Ships Registered

Would permit the employment of crew of any nationality and at any wage scale the Owners wished (most countries insist that a significant number of the crew are its own nationals, employed at nationally agreed wage scales). Would demand minimal taxation. They found the countries they were looking for in Panama and Liberia which had already established “open registers”.  With ships Registered under either of these flags (known as either “Flags of convenience” or “free flags”) the American Owners were able to compete on the international tramp, both dry and tanker, markets and in the non-protected liner runs. In the same way, over the last two decades the traditional European and Japanese tramp Owners have found it increasingly difficult to participate in an increasingly competitive shipping market.  Whereas it is probably true that a Shipowner would, all things being equal, prefer to Register his ship under the flag of his own country and crew it with his own fellow nationals, increasing labour costs have all but priced the traditional Shipowners out of the market.  These have been taken over by the Panamanian and Liberian flags and by emerging nations with lower labour costs.  (It should be borne in mind that the other elements which make up the total of the daily running costs of a vessel – discussed in detail in a subsequent lesson – will be practically the same for a well run vessel, regardless of flag, the world over).  The principal elements of the higher labour costs faced by the traditional owners are: Higher domestic wage levels. Comprehensive and expensive Social Security payments demanded by the national governments in respect of the personnel employed. Nevertheless, there are a number of ways in which a national government, if it so wishes, can assist its own national fleet: Facilitating loans at a low rate of interest. Assistance with Social Security payments for the crews.