 |
 |
 |
 |
 |
 |
|
|
|
|
|
|
  |
|||||
The flagging of a ship is very similar to the registering of a car. If you live in the state of Illinois, you register your car and pay automobile taxes to the state of Illinois. A ship must be registered (flagged) with a country. Ship registration (flagging) is required in order for authorities to track tonnage and collect taxes. How does a company decide in which country to flag their vessels? One of the biggest factors determining a flagging decision is cost. It is more expensive to register a ship in the United States than in a foreign country. Let’s look at some of the cost differences. A U.S. Flag vessel is required to employ an American crew which is significantly more expensive than a foreign crew. A U.S. Flag vessel must pay higher taxes and fees. A U.S. Flag vessel also follows a different set of laws. A U.S. Flag vessel follows the U.S. Code of Regulations, a foreign flag vessel follows the International Code of Regulations. The U.S. Code requires more rigid training for crews, and more stringent licensing requirements for crew documents. Under the U.S. Code, the regulations regarding fire fighting, life saving, safety, navigation, and communication equipment are more rigorous. The procedures regarding the stowage and carriage of hazardous goods follow U.S. laws which are more restrictive than international laws. All of these more severe regulations cost more money. But there are a few very important things that a foreign flag ship cannot do:
Let’s dip into a little history here. Over the years, the U.S. fleet has dwindled from over 1000 ships to less than 200. This is mostly due to the decreased demand for old ships and the prohibitive cost of running U.S. flag ships. In an effort to reduce the number of U.S. ship owners going overseas to register, the U.S. government established a subsidy program called the Operational Differential Subsidy (ODS), to help offset some of the additional costs associated with flagging with the U.S. In return for the subsidies, the U.S. keeps jobs and tonnage in the U.S. and the government also has vessels available in times of trouble or need. The ODS subsidies just expired on 12/31/97. The new subsidy program, effective 1/1/98, is called the Maritime Security Program (MSP). MSP differs from ODS in that it operates with a smaller pool of vessels. In 1998, the pool will consist of 47 vessels. The number of vessels needed in the pool will be re-evaluated each year. Each U.S. ship owner must apply for a space among the pool of vessels. The government evaluates all applications and selects each vessel. This year, nine ASM ships will be under the MSP. In fact, ASM is in the process of re-flagging four of their current foreign flag container ships to U.S. flag to operate under MSP. |
|
|
|
|
|
|
|