depending on the type and size of the vessel and whether it is an initial application or a renewal. Refer to the NPFC’s fee schedule to determine the appropriate fee for your vessel.
- Submit Application and Supporting Documents: Once you have completed the application form and gathered the required supporting documents, such as proof of financial guarantees, you must submit the application package to the NPFC. The submission can be done through the NPFC’s online COFR application system or by mail.
- Review and Approval: The NPFC will review your application and supporting documents to ensure compliance with the COFR requirements. If your application is complete and meets all requirements, the NPFC will issue a COFR for your vessel. The processing time may vary depending on the NPFC’s workload and the complexity of your application.
- Maintain COFR on Board: Once you receive the COFR, you must keep it on board your vessel at all times while operating in U.S. waters. The COFR must be presented to the USCG or other authorities upon request.
Obtaining a COFR in the United States involves identifying a suitable financial guarantor, securing financial guarantees, completing the COFR application form, paying application fees, submitting the application and supporting documents to the NPFC, and maintaining the COFR on board the vessel. It is essential to ensure compliance with all requirements to avoid potential fines, penalties, or denial of entry or departure from U.S. ports.
Pros and Cons of Ship Ownership in the United States
Ship ownership in the United States has its advantages and disadvantages. Below, we outline some of the main pros and cons associated with owning and operating ships under the U.S. flag.
- Access to U.S. Domestic Trade: Owning a U.S.-flagged ship allows shipowners to participate in the domestic maritime trade, including the lucrative “Jones Act” trade, which requires that all goods transported between U.S. ports be carried on U.S.-flagged and U.S.-built vessels, owned by U.S. citizens, and crewed by U.S. citizens or permanent residents.
- Government Support Programs: U.S.-flagged ships are eligible for various government support programs, such as the Maritime Security Program (MSP), which provides financial assistance to selected vessels in exchange for their availability to support national defense and emergency response needs.
- Tax Advantages: Shipowners in the United States can benefit from certain tax advantages, such as the tonnage tax regime, capital gains tax deferral, and accelerated depreciation, which can potentially reduce their tax liabilities.
- High Safety and Environmental Standards: U.S.-flagged vessels must adhere to strict safety, environmental, and labor regulations, which can contribute to better safety records, higher crew standards, and reduced environmental impact.
- Higher Operating Costs: Operating a U.S.-flagged ship can be more expensive compared to ships flagged in other countries due to higher labor costs, regulatory compliance costs, and maintenance expenses. This can put U.S.-flagged vessels at a competitive disadvantage in international markets.
- Limited Access to Foreign-Flagged Ships: The Jones Act limits the ability of foreign-flagged ships to engage in domestic maritime trade in the United States, which may reduce the pool of available vessels and potentially increase freight rates for shippers.
- Regulatory Burden: U.S.-flagged ships are subject to extensive regulations, which can impose a significant burden on shipowners in terms of time, effort, and resources required to ensure compliance. These regulations include safety, environmental, and labor standards, as well as reporting and documentation requirements.
- Liability Exposure: Shipowners operating in the United States are subject to stringent liability regimes, such as the Oil Pollution Act of 1990 (OPA 90) and the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), which can expose them to significant financial risk in the event of an oil spill or hazardous substance release.
Ship ownership in the United States offers advantages such as access to domestic trade, government support programs, and tax benefits, but also comes with challenges, including higher operating costs, regulatory burdens, and potential liability exposure. Shipowners must carefully weigh these pros and cons when considering whether to operate under the U.S. flag.
Top Private Ship Owners in the United States
Currently, some top private ship owners in the United States:
- Crowley Maritime Corporation: Founded in 1892, Crowley Maritime is a diversified shipping and logistics company based in Jacksonville, Florida. Their operations include vessel ownership and management, liner shipping, logistics, and marine solutions. The company operates a diverse fleet, including tankers, container ships, tugs, and barges.
- Matson, Inc.: Matson is a prominent U.S. shipping company, specializing in container shipping and logistics services. Founded in 1882 and headquartered in Honolulu, Hawaii, Matson primarily serves the trade routes between the U.S. West Coast, Hawaii, Alaska, Guam, and other Pacific islands. The company operates a fleet of container ships and roll-on/roll-off (RoRo) vessels.
- Kirby Corporation: Based in Houston, Texas, Kirby Corporation is the largest domestic tank barge operator in the United States, specializing in inland and coastal transportation of bulk liquid cargoes. The company operates a fleet of tank barges and towing vessels and provides marine transportation services to the petrochemical, refining, and agricultural industries.
- TOTE Maritime: TOTE Maritime, a subsidiary of Saltchuk, is a leading U.S. carrier providing services in the domestic and international markets. Headquartered in Jacksonville, Florida, the company operates a fleet of container ships and RoRo vessels, primarily serving trade routes between the U.S. mainland, Alaska, Puerto Rico, and the U.S. Virgin Islands.
- OSG Ship Management: Overseas Shipholding Group (OSG) is a major tanker company based in Tampa, Florida, that specializes in the transportation of crude oil and petroleum products. The company operates a diversified fleet of international and U.S.-flagged vessels, including medium range (MR) tankers, Aframax tankers, and articulated tug-barges (ATBs).
- American Steamship Company (ASC): Founded in 1907, ASC is a major U.S. shipping company that specializes in the transportation of dry bulk commodities, such as iron ore, coal, and limestone, on the Great Lakes. Based in Williamsville, New York, the company operates a fleet of self-unloading bulk carriers designed specifically for Great Lakes trade.
- Hornbeck Offshore Services: Hornbeck Offshore, headquartered in Covington, Louisiana, is a leading provider of marine transportation services to the offshore oil and gas industry. The company operates a fleet of offshore support vessels (OSVs), including platform supply vessels (PSVs) and multi-purpose support vessels (MPSVs), primarily serving the U.S. Gulf of Mexico and select international markets.
- Edison Chouest Offshore: Founded in 1960, Edison Chouest Offshore is a privately-held company based in Cut Off, Louisiana, that specializes in providing support services to the offshore energy industry. The company operates a diverse fleet of vessels, including anchor handling tug supply (AHTS) vessels, platform supply vessels (PSVs), fast supply vessels (FSVs), and various specialized vessels for subsea operations, icebreaking, and research.
- SEACOR Holdings Inc.: SEACOR Holdings is a diversified maritime and logistics company based in Fort Lauderdale, Florida. The company operates a fleet of offshore support vessels, inland and coastal tank barges, harbor tugs, and other specialized vessels. SEACOR’s services include marine transportation, offshore support, inland transportation, and emergency preparedness and response.
- International Shipholding Corporation (ISC): ISC, founded in 1947 and based in Mobile, Alabama, is a diversified shipping company that operates a fleet of U.S.-flagged and international vessels, including pure car/truck carriers (PCTCs), multipurpose vessels, and bulk carriers. The company’s services include ocean transportation, vessel management, and logistics support.
These companies represent a diverse range of shipping operations within the United States, including dry bulk, tankers, container ships, offshore support, and specialized vessel services. As the shipping industry is constantly evolving, it is important to stay up to date with the latest developments to ensure an accurate understanding of the current landscape of U.S. shipowners.
Top Public Ship Owners in the United States
Currently, some top public ship owners in the United States:
- Navios Maritime Holdings Inc. (NYSE: NM): Navios Maritime Holdings is a global, vertically integrated seaborne shipping and logistics company headquartered in Monaco and listed on the New York Stock Exchange. The company operates a fleet of dry bulk carriers and tankers through various subsidiaries, focusing on the transportation of commodities such as iron ore, coal, grain, and petroleum products.
- Scorpio Tankers Inc. (NYSE: STNG): Based in Monaco and listed on the New York Stock Exchange, Scorpio Tankers is a leading international provider of marine transportation for petroleum products. The company operates a fleet of product tankers, including Medium Range (MR) tankers, Handymax tankers, and Long Range (LR) tankers.
- Genco Shipping & Trading Limited (NYSE: GNK): Genco Shipping & Trading, headquartered in New York, is a leading dry bulk shipping company that operates a fleet of Capesize, Panamax, Ultramax, Supramax, and Handysize vessels. The company transports iron ore, coal, grain, steel products, and other dry bulk cargoes worldwide.
- Diana Shipping Inc. (NYSE: DSX): Diana Shipping, based in Athens, Greece, and listed on the New York Stock Exchange, is a global provider of shipping transportation services for dry bulk cargoes. The company operates a fleet of bulk carriers, including Capesize, Kamsarmax, Post-Panamax, Panamax, and Supramax vessels.
- Eagle Bulk Shipping Inc. (NASDAQ: EGLE): Headquartered in Stamford, Connecticut, and listed on the NASDAQ, Eagle Bulk Shipping is a leading global owner and operator of Supramax and Ultramax dry bulk vessels. The company specializes in the transportation of major and minor bulk cargoes, including coal, grain, ore, petcoke, cement, and fertilizers.
- Star Bulk Carriers Corp. (NASDAQ: SBLK): Star Bulk Carriers, headquartered in Athens, Greece, and listed on the NASDAQ, is a global shipping company that provides transportation services for dry bulk cargoes. The company operates a large fleet of bulk carriers, including Capesize, Post-Panamax, Kamsarmax, Panamax, Ultramax, and Supramax vessels.
- Teekay Tankers Ltd. (NYSE: TNK): Teekay Tankers, a subsidiary of Teekay Corporation, is an international tanker company based in Hamilton, Bermuda, and listed on the New York Stock Exchange. The company operates a fleet of crude oil and product tankers, including Suezmax, Aframax, Long Range (LR), and Medium Range (MR) vessels.
- Safe Bulkers, Inc. (NYSE: SB): Safe Bulkers is an international provider of marine dry bulk transportation services, based in Monaco and listed on the New York Stock Exchange. The company operates a fleet of Panamax, Kamsarmax, Post-Panamax, and Capesize bulk carriers, transporting commodities such as coal, grain, and iron ore.
- Ardmore Shipping Corporation (NYSE: ASC): Ardmore Shipping, headquartered in Pembroke, Bermuda, and listed on the New York Stock Exchange, is a global provider of seaborne transportation of petroleum products and chemicals. The company operates a fleet of MR and Handysize product and chemical tankers.
- Matson, Inc. (NYSE: MATX): As previously mentioned in the list of top private ship owners, Matson is also a publicly-traded company listed on the New York Stock Exchange. The company specializes in container shipping and logistics services, serving trade routes between the U.S. West Coast, Hawaii, Alaska, Guam, and other Pacific islands.
These public shipping companies represent various sectors within the maritime industry, including dry bulk, tankers, container ships, and specialized vessel services. As the shipping industry is constantly evolving, it is important to stay up to date with the latest developments to ensure an accurate understanding of the current landscape of U.S. shipowners.