Flag states and safety: 1997-1999

Abstract

This paper examines the casualty rates of flag states in order to determine whether Flags of Convenience have a worse record than other types of register. The analysis uses the Lloyd's casualty database for the years 1997–1999. The data reveal that FOCs do, indeed, have a worse record than either second/international registers and national flags, but that there are considerable variations within the FOC group itself. This leads the authors to conclude that it is the newer, faster growing FOCs that are most likely to have inferior records to other flag states, and that this is due to the very nature of their, largely profit-making, regimes.

Notes

It is recognized that this term is a problematic one. Bergantino and Marlow [2], for example, cite six different definitions ranging from that of the OECD in 1958 to that of Bergstrand in 1983 [3], whilst Dickinson [4] outlines the problems that the ITF have with their own definition. There is no intention here, however, to contribute further to this debate, and the definition used is a very simple one: any flag state that is currently categorized by the ITF as being an FOC, will be deemed to be such for the purposes of this paper

The full database contains details of all casualties for the period 1978 to the present date. The authors have only utilized the data for the period 1997–1999 because of the fact that, in earlier years, the FOC system was less developed. The data for the years 1997–1999 contains details of 3194 serious and non-serious casualties to all types of cargo carrying vessels

The reason for these divisions are as follows. First, it is generally recognized that the ‘traditional’ (usually, although not exclusively Western European) maritime states have a more comprehensive regulatory framework than some other countries, particularly those in the developing world. Secondly, it would appear that the older, more established FOCs are making some attempts to impose more rigid guidelines for the owners flagging their vessels to their fleets, whilst the newer entrants to the market seem to be aggressively marketing their services upon the very notion that such rigidity is absent. A fuller discussion of these points appears later in the text

Taking the ITF data as an example, the largest of the FOC fleets mentioned as having one of the worst loss records, has a fleet size 3000% bigger than that of the smallest fleet mentioned, Cambodia. This disparity is even more marked if tonnage is considered, where the Panama GT is 158 000% bigger than that of Cambodia!

The formula used throughout this paper for the calculation of ‘average casualty rates’ is as follows: first, the number of casualties per flag state in each year is divided by the number of vessels in the non-fishing fleet for that state for that year, and then multiplied by a factor of 100 in order to give a ‘casualty rate’ by fleet size. Secondly, the casualty rates for all 3 years are totalled and divided by a factor of three, in order to give an average 3 year casualty rate for the period. The calculation of such a rate alleviates, to some degree, the problems of comparing casualties for flag states that have vastly differing fleet sizes; whilst the averaging process for the 3 years, again, alleviates, to a certain extent, the problem of very poor performances by states in just 1 year out of the three, overly skewing the data. All data relating to fleet sizes, etc. has been taken from Lloyd's Register, World Fleet Statistics [24]

The 0.05 level of statistical significance has been used throughout this analysis

It is, indeed, likely that the only reason that the casualty rate for second/international registers is not statistically significantly different from the others, is the relatively small sample size for this group in comparison to the other two groups

It is recognized, however, that vessel type has a different impact upon vessel age, in that certain types of vessels have longer life spans than others

The categories are comprised of the following flag states: Old FOCs: Antigua and Barbuda, Bahamas, Bermuda, Cyprus, Honduras, Liberia, Malta, Marshall Islands, Panama and St. Vincent, and the Grenadines. New FOCs: Barbados, Belize, Bolivia, Cambodia, Canary Islands, Cayman Islands, Cook Islands, Equatorial Guinea, Gibraltar, Lebanon, Luxembourg, Mauritius, Myanmar, Netherlands, Antilles, Sri Lanka, Tuvalu, and Vanuatu. Second/International ship registers: Anguila, British Virgin Islands, Channel Islands, DIS, Falklands Islands, Faeroes, Faeroes (FAS), Hong Kong, Isle of Man, Kerguelen Islands, Macao, Madeira, NIS, Philippines, Sao Tome and Principe, Singapore, Turks and Caicos, Ukraine, and Wallis and Futuna. Traditional maritime nations: Argentina, Australia, Austria, Belgium, Brazil, Canada, Chile, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Japan, Mexico, Netherlands, New Zealand, Norway, Portugal, Russia, South Africa, Spain, Sweden, Switzerland, UK, Uruguay, USA, and Venezuela. Emerging maritime nations: Albania, Algeria, Angola, Azerbaijan, Bahrain, Bangladesh, Benin, Brunei, Bulgaria, Cameroon, Cape Verde, China, Columbia, Comoro, Congo, Congo (DR), Costa Rica, Cote d'Ivoire, Croatia, Cuba, Djibouti, Dominica, Dominican Republic, Egypt, El Salvador, Equador, Eritrea, Estonia, Ethiopia, Fiji, Gabon, Gambia, Georgia, Ghana, Grenada, Guatemala, Guinea, Guinea-Bissau, Guyana, Haiti, Hungary, India, Indonesia, Iran, Iraq, Israel, Jamaica, Jordan, Kazakhstan, Kenya, Kiribati, North Korea, South Korea, Kuwait, Laos, Latvia, Libya, Lithuania, Madagascar, Malaysia, Maldives, Mauritania, Micronesia, Morocco, Mozambique, Namibia, Nicaragua, Nigeria, Oman, Pakistan, Papua New Guinea, Paraguay, Peru, Poland, Qatar, Romania, St. Helena, St. Kitts Nevis, Samoa, Saudi Arabia, Senegal, Seychelles, Sierra Leono, Slovakia, Slovenia, Solomon Islands, Somali Republic, Sudan, Surinam, Syria, Taiwan, Tanzania, Thailand, Togo, Tonga, Trinidad, Tunisia, Turkey, Turkmenistan, UAE, Vietnam, Yemen, and Yugoslavia. The category New FOC includes those flag states that have only recently been classified as such by the ITF. It should also be noted that these states represent all 179 flag states during the period 1997–1999, as shown in Lloyd's World Fleet Statistics [24]. As mentioned previously, only 121 flag states actually suffered casualties in this period, but the data on all flag states has been included when calculating average grouped casualty rates in order to give a more complete picture

The research is an ITF sponsored project entitled ‘Flag State Audit’ examining the regulatory regimes in 37 flag states. The research commenced in May 1999, and was completed on 30th June 2001

Many FOC registers do, indeed, have an annual recurring fee which, in many cases, is the virtual equivalent to an annual tonnage tax