WASHINGTON — A group representing maritime shipping labor is warning regulators about rising economic and safety risks caused by foreign flags-of-convenience (FOC) ship registries.
Responding to an informal investigation launched in April by the Federal Maritime Commission, the Seafarers International Union (SIU) told the FMC that FOC registries – those that register and flag vessels with significantly less regulatory oversight than other registries – are enabling the expansion of the so-called “dark fleet,” a network of vessels operating outside virtually all regulatory oversight.
“These ships routinely evade sanctions, safety protocols, and environmental regulations by exploiting permissive flag states and obscured ownership structures,” stated SIU President David Heindel in comments filed with the FMC. He cited analyses from Lloyds List and others that show the dark fleet now comprising 600 to 1,000 vessels.
“We commend the FMC for taking this essential step toward exposing and addressing systemic abuses in vessel flagging – and urge the broader maritime community and international regulators to take coordinated action to restore integrity to global shipping.”
In April, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued an update to a 2019 advisory to help the global shipping and maritime industry identify sanctions evasions related to the shipment of Iranian-origin petroleum and petroleum products.
The new advisory noted how “shadow fleet” tankers rely on flag registries with lower operating and due diligence standards.
According to OFAC, these tankers regularly:
- Move their registrations to flag states known to be providing services to other sanctioned tankers.
- Illegitimately claim to fly a flag they are not registered with (i.e., a “false” flag).
- Flag vessels with registries not authorized to provide flagging services (i.e., fraudulent registries).
“Maritime sector stakeholders should consider the flag registry and registration history of a vessel and conduct enhanced due diligence to ensure vessels with which they and their counterparties engage are not participating in trade of Iranian petroleum, petroleum products, or petrochemicals,” OFAC stated.
The International Transport Workers’ Federation (ITF), with which SIU is affiliated, contends that the FOC system has been the subject of the group’s longest-running campaign – launched in 1948 – “due to its role in circumventing labor regulations, suppressing wages, and enabling unsafe working conditions,” the group stated in May. Data compiled by ITF currently lists 45 FOC registries.
SIU, which represents U.S. vessel crews assigned to U.S.-flag vessels trading domestically and internationally, told FMC that the ability to suppress wages and creating unsafe working conditions for seafarers leads to unfair competitive advantages for shipowners, who can circumvent labor protections and fair wage requirements and evade taxation and financial responsibilities.
“Responsible shipowners who maintain high standards are undercut by FOC vessels operating with substandard conditions, creating a ‘race to the bottom’ that undermines the entire maritime industry,” SIU asserted.
It recommended that FMC’s investigation “examine how FOC practices distort fair competition and consider measures to level the playing field for operators maintaining proper standards.”
SIU also cited ITF data showing that FOC ships are “significantly overrepresented” in vessel detentions, maritime casualties and incidents, vessels operating with expired or counterfeit certificates, and vessels with inadequate maintenance and safety equipment.
The group recommended that FMC analyze flag state casualty data “and examine correlation between FOC registration and safety deficiencies.”
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