Tuesday, April 21, 2020
Liberias Shipping Empire
When one thinks of shipping juggernauts the small west African nation of Liberia is not the first to come to mind. But as with many thing in our complex world looks can be misleading. This small nation with very limited industry and infrastructure control 12% of the world's shipping vessels making it one of the three leading nations when it comes to the number of registered vessels. How and why is this possible?
The reason that Liberia is able to claim to have one of the world's largest fleet of merchant ships without any real industry, infrastructure or capital has to do with private corporations and the interaction with international regulation of shipping. International law stipulates that all vessels must be registered to a nation, those vessels are subject to inspection and regulation by said nations. These shipping vessels do not want to waste time on lengthy inspections or regulations that increase the cost of transport so there was a demand for shipping agencies looking for a country to register with low restrictions. Liberia filled this demand. Their regulation is minimal along with there inspections and this I by design. The nation of Liberia is attempting to encourage economic growth with a very low amount of cost associated with partnering with them. This overtime led to more and more nations signing with Liberia. Leading to the growth of Liberia's grand mercantile fleet.
This at a glance can appear scummy as Liberia "control" of the shipping is one based upon the abuse of global regulation, but this also helps the small country grow its economy in ways that would otherwise be impossible while providing a service that drastically reducers cost for the shipping industry.
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The downside towards this practice is that the host countries have to cover the cost of any misfortune while not getting any revenue. When the Coronavirus hit the cruise ships, Cruise Lines still called on the US for help even though they were registered in the Bahamas. Even though having ships registered in Liberia might be beneficial towards their economy, they simply aren't equipped to support "their" companies.
ReplyDeleteCountries have tried to enact laws to encourage domestic registration. Under the Jones Act, the US does not let any air or cruise line registered internationally to transport passengers(or cargo) between two domestic ports. While this is a bigger deal for airlines, whose business model relies on non stop and quick flights, cruise lines and shipping vessels can just make a quick stop in Mexico or Canada between destinations.