International Handbook of Maritime Economics
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International Handbook of Maritime Economics

Edited by Kevin Cullinane

This timely and comprehensive new Handbook brings together an unrivalled group of distinguished scholars and practitioners to provide in-depth analysis and a contemporary perspective on a wide-ranging array of topics in maritime economics.
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Chapter 3: The Option to Change the Flag of a Vessel

Manolis G. Kavussanos and Andrianos E. Tsekrekos


Manolis G. Kavussanos and Andrianos E. Tsekrekos 3.1 Introduction Since the middle of the twentieth century, the politics and economics behind the decision to change a vessel’s registry from a national flag to a ‘flag of convenience’1 have been at the centre of heated debates in the shipping industry. However, since 1988, the sizes of fleets registered under flags of open-registry countries have consistently exceeded those of traditional maritime national registries and, as the last column of Table 3.1 suggests, there is no sign that this phenomenon will change soon. As can be observed in Tables 3.1 and 3.2, more than half of the world fleet (54.34 per cent in terms of deadweight tonnage) is currently registered under flags of convenience. As Table 3.2 suggests, this percentage ranges from 41.17 per cent for general cargo vessels and can be as high as 60.09 per cent for bulk carrier ships. Although this widespread phenomenon of ‘flagging out’ has important Table 3.1 Flags of Convenience (FoC) with the largest registered deadweight tonnage (as of 1 January 2008) No. of vessels 7616 2173 1422 1097 1442 982 339 1124 153 1043 17 391 UNCTAD (2008). Registration flag % of world Tonnage % of world % dwt total (000 dwt) total growth (vessels) (dwt) 2008/2007 7.81 2.23 1.46 1.13 1.48 1.01 0.35 1.15 0.16 1.07 17.85 252 564 117 519 59 744 59 600 45 218 29 431 13 850 11 183 9870 8503 607 482 22.60 10.51 5.34 5.33 4.05 2.63 1.24 1.00...

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