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Flagging out – the long tail of convenience

22 January 2020

Corrosive flags of convenience have undermined national flags, says Nautilus general secretary Mark Dickinson. We must support flag states that exercise effective control

News reached my desk over the New Year that Stena Line's latest new build Stena Estrid has, without much fanfare, quietly changed flag from the UK to Cyprus.

Stena Estrid is the first of three Ropax vessels being built for the company's Irish Sea routes, with sister ships Stena Edda and Stena Embla expected to commence operations in the spring of 2020 and early 2021. I guess we can expect them to join their sister in Limassol.

Is this another blow to post-Brexit Britain, a symbol of wider maritime malaise in the UK, or merely a reflection that no one really cares what the flag state is anymore?

Hot on the heels of Maersk, CMA-CGM, P&O Ferries and Carisbrooke Shipping (see March 2019 comment) this is surely another painful blow to the UK's continued aspiration to remain a strong and growing maritime nation. It is made more painful because Stena, like P&O Ferries, has opted in favour of the Cyprus flag of convenience (FOC) ship register (and an EU member state).

As far back as the 1930s the International Labour Organization (ILO) was concerned about ship registers such as Panama and Liberia, when predominantly Greek and US shipowners joined them, seeking to avoid strong seafarer trade unions, rising employment costs and labour regulations. Lack of transparency over ship ownership and low or no taxes also appealed.

In 1948, fearing the erosion of national standards, the International Transport Workers' Federation (ITF) launched a campaign to eradicate 'FOCs' and drive ships back to national flags. Over 70 years later, despite the ITF's best efforts, FOCs have grown to now represent over 55% of the world fleet. The ITF FOC list now includes a total of 35 ship registers including Red Ensign Group members Bermuda, Cayman Islands and Gibraltar. Many also feature on the Organisation for Economic Co-operation and Development’s (OECD) list of 'uncooperative tax havens'.

FOCs also spurned the growth of international and second registers, drove the deregulation of national flags such as the Netherlands and led the UK Ship Register to ease eligibility requirements in a vain attempt to appeal to a much broader shipowner community.

International law (UNCLOS) requires registers to maintain a 'genuine link' between the flag of the vessel and the shipowner. This ensures the flag states can, as the Maritime Labour Convention (MLC) states, 'effectively exercise jurisdiction and control' over their ships. With FOCs that rule is waived, meaning flag states cannot effectively control or regulate ships flying their flag.

Flag states therefore rely on port states to do their dirty work, and that is why we now have Port State Control. It is why we have the International Safety Management Code. It is why flag states contract out to classification societies. It is why flag states woo shipowners, calling them 'customers'. It is why the International Maritime Organization (IMO) is criticised as being slow to respond to global developments.

FOCs at their corrosive best are why we needed the MLC, SOLAS, MARPOL and STCW – because national flags were utterly defenceless against what the maritime author Ian Urbina refers to as 'the Outlaw Ocean', undermined and compromised by the growth of FOCs. What we have witnessed over the last century is the re-regulation of the shipping industry at the global level.

The choice of flag state is crucial, I hope I am not alone in thinking so.

International law requires registers to maintain a 'genuine link' between the flag of the vessel and the shipowner Nautilus general secretary Mark Dickinson
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From the general secretary January 2020

As we start the new year, we recommit to being an action-focused, modern and dynamic union, driven by a clear organising strategy, says Nautilus general secretary Mark Dickinson

As we enter a new decade in which disruption is the name of the game and technology transforms our world, shipping is at the centre of the evolving storm.

The industry is at the heart of our globalised just-in-time economy. Every hour of every day, thousands of vessels are on the oceans and rivers connecting countries and keeping global trade moving. But while shipping's importance remains unchanged, the way it works – and the ways in which its people work – are facing transformation.

Nautilus International has worked long and hard on our four-year Strategic Plan and 2030 Vision adopted at the General Meeting in October 2019. It puts in place a proactive response to ensure that we remain relevant, responsive and financially sustainable for the future.

This year will be critical for the delivery of this vision. We are focused on developing new ways of working, new ways of organising, new ways of campaigning, and new ways of servicing our members that demonstrate our continued relevance.

We will keep our organisation at the cutting edge, responding to globalisation's challenges with, for example, the Nautilus Federation of like-minded ITF affiliated unions providing a worldwide support and assistance network based on cooperation and collaboration.

We look to the future with optimism, but we face a double whammy. The demographics of our membership mean that around one-third of our members will reach retirement age over the next decade. Despite the renewed investment in skills in the UK and NL the numbers coming into the shipping industry are falling short of the numbers leaving. It's very clear that we can't continue as we are. If that sounds stark, it's meant to.

The 2030 Vision is our response – a positive vision for the future based not on fear of the unknown, but a clear track of hope. Because we don't just face risks and challenges, we also face opportunities, and we are determined to seize them.

Our 2030 Vision will strengthen our recruitment efforts, continuing our growth in the superyacht and windfarm sectors, capitalising on the potential in inland waterways and river cruises and seizing the opportunities offered in fishing, through the new ILO Convention 188.

Our 2030 Vision will transform the way we work – we will relaunch Nautilus as an action-focused, modern and dynamic union and professional organisation, driven by a clear organising strategy, that is innovative, creative and, above all, proactive and professional.

The 2030 Vision is our blueprint for the future – a sustainable future that ensures that the scale of the challenges faced by Nautilus is matched by the scale of its ambition. Nautilus is proud to say that Wherever You Are So Are We. That will continue to be but we will also focus greater efforts on supporting you throughout your career journey in a positive and aspirational way.

Happy New Year!


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