Maritime Industry Background

All ocean going vessels engaged in international commerce must have a country of registry in order to operate in international waters. Accordingly, most countries, including the U.S., provide these registration services or flags of registry. Predominant countries offering flags of registry for cruise vessels are the United Kingdom, Panama, Norway, Netherlands, Bahamas and the United States. These nations, which provide vessel owners with comprehensive, competitive ship registry services and maritime expertise, are all member states of the International Maritime Organization (IMO). In the competitive international shipping industry, there are a number of factors that must be met for a valid registry. One of the most important is that a flag state be an IMO member nation which has adopted all of the IMO’s maritime safety Resolutions and Conventions. Secondly, a flag state should have an established maritime organization that is capable of enforcing all international and national regulations. Major flag registries provide comprehensive maritime expertise and administrative services; require annual safety inspections prior to issuance of a passenger vessel certificate; and utilize recognized classification societies to monitor its vessels compliance with all international and flag state standards.

Flag states have certain rules and requirements for vessels that fly their flags. Major requirements include crew nationality, crew composition, ship owner citizenship and ship building requirements. The crewing, ship construction and ownership requirements to flag a vessel in the United States are among the most restrictive of the maritime nations. Current manning regulations for U.S.-flag vessels engaged in coastwise trade mandate that all officers and pilots and 75% of other onboard personnel be U.S. citizens or residents. In addition, U.S. flag vessels engaged in coastwise trade must be owned by U.S. citizens and constructed in U.S. ship yards. This construction requirement applies to the entire hull and superstructure of the ship and the majority of all materials outfitting the vessel.

Regardless of the flag a vessel flies, compliance with SOLAS standards and other internationally recognized conventions is monitored by both the flag and port states. The flag state has the primary responsibility for ensuring that its vessels meet all established international guidelines. The flag state conducts annual ship examinations which include a thorough inspection of the vessel and its safety systems. As a result of these examinations, a vessel is certified to be in compliance with all international safety standards. The effort of the flag state is augmented by an additional annual survey conducted by a classification society to certify a vessel’s seaworthiness and structural integrity.

Port states, that is, those countries at whose ports a vessel calls, also play an important role in this regulatory framework. The United States, a major port state represented at the IMO by the U.S. Coast Guard, has a reputation for its vigorous enforcement of SOLAS standards. To ensure compliance with SOLAS safety requirements, the Coast Guard conducts quarterly inspections on all vessels embarking passengers at U.S. ports. This cooperative effort between flag and port states provides a maritime safety enforcement system which has proven effective over the years.

Because of these restrictions outlined above for U.S. flag registry, nearly 90% of the commercial vessels calling on U.S. ports fly a non-U.S. flag. Therefore, vessels operating with international registries are not unique to the cruise industry. A majority of the major U.S. controlled shipping companies engaged in international commerce have chosen to operate under flags other than that of the United States.