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How Prohibition Caused Thousands Of Modern Ships To Fly The Panamanian Flag
Rum runners and flags of convenience
According to recent data, roughly 54% of all global maritime freight is carried on ships flagged to four countries. Over half of all goods shipped via the ocean are carried by ships registered to Panama, Liberia, the Marshall Islands, and Hong Kong. Ships registered to Panama and Liberia alone account for over 30% of all global maritime freight. This phenomenon is called flags of convenience. A ship’s owner will choose to register their ship to a country like Panama or the Marshall Islands to avoid high taxes and regulations in their home countries. A flagged ship in international waters is beholden to the rules and regulations of its home country.
Countries like Panama and Liberia have made a name for themselves by offering low inspection requirements, low taxes, low fees, and minimal standards for workers. Traditional maritime powers like Japan, the United Kingdom, and the United States have much higher taxes and fees and much stricter inspection requirements which have led many ship owners to register with less restrictive countries.
Today, flags of convenience dominate the global freight scene, but they started in 1920 when the United States decided to ban the sale of alcohol. A decision by teetotalers…
