Owners Looking at Flag Price Rather than Cost

Too many shipowners look at price rather than cost when choosing a ship registry, and explore a variety of ways to circumvent international regulations, according to Scott Bergeron, Chief Operating Officer of the Liberian International Ship & Corporate Registry (LISCR), the US-based manager of the Liberian Registry.

Speaking at the recent International Chamber of Shipping Conference in London, Bergeron said, “There is a wide range of factors to be considered when measuring flag state performance. Price is just one of them, but it is one that invariably gives rise to misunderstanding. The cost of a flag state is typically less than one-half of one percent of the vessel’s operating expenses. As with any market-based system, there is a price-competitive factor and there is also the matter of taxation. But, when choosing a flag, too many shipowners look at the price rather than the cost.

“What is the cost, for example, of one day of detention; of a non-responsive maritime administration; of repatriating stowaways; of accidents or claims caused by crew in-competence; or of an act of piracy? What expenses can be saved if the flag state is forward-thinking, actively involved, always available and regularly examining initiatives to reduce operational expenses?”

Bergeron also emphasised that responsible flag states should actively seek to achieve compliance with both domestic and internationally adopted regulations. He said, “There are undoubtedly a number of flag states which need to improve their performance. There needs to be greater emphasis on truly effective measurement points, mandatory participation in the IMO’s ‘Voluntary’ Member State Audit, and an attitude of continuous improvement.”

The Liberian Registry is one of the world’s largest and most active shipping registers, with a long-established track record of combining the highest standards for vessels and crews with the highest standards of responsive service to owners. It has recently surpassed all-time tonnage records, with over 3,400 ships, aggregating more than 107m gross tons, currently registered.