The War of the Open Registries - Panama v Bahamas

In a previous article we reported different strategies used by Liberia to resume a leading position in the world fleet, a leadership that it enjoyed until 1992 when Panama became the number one flag in the world merchant fleet.

Panama has retained this position for nearly a decade and although it should not fear Liberia or Marshall Islands, it should look at the moves of the Bahamas competitor closely and with caution

In 1977, the Bahamas registry had only 60 ships aggregating 60,000 gross tons. In 1985, the registry increased to 350 ships and 5 million gross tons. Presently, Bahamas is third in the world fleet with approximately 1,500 ships and 30 million gross tons.

Comprising the Bahamas fleet are tankers (23%), passenger ships (10%), general cargo (17%), containerships (10%), bulk carriers (12%), reefers (12%), tugboats and supply ships (8%), yachts (1%), combination carriers - OBOs (1%) and drilling platforms - MOUDs (2%), barges (2%), fishing vessels (2%).

The Bahamas Maritime Authority is a government entity that controls and manages the ship registry in a commercial and flexible way. All excess revenue, once operational expenses are covered, is sent to the National Treasury. It is important to make the distinction between this administrative regime and those of registries that are managed by private companies whose thrust is to obtain profits for its shareholders.

Flagging costs

Bahamas says its aim is to have a modern, quality fleet and has thus created a series of economic incentives:

Registry costs for ships of 2,000 to 5,000 net tons is US$1.00 per net ton or fraction. The annual tax is 13 cents per net ton plus US$1,650.00.

Ships of over 5,000 net tons pay US$0.90 per net ton to register and the annual tax is 12 cents per net ton plus US$1,650.00.

Ships of more than 25,000 net tons pay a maximum amount of US$22,500.00 for flagging rights and the annual tax is 12 cents per net ton plus US$1,650.00.

Special discounts

A discount of one third of the registry cost for ships of less than five years of age was introduced in 1998.

Fleets of three or more ships registering at the same time and with ages below 12 years receive a discount of one third of the registry cost.

The discount increases to 50 percent for fleets of ten ships.

All Bahamas flag ships are subject to an annual inspection that is paid directly at the time the inspection is carried out.

Analysis vs. Panama

Unlike the extensive network of consulates that Panama has available to provide service to ships, Bahamas has only four offices to register ships: Nassau, London, New York and Tokyo.

It offers, however, a telephone number in case of emergencies during non-working hours. Another positive point of the Bahamas registry is that accident investigations and damages are public knowledge and once the investigations are completed, they are published and made available to the public.

We observe, however, that flagging in Bahamas is more expensive than flagging in the Panama registry. Although Bahamas offers the user a series of benefits similar to those offered by Panama, including a banking center, incorporation of companies and ports, their tax regime is more expensive than Panama’s. Companies with fleets of 20 or more ships enjoy savings between $2,000 and $3,000 per ship, which translates into overall savings between $40,000 and $60,000 annually.

The Bahamas Shipowners’ Association

The Bahamas Shipowners’ Association was founded in July 1997 to establish a communication channel between the administrations and users. An executive committee formed by shipowners from all over the world meets several times a year to analyze in detail points of interest and issues discussed at IMO.

The Association has four sub-committees representing different sectors of the industry–tankers, cruise and passenger ships, and dry and liquid bulk carriers. These sub-committees must report to the executive committee. Steven Hillyard, of Chevron Shipping, is the current chairman of the association.

In addition to the official presence of Bahamas at IMO, the association appointed a correspondent in 1998 to attend IMO sessions and report results. This helps members to be informed on developments at IMO and allows them to participate more actively in discussions. The correspondent also offers advice and technical support to Bahamas representatives during the sessions, as well as to working groups at IMO.

Conclusion

The Bahamas registry shows that the gradual perseverance of a ship registry with continuous planning, training, work and growth programs based on logistical and futurist plans pays good dividends. The Bahamas registry has become the third in the world fleet after Panama and Liberia and aims to attain the coveted number one position. The Bahamas registry has a good reputation and a record of arrests below the average. Its marketing program is effective, and the personnel handling the registry are friendly and efficient. It can be concluded that Bahamas is a serious competitor of Panama.


© 2000 Maria Dixon - ISM Shipping Solutions Ltd.

Translated from the Edited version published in Mundo Maritimo section of El Universal, Grupo Editorial Universal, S.A. Panamá, with permission from the Author