Ships scramble for island flags

BOTH Vanuatu and the Republic of the Marshalls received some unexpected revenues as a result of the United States invasion of Panama their shipping registry fees soared when the US cut off ships carrying Panama flags from US waters.

A couple of weeks before the invasion, as part of United States commercial sanctions on Panama, the Department of State ruled that ships carrying the Panama flag of convenience would not be admitted to US waters after January 31, 1990. Since Panama, like Africa’s Liberia, has a significant part of the world’s shipping flying its flag, there was a scramble for other flags, and both Vanuatu and the Marshalls were only too happy to oblige. (The nationality of a ship’s owners, and the flag it carries, are often different; Panama, Liberia and other providers of flags of convenience compete as to who can provide the least

expensive, least troublesome registry

system.) Although hard figures were not im-

mediately available, apparently

Vanuatu’s Deputy Commissioner of Maritime Affairs, who works in New

York, registered an additional hundred vessels or so, increasing the size of the Vanuatu flag fleet to about 500.

Meanwhile, in the Marshall’s Hawaii office, perhaps another 15 or 20 ships registered as a result of the US bar of

Panamanian ships.

Many of the ships transferring to Mar shalls or Vanuatu registration were own ed by Hong Kong, Taiwan or Japanese interests. The Evergreen Line, out of Taiwan, for example, shifted from Panamanian to Marshall Island registra tion for at least two of its ships which use the port of Baltimore (the deepsea port closest to Washington.) How much of a financial boost was the shift to Vanuatu registry? Again, hard data are lacking. One source said that each registry involved hard negotiations between the owners on one hand, and the registering nation on the other. “It’s a bazaar out there,” he said. No one was anxious to quote exact numbers, but an estimate of about US$25OO or $3OOO a year for an average 10,000 ton freighter was suggested. (The registry rate is often calculated by so many cents per ton; the $3OOO would be 30 cents a ton for a

10,000 ton ship.) Given these benchmarks, Vanuatu probably picked up at least U 55250,000 to $300,000 in registry fees, assuming one hundred 10,000 ton ships, but more were the ships, on average, larger. In addition there was usually other fees as well, such as for inspection services; under some circumstances these associ ated charges can be more than the reg

istry fee.

One of the ironies of the Vanuatu windfall was that on the very day that the story of its good fortune emerged (December 29) as a result of the invasion of Panama, Vanuatu’s ambassador to the United Nations was voting in the Gener al Assembly to condemn that invasion.

By that time the US had rescinded its ban on Panama flag ships, and, as a re sult, there are no more expected shifts in registration caused by that factor. In fact, there may be some movement back to Panama now that the status quo ante has been restored.

The Marshalls situation is a bit diffe rent. The republic has been actively in volved for only about two years, after an extensive planning period; and it appears to focus its attentions on a smal ler collection of very large vessels. Ear lier in 1989 it had a fleet of only five

under its flag.

“We are dealing with the sophisticated

shipowner,” explained Howard Zeder,

Commissioner of the Marshall’s Maritime Authority (and son to old Pacific hand Fred Zeder, now a Bush appointee as the head of the U.S. Overseas Private

Investment Corporation.)

Zeder said that most registration changes take place at the end of the year, and that in addition to an unspeci fied amount of changes caused by the Panama decision that the Marshalls had signed up seven huge tankers on a “planned basis”. These include some of the monsters of the ocean, two weighing in at 400,000 tons (and stretching more than 1000 feet in length) and five others in the 300,000 ton category.

The Marshall’s basic registry fee is a sliding scale, from 35 cents down to 20 cents a ton. Assuming the 20 cent rate, the two biggest tankers would bring the Marshalls $BO,OOO each, and the 300,000 ones would cost $60,000 each, for a total of $460,000, for the group of seven tankers. In addition there are the associ ated fees, such as for vessel certification and crew licensing.

Zeder’s office was preparing an end of-the-year report on its registry activi ties, but this was not available at press time. □