The Shipping Industry

There is a wide range of shipping companies from serious-minded, high quality shipping companies to sub-standard operators. It is estimated that sub-standard shipping accounts for around 10% of the world fleet, which works out to quite a large number of ships. The shipping industry is global and not very transparent for an outsider. Current arrangements make it almost impossible to identify the real owners of vessels. Ships can be registered in one country, while the owner and charterer are based in another. So they cannot be held accountable for the way they maintain and operate their ships. That is why this industry is so difficult to regulate and control.

Impossible to Trace
All kinds of scenarios are possible which make it very difficult to pin down ship owners and make them take responsibility. Shipowners can sell a ship. And then charter it back from the new owner. Or sell it to a nephew. They can rename and reflag the ship. An example is vessel X, a general purpose ship built in Poland, 1983. It delivers old refrigerators and cars from Europe to West-Africa. The owner is based in Romania. But the registered owner is registered in Panama. Captain and officers are Russian. And the crew is half Indian, half Philippine.
In another scenario, a Dutch company charters the ship. It pays the rent to a bank account in Luxembourg. The hull insurance is based in London. But the cargo insurance is Dutch. The management of the ship and the crew is based in Latvia.


Flag of Convenience
Shipowners have the right to sail their ships under any flag they chose. A shipowner can register his ships to any national register and not necessarily his own country. He can choose to sail under a flag of a country, which has lax or no regulations. Because of that 43% of the world tonnage is sailing under one of the 29 Flags of Convenience (FOC). FOC's are nations where ships can be registered cheaply and where the rules regarding crew, safety and environment are not very strict. Five of the six largest registries are Panama, Liberia, Bahamas, Malta and Cyprus. They are 'open registers', meaning there is no genuine link between the ship and the flag. Ship owners prefer FOC. Most of the single hull oil tankers that broke down during the past years sailed under a FOC.

Shipowners sailing under a FOC enjoy and keep the status quo. Most FOC-ships are owned by Greek, Japanese, American, Chinese (Hong Kong), Norwegian and German shipping companies. The FOC states carefully protect the interests of these shipowners

Since FOC states 'control' nearly half of the world's tonnage, they have a strong representation in the International Maritime Organisation. And within the IMO, a treaty only comes into force if the ratifying states together represent the required shipping tonnage (this differs per treaty). That means that in fact FOC states have the power of veto in the IMO. It is no wonder that FOC countries within the IMO obstruct global regulation on ship breaking.

A FOC also offers the opportunity to hide the identity of shipowners. A letterbox company is sufficient to sail under the flag of a FOC. That makes it very difficult to trace the company responsible for an End of Life Vessel destined for shipbreaking.

Greek companies
Greece has a long history and tradition in shipping. More than half of the European ships are Greek owned. The overall Greek share of ships of the existing fleet is around 18%. For new orders this is 23%. The Greek share in oil tankers of the existing world fleet is 23%. But for new orders it is 35%!

Many Greek shipping companies have a record of bringing ships - probably with toxic substances - to Asian beaches. These companies include Athenian Sea Carriers, Colouthros, LMZ transpoil Shipmanagers, Livanos group, Polembros Shipping, Centrofin Management, Tsakos Shipping & Trading and Thenamaris.Many of the ships suspected to be heading for toxic scrapping in Asia, belong to Greek companies. The Greek authorities aren't very active when handling the problems of shipbreaking.