zs 동명대학교 TONGMYONG UNIVERSITY FINAL REPORT DECISION ANALYIS TOPIC SELECTING SHIP REGISTRY CLOSED OR OPEN Students 레튀축리 – 19330110 응웬응옥프엉타오 – 19330123 레응웬이엔쑤안 – 19330109 Instruc.zs 동명대학교 TONGMYONG UNIVERSITY FINAL REPORT DECISION ANALYIS TOPIC SELECTING SHIP REGISTRY CLOSED OR OPEN Students 레튀축리 – 19330110 응웬응옥프엉타오 – 19330123 레응웬이엔쑤안 – 19330109 Instruc.
INTRODUCTION
According to the United Nations Convention on the Law of the Sea (UNCLOS), the principle of freedom of navigation prevails in the high seas, allowing access to all states This agreement addresses specific state-related issues regarding navigation and overflight, emphasizing that no state can claim sovereignty or authority over the high seas All vessels enjoy unrestricted access, but the UNCLOS and public international law provide a framework that prohibits certain conditions aboard these vessels, ensuring safe and lawful navigation.
Every vessel must possess a nationality through its registration under a state, which enables it to operate under that state's regulations and navigate the high seas A national flag serves as an official endorsement, signifying that a country has jurisdiction and control over the vessel in various administrative, technical, and social aspects As economic development intensifies, many ships from our country are opting to fly foreign flags for transportation and trade, leading to increased activity and growth in maritime commerce Consequently, registering and flying foreign flags has become a practical approach to facilitate smoother circulation and docking at international ports.
Ship registration laws are categorized into open and closed registries Closed registries are national systems that allow only ships owned, operated, and crewed by the nationals of that country to register under its flag Ship owners must be from the country of registration, and their business operations must be based there Additionally, vessels registered under a closed registry can be requisitioned during wartime for transporting goods and personnel in support of national interests.
Maritime registries often feature open registries in various countries, enabling vessel owners to register their ships under a foreign flag without a genuine connection to that flag state This system allows ship owners of different nationalities to operate their vessels under the flag of the open registry country, which is typically displayed on the ship Additionally, the legal framework of the flag state governs the operations of these vessels.
Registering a vessel with an open registry can enhance its marketability and ease of trade on the high seas By choosing to register in a country different from the owner's residence, ship owners can significantly reduce operating and administrative costs while benefiting from less stringent regulations Additionally, they may take advantage of tax incentives such as tonnage tax, which applies a standard corporate income tax rate based on the size and number of ships operated Open registries like Panama and Liberia are particularly attractive due to their minimal citizenship or residency requirements, straightforward online registration processes, and access to tax-free income and affordable labor Ultimately, proper vessel registration is crucial for engaging in international trade, providing substantial economic benefits to the owner's country.
While there are benefits to sailing under a flag of convenience, significant disadvantages must be considered by ship owners Ships operating under open registries often expose seafarers to more hazardous working conditions due to less stringent regulations This lack of oversight can lead to serious risks for crew members, including inadequate insurance and compensation Furthermore, fundamental rights for seafarers, such as the ability to form trade unions, receive fair wages, and enjoy safe working conditions, are often not guaranteed Additionally, crew members may be deprived of essential rest periods between duties, further compromising their well-being.
Figure 1 Top 10 flag States in 2019
In 2019, Panama dominated the list of the top 10 flag states, boasting the highest tonnage and the largest number of registered vessels, with 9,367 ships flying its flag, significantly outpacing China, which ranks second with 4,486 fewer vessels Following Panama are Liberia and the Marshall Islands Notably, only three countries—China, Hong Kong, and Greece—utilize a closed registry system, while the others operate under an open registry framework.
Our research is among the first to apply the best-worst method for identifying the most and least important criteria in ship registry selection While previous studies have utilized various methodologies, such as fuzzy logic, SWOT analysis, and AHP, to address ship flag choice issues, the ANP method has been less frequently employed Notably, Celik & Kandakoglu (2012) applied a fuzzy SWOT analysis to explore the flagging-out dilemma in Turkey, while Perepelkin et al (2010) developed an enhanced methodology to assess flag performance across global shipping industries Additionally, Kandakoglu et al (2009) introduced a multi-methodological approach for selecting shipping registries in the maritime transportation sector, and Lua, Fan & Li (2013) analyzed flag choice using individual ship registration data.
9 behavior, used a binary choice model to analyze flagging-out decision, and used a nested logit model to analyze final flag choice
Ship owners must recognize the factors that influence the decision to register a vessel, as this choice is crucial for success in the competitive international shipping market Selecting an appropriate flag is a vital step in developing cost-effective strategies for ship operations This raises two important questions regarding the registration process.
“Which registry should the ship owner register their ship in?” and “How important are the factors that affect the ship registration decision?”
Our research team identified eight key criteria for evaluating open and closed registry options, which include shipbuilding standards, living and working conditions, crew wages, the availability of well-trained seafarers, types of ships, trading routes, tax implications, and bureaucratic control.
This study addresses the challenges faced by ship owners in deciding on ship registration by utilizing the Best-Worst Method to identify key influencing factors A significant strength of this research lies in its reliance on data provided by esteemed professors with extensive expertise in the shipping industry.
This article will first examine existing literature on closed and open registries to identify the factors influencing ship registration decisions and their purposes Next, we will outline our methodology, detailing the methods used, their developers, and applicable areas The study design process will also be elaborated upon Following this, we will discuss data processing and present the estimated outcome model along with data analysis Finally, we will share the research results and conclude the paper.
LITERATURE REVIEW
Ship registration is essential for commercial trading, as a vessel must display a flag to gain access to ports worldwide Therefore, selecting the appropriate type of registry is a crucial strategic decision for ship operations.
Ship registration primarily falls into two categories: closed registry and open registry Closed registration is the most common type within the maritime industry, while open registration offers a different approach for ship ownership and operation.
10 appeared with a new term of “flag – out” which means that ships are registered in another country rather than the national one
So why do ship owners flag out their ships?
Ship operator’s main goals are to operate vessels as efficiently as possible with the minimum costs
In developed countries, open registry is an option to outsource the cheap labor market and
American-owned ships registered under Panama's open registry, or flag of convenience, are not bound by U.S regulations, allowing ship owners to significantly reduce operational costs and labor expenses This enables them to offer lower prices for goods compared to ships registered in developed nations, often at the expense of crew living standards and working conditions Judith Swan highlights that open registries provide numerous advantages, including minimal vessel restrictions, a favorable tax environment, low administration fees, and flexible manning requirements, making the registration process quick and efficient One of the most notable benefits is the exemption from local income taxes, further incentivizing ship owners to choose this route.
Open registration has sparked controversy due to its contrasting regulations with closed registries Closed registries enforce stringent shipbuilding standards, crew qualifications, and welfare, prioritizing safety, while open registries often prioritize revenue, leading to infrequent enforcement of maritime laws This profit-driven approach can compromise maritime security, resulting in sub-standard shipping practices, safety issues, and crew maltreatment Research by Bye and Aaberg (2018) indicates that ships operating under Flags of Convenience (FOC) are more likely to experience maritime accidents The proliferation of FOCs has fostered a deregulated, non-unionized segment of merchant shipping, significantly impacting the global market and national maritime policies.
The organization of the maritime transport sector significantly impacts national fleets in industrial countries and central trade union activities, influencing economic, wage bargaining, and organizational policies (Koch-Baumgarten, 1998) By registering under open registries, ships can circumvent union regulations that establish essential safety, security, and seafarers' rights, allowing them to reduce operational costs and compensation expenses.
Selecting between two types of registries is similar to scaling the benefits and drawbacks of them in terms of costs, compulsory regulations, and maritime security
We looked at some previous studies which share the same topic in order to identify the criteria of selecting ship registry
In 2009, Celik, Er, and Ozok identified three primary categories influencing shipping registry selection: economic, social, and political factors Their research, utilizing Fuzzy AHP methodology, revealed that bank finance and tax-related expenses are the most critical elements in the economic decision-making process (Application of fuzzy extended AHP methodology on shipping, 2008) Similarly, Kyriaki and Michael (2016) corroborated these findings within the economic category.
The flag-out ratio of a country is influenced by its tax system, ease of starting a business, and levels of corruption and transparency A favorable tax environment for ship owners requires not only an investor-friendly tax structure but also efficient management Ship owners consider five quantitative factors when deciding to flag out: vessel age, trade engagement, basic wage costs, national insurance payments, and training expenses While basic wage costs may deter some, overall employment costs are more significant Qualitative factors such as crew salaries, availability of skilled labor, and fiscal reasons also play a crucial role According to Angela and Peter, crew expenses are the primary reason firms opt against using a national flag, alongside the desire to avoid bureaucratic oversight, high compliance costs, lack of skilled labor, and other fiscal considerations Those choosing to operate under closed registries often cite these same challenges.
12 their decision was influenced by a variety of factors, including ship’s type, trading routes, public relations concerns, marketing, and historical considerations
Key factors influencing ship registration include crew wages, seafarers' living and working conditions, the availability of skilled seafarers, the type of ship, shipbuilding standards, trading routes, taxation, and bureaucratic regulations.
Crew wages refer to the salaries of seafarers, which are determined by the number of days spent on board There is a significant disparity between the earnings of seafarers from developed countries and those from developing nations For example, an ordinary seaman in the Philippines earns approximately $5,258, while their counterpart in Japan makes around $32,544, according to the ERI's Salary Expert Database Consequently, ship owners in Japan must carefully weigh the decision of registering their vessels in Japan's closed registry versus opting for an open registry that allows for the outsourcing of crew members.
Standard living and working conditions refer to the quality of life on board of the ship: food, drink, working and resting hour, medical treatment, accommodation, etc
The International Labour Organization (ILO) safeguards the rights of seafarers through the Maritime Labour Convention (2006), ensuring their freedom of movement for both well-being and professional activities, ultimately facilitating international commerce.
Seafarers can be categorized into two main types: national and non-national The availability of well-trained seafarers plays a crucial role in the decision to outsource crew members Today, seafarers must adhere to various conventions to work aboard ships, with the STCW (International Convention on Standards of Training, Certification and Watchkeeping for Seafarers) being one of the fundamental requirements The STCW aims to ensure a safe working environment for seafarers while enhancing their professional performance It encompasses several certifications for positions such as master, chief mate, and radio operator, covering essential areas like basic safety training, medical fitness, and firefighting (International Transport Workers’ Federation).
Ship owners can choose between national or open registries based on their vessel type to maximize practical benefits For example, fishing vessels primarily engaged in domestic trade are better suited for closed registries.
Trading routes refer to the maritime shipping networks that connect continents, countries, or ports When vessels transport goods exclusively between ports within the same country, it becomes a matter of ship registration.
Taxation significantly impacts ship owners' profits, with rates varying based on vessel conditions such as age and type Each country has its own ship registration tax system; for example, in Panama, a ship owner registering a new or secondhand vessel is required to pay three primary fees: a consular fee, a registration fee, and an annual tonnage tax for the first year The tax calculation formulas differ for each ship type, but generally include five main fees: annual tax, annual consular tax, annual inspection fee, annual investigation fee, and a 3% charge based on Net Tonnage Additionally, vessels that actively engage in environmental preservation can receive an annual tax discount of up to 50% for three years.
Shipbuilding standards encompass the essential equipment and technology required for ships, with certain registries, such as Hong Kong, recognizing compliance with IMO conventions as meeting national standards (Mayer Brown, 2008) The SOLAS Convention aims to establish minimum standards for the construction, equipment, and operation of ships to ensure safety (IMO, 1974) Among the SOLAS certificates, the Navigation License is particularly relevant to shipbuilding standards.
Cargo Ship Safety Construction Certificate
Cargo Ship Safety Equipment Certificate
Cargo Ship Safety Radio Certificate
Class Certificates (Ports and Maritime Affairs, 2016)
METHODOLOGY
When a problem is so complicated that it can only be modeled as a hierarchy or network, most
“Best-worst method” fall to arrive at a solution In a specific, ship registration is a multi-criteria
A multi-criteria decision-making method (MCDM) is an effective tool for evaluating the importance of different criteria MCDM techniques have been successfully utilized across diverse areas, including sustainable supply chain management and green port initiatives.
In this study, we introduce the "Best Worst Method" (BWM), a novel approach that offers distinct advantages for our research, marking its first application in this field A detailed description of the BWM will be provided in the following section.
Decision-making is the cognitive process of choosing an alternative from a range of options In multi-criteria decision-making (MCDM) problems, decision-makers must identify the most suitable alternative based on various criteria The Best Worst Method (BWM), developed by Dr Jafar Rezaei at Delft University of Technology in 2015, addresses these challenges This method employs systematic pairwise comparisons of decision criteria to evaluate and rank alternatives effectively.
BMW stands out among Multi-Criteria Decision-Making (MCDM) methods due to its requirement for fewer data inputs Specifically, it necessitates fewer pairwise comparisons compared to the Analytic Hierarchy Process (AHP), with 2n3 comparisons for BMW versus n(n-1)/2 for AHP The pairwise comparison technique involves assessing each alternative against every other alternative, leading to a comprehensive ranking of all possible pairs.
The data analysis results obtained through Best-Worst Method (BWM) are deemed more reliable than those derived from Analytic Hierarchy Process (AHP) due to the greater consistency in comparisons A consistent ratio indicates data reliability, with Chu and Kuang (2002) suggesting that a consistency ratio below 0.1 is essential for valid research outcomes when using AHP, as higher ratios may lead to varying results Rezaei (2015) emphasizes that the consistency ratio in BWM serves as a measure of reliability, highlighting that BWM consistently yields dependable results.
Similar to other BWM studies, the method develops in the six steps:
(2) Find the best and the worst criterion;
(3) Find the preference of the best criterion over all other criteria;
(4) Find the preference of all other criteria over the worst criterion;
To determine the most effective or least effective criteria using this method, it has been applied in various real-world scenarios For example, research by Kusi-Sarpong, Rezaei, and Ahmadi highlights its practical applications.
In recent studies, the Best-Worst Method (BWM) has been employed to identify key social sustainability criteria in supply chain management, as highlighted by Wankhele and SVinodh (2021), who created a framework tailored for the automotive sector and evaluated challenges for effective implementation in Indian automotive industries Additionally, BWM has been utilized to determine suitable governance models for green port management in the Indian Ocean Rim, leveraging principles of social systems engineering, as demonstrated by Ziaul, Henrik, and Mariia (2020).
DATA COLLECTION
We conducted a data collection effort by distributing 20 questionnaires via Google Forms to professors, teachers, and professionals in the Maritime and Shipping Industry through email, Zalo.vn, and Facebook Out of the 20 questionnaires sent, we received 10 responses, although one was discarded due to a low knowledge rating of 1 on maritime industry and ship registration The data collection took place over three weeks, from May 1 to May 20, 2022, providing valuable insights into the perspectives of the respondents.
1 Teaching/Management Vietnam Academic 11 PhD
Logistics and supply chain management Vietnam Academic 24 PhD
Shipping industry and logistics Vietnam Academic 12
5 Logistics and Transport Vietnam Academic 13
Respondents from Vietnam and Korea exhibit similar proportions, with 5 from Vietnam and 4 from Korea, indicating potential differences in results between the two countries The majority of participants are affiliated with the Port and Shipping industries and hold academic positions Notably, only one respondent comes from the industrial-commercial sector, possessing a bachelor's degree in the Chartering Department All respondents have over 11 years of experience in their respective fields.
DATA ANALYSIS
Empirical application of the BWM
Our group is focused on assessing the most suitable type of ship registry, which primarily falls into two categories: closed registry and open registry Closed registry is the traditional form of ship registration in the maritime sector, while open registry has emerged as a modern alternative.
"flag-out" which means that ships are registered in another country rather than the national one.
Formulation of the problem
In the initial phase, our team established specific criteria to define the topic, providing clarity on the development and refinement processes of the proposed framework.
18 this assignment The criteria were identified through a combination of a literature review and previous studies, we identified 8 criteria which are important in ship registry selection They are:
(1) Ship building standards: refer to the required equipment or technology of the ship
(2) Standard of living and working conditions: refer to the quality of life on board of the ship: food, drink, working and resting hour, medical treatment, accommodation, etc
(3) Bureaucratic control: Control of an organization and the individuals that make up the organization through systems of standardized rules, methods, and verification procedures
(4) Crew's wage: relates to the salary of the seafarers that is calculated by the days staying on board of the ship
(5) Tax: the amount to be paid to the country of registration of the ship
(6) Trading routes: routes are the shipping networks on the sea between continents, countries, or ports
(7) Availability of well – trained seafarers: affect the decision of out – sourcing the crew
(8) Ship's type: Type of the ship which is registered.
Find the best and the worst criterion
In step 2 of the survey, participants evaluated the significance of various criteria for ship registration by identifying both the most and least important factors among eight provided options Respondents were specifically tasked with determining which criterion held the highest priority and which was deemed the least essential for the process of ship registration.
The most important means best and the least important means worst
Table 2 Other to Most Vector
Standard of living and working conditions
Crew's wage Tax Trading routes
Availability of well – trained seafarers
In a recent survey, respondents ranked their preferences for various criteria on a scale of 1 to 9, with 1 indicating the most important criterion The results revealed that shipbuilding standards and tax emerged as the two most favored criteria among participants.
Table 3 Other to Worst Vector
Standard of living and working conditions
Crew's wage Tax Trading routes
Availability of well – trained seafarers
Availability of well – trained seafarers
In this phase, participants evaluated the preference ratio of all criteria in relation to the least important criterion using a questionnaire, employing a measurement scale from 1 to 9 The least important criteria were assigned a score of 1, with the two most frequently identified least important factors being the ship's type and crew's wage.
Find the preference of the best criterion over all other criteria
Respondents evaluated the significance of the top criterion in comparison to other criteria using a 1–9 scale, which allowed us to represent the best-to-others vector effectively.
Here, 𝑎 𝑏𝑗 indicates the preference of the best criterion B over the criterion j
STEP 4 Find the preference of all other criteria over the worst criterion
In the subsequent phase, participants ranked the significance of various criteria relative to the least favorable criterion, using a scale from 1 to 9 This allows us to represent the comparison of all other criteria against the worst criterion as a vector.
Here, 𝑎 𝑗𝑤 indicates the preference of the criterion j over the worst criterion W
In this stage, we minimize the maximum absolute differences (|𝑤 𝑏 − 𝑎 𝑏𝑗 𝑤 𝑗 |, |𝑤 𝑗 − 𝑎 𝑗𝑤 𝑤 𝑤 |) for all j to find the optimal weights of a criterion The minimization problem can be expressed as follow: min [max
The, we can solve (3) as a liner optimization model shown in (4) min 𝛿 𝐿 min 𝛿 𝐿 s.t
A solution to (4) gives the optimal weights ( 𝑤 1 ∗ , 𝑤 2 ∗ , … , 𝑤 𝑛 ∗ ) as well as the optimal value of 𝛿 𝐿
𝛿 𝐿∗ is the consistency ratio of the pair-wise comparison procedure in BWM
The optimal weights of each of the criteria and consistency ratio 𝛿 𝐿∗ of each respondent are presented in table 4
Standard of living and working conditions
Crew's wage Tax Trading routes
Availability of well – trained seafarers
We conducted a questionnaire-based interview with nine experts from industrial and academic sectors to gather comparative data essential for Best-Worst Method (BWM) analysis Utilizing BWM, we calculated the individual weights assigned by these experts Subsequently, we aggregated these weights using a simple average to establish the overall criteria weights.
Table 4 presents the aggregated weights of the eight criteria derived from expert input Although the consistency ratios range from 0.13 to 0.21, which are not very close to zero, literature from various studies indicates that these results can still be considered highly reliable.
According to Table 4, "ship building standards" holds the highest weight for social sustainability criteria at 0.224, followed by "trading routes" and "bureaucratic control" with weights of 0.141 and 0.129, respectively The criterion "availability of well-trained seafarers" has a weight of 0.080, making it the least important, which is not unexpected, while "crew's wage," ranked second, is closely associated with this criterion.
STEP 6 Final scores of alternatives
We need to calculate the scores for each of the alternatives
Respondents were asked to rate the different alternatives using a 1-9 scale where 1 refers to not important at all and 9 to extremely important
Table 5 Importance of alternatives under each criterion (respondent 7)
Standard of living and working conditions
Crew's wage Tax Trading routes
Availability of well – trained seafarers
Table 5 presents the responses from respondent number 7 as an example The values were normalized by dividing each values by their column-wise maximum value following a linear normalization approach
Table 6 Normalized Values for respondent 7
Standard of living and working conditions
Crew's wage Tax Trading routes
Availabili ty of well – trained seafarers
Table 6 shows the normalized values in relation to respondent number 7
Table 7 Priority of alternatives (respondent 7)
Standard of living and working conditio ns
Availabi lity of well – trained seafarers
Table 7 outlines the prioritized alternatives for respondent number 7, showcasing the calculated values for each of the eight criteria associated with the two alternatives These values are derived by multiplying the normalized figures.
The final priority score for each alternative is calculated by summing the row-wise totals, as demonstrated in Table 6, which presents the results based on their respective weights.
The final priority value for alternative i is represented by 𝑍 𝑖, while 𝑥 𝑖𝑗 𝑛𝑜𝑟𝑚 indicates the normalized values of criterion j for alternative i By applying this method, the priorities of ship registry can be determined for all respondents, as demonstrated in Table 8.
Table 8 Priorities for ship registration
In the initial phase of the questionnaire, we gathered information about the respondents' fields, noting that one participant was from the industrial-commercial sector while the others were from academia The preference for open registration emerged, aligning closely with the overall findings We also examined the respondents' countries of residence, revealing that four out of nine participants reside in Korea The average score for open registration among Korean respondents was 0.924, compared to 0.891 for closed registration Additionally, non-Korean respondents expressed similar views, indicating a general consensus that open registration is preferable to closed registration.
Table 9 Priority of alternatives under each criterion (full sample aggregate level)
Standard of living and working conditions
Crew's wage Tax Trading routes
Availability of well – trained seafarers
The study's findings, detailed in Table 9, indicate that open registry, with an average score of 0.1085, is the preferred choice for ship owners over closed registry This preference is attributed to the flexibility of selecting a suitable country for registration without being bound by national regulations, as well as potential cost savings from lower taxes and a more affordable labor market Key considerations for ship registration include shipbuilding standards and tax implications, both of which significantly affect operational quality and profitability Ensuring the ship meets safety and durability requirements is vital for successful maritime operations Additionally, vessels that prioritize environmental preservation can benefit from tax discounts of up to 50% for three years, highlighting the importance of tax considerations in enhancing ship owners' earnings.
27 is taxed differently in each nation Ship owners are mainly interested about selecting a jurisdiction with a low tax rate
It can be referred from the data analysis that opened registry is a better choice for ship owner with
Seven out of the top ten flag states globally are open registries, highlighting their popularity among ship owners The advantages of favorable tax conditions and relaxed regulations make operating under an open registry more commercially appealing for many ship owners.
Looking from the respondents’ nationalities point of view, both Korea and Vietnamese respondents chose open registry
Data indicates a strong preference for open registry over closed registry, with open registry receiving higher mean scores in 7 out of 9 responses The most significant criterion for selecting a ship's flag is shipbuilding standards, which has a mean score of 0.224, far surpassing other factors Tax considerations rank second, with a mean score of 0.151.
Open registries are often perceived as having more lenient shipbuilding requirements compared to closed registries, which are believed to impose stricter registration processes However, some registries, like Hong Kong, now accept compliance with IMO conventions as sufficient for meeting their shipbuilding standards Countries such as China (a closed registry) and Panama (an open registry) require specific IMO safety and technical certificates for ship registration, highlighting minimal differences in shipbuilding standards between the two types of registries Nonetheless, closed registries like China impose additional restrictions, requiring vessels to be both owned and constructed within the country Consequently, shipowners face challenges if their vessels are built in countries like Korea or Japan, potentially incurring significant import duties and taxes if they wish to register in China, making shipbuilding an essential consideration in the registration process.
Different countries implement unique tax systems with varying fees and discount policies, which is why open registries like Panama and the Marshall Islands attract ship owners to register their vessels there Consequently, the taxation ranking of these jurisdictions is both logical and expected.
The availability of well-trained seafarers and crew wages are the least significant factors in ship registration Seafarers must hold STCW certificates relevant to their positions, ensuring they possess the necessary expertise for onboard duties While crew salaries differ across countries, ship owners face challenges as not all nations permit outsourcing seafarers from countries with lower labor costs, such as the Philippines or China Consequently, ship owners must carefully weigh the implications of crew wages against the nationality of their crew.
Estimate optimal weights
In this stage, we minimize the maximum absolute differences (|𝑤 𝑏 − 𝑎 𝑏𝑗 𝑤 𝑗 |, |𝑤 𝑗 − 𝑎 𝑗𝑤 𝑤 𝑤 |) for all j to find the optimal weights of a criterion The minimization problem can be expressed as follow: min [max
The, we can solve (3) as a liner optimization model shown in (4) min 𝛿 𝐿 min 𝛿 𝐿 s.t
A solution to (4) gives the optimal weights ( 𝑤 1 ∗ , 𝑤 2 ∗ , … , 𝑤 𝑛 ∗ ) as well as the optimal value of 𝛿 𝐿
𝛿 𝐿∗ is the consistency ratio of the pair-wise comparison procedure in BWM
The optimal weights of each of the criteria and consistency ratio 𝛿 𝐿∗ of each respondent are presented in table 4
Standard of living and working conditions
Crew's wage Tax Trading routes
Availability of well – trained seafarers
We conducted a questionnaire-based interview with nine experts from both industrial and academic backgrounds to gather the necessary comparison data for Best-Worst Method (BWM) Utilizing this data, we calculated the weights assigned by these experts through BWM To establish the overall weights for the criteria, we then applied a simple average aggregation method.
Table 4 presents the combined weights of eight criteria derived from expert input Although the consistency ratios range from 0.13 to 0.21, which is not close to zero, other research and studies indicate that these results can still be considered highly reliable.
According to Table 4, the criterion "ship building standards" holds the highest weight for social sustainability at 0.224, followed by "trading routes" at 0.141 and "Bureaucratic control" at 0.129 The availability of well-trained seafarers is ranked as the least important criterion with a weight of 0.080, which is not unexpected, while "Crew's wage," which is closely related, ranks second.
Final scores of alternatives
RESULTS
It can be referred from the data analysis that opened registry is a better choice for ship owner with
Seven out of the top nine flag states worldwide are open registries, highlighting their popularity among ship owners The advantages of favorable tax conditions and relaxed regulations make operating under an open registry more commercially appealing for many maritime operators.
Looking from the respondents’ nationalities point of view, both Korea and Vietnamese respondents chose open registry
Recent data indicates a clear preference for open registries over closed registries, with open registries receiving higher mean scores in 7 out of 9 responses Among the various criteria for selecting a ship's flag, shipbuilding standards emerged as the most significant factor, boasting a mean score of 0.224, far surpassing other considerations Taxation ranked second, with a mean score of 0.151.
Open registries are often perceived to have less stringent shipbuilding standards compared to closed registries, which can pose challenges for ship registration However, some registries, like Hong Kong, now accept compliance with IMO conventions as sufficient for meeting their standards Countries such as China and Panama, despite their registry classifications, maintain similar safety and technical certification requirements aligned with IMO guidelines Notably, closed registries like China impose additional restrictions, requiring vessels to be both owned and constructed within the country, which can complicate registration for ships built in places like Korea or Japan Consequently, shipbuilding location becomes a critical factor in the registration process.
Each country operates under its own tax system, featuring distinct fees and discount policies This is why open registries like Panama and the Marshall Islands attract ship owners to register their vessels there Consequently, it is not surprising that taxation ranks as a significant factor in this context.
The availability of well-trained seafarers and crew wages are the least important factors in ship registration Seafarers must hold STCW certificates for their desired positions, ensuring they possess the necessary knowledge for onboard work While crew salaries differ by country, not all nations permit outsourcing seafarers from countries with lower labor costs, such as the Philippines or China Consequently, ship owners must carefully weigh the implications of crew wages against the nationality of their crew.
In analyzing the data from Table 4 on optimal weights and Table 8 regarding priorities for ship registration, it is evident that Korean respondents prioritized different criteria, particularly differing in their selection of the most important factor, while largely agreeing on the least important criterion, which was the ship's type Conversely, the majority of Vietnamese respondents identified shipbuilding standards as the top criterion, while tax and crew wages were deemed equally unimportant by many, highlighting the contrasting perspectives between the two groups in the ship registration process.
The analysis reveals four results with a consistency ratio between 0.1 and 0.2, and five results ranging from 0.2 to 0.22, indicating overall acceptable reliability As previously noted, the results obtained using BMW consistently demonstrate reliability, and the consistency ratios below 0.22 further affirm the dependability of our data.
CONCLUSION
A ship's registration signifies its nationality, granting it the right to fly a state's flag and navigate the high seas It's essential to note that freedom of navigation allows all states access to the ocean, but each vessel must possess a legal and national identity This legal personality is crucial for ensuring the ship's protection under international law.
This dissertation aims to identify a multiple-criteria decision-making approach for ship owners selecting shipping registries Utilizing the Best-Worst Method (BWM), the study assesses the key factors influencing this decision-making process The research offers an objective evaluation of the challenges faced by experts in the specialized field of the shipping industry.
According to practical experts, the most crucial factor in shipbuilding is adherence to industry standards, while the availability of well-trained seafarers is deemed the least significant Additionally, they consider related taxes, trading routes, and bureaucratic control as important sub-criteria influencing the industry Furthermore, experts identify open registry as the most favorable option for the shipping registry system.
Shipbuilding standards are crucial for ship owners when selecting a ship's registry, as they must adhere to IMO conventions that require state approval of treaties and international norms Additionally, taxes significantly impact profitability, making them an essential consideration for ship owners For instance, Liberia's marine register, the world's second-largest Open Registry State, generates approximately $18 million annually, contributing to 25% of its national income In contrast, Panama operates over 21.5% of global maritime traffic, yielding even higher income from its open registry services Therefore, ship owners should prioritize tax implications to maximize their economic benefits.
This research investigates the factors influencing ship owners' decisions to register a ship, but the findings should be viewed with caution due to certain limitations The study is based on a limited sample, which aims to minimize bias and ensure data quality while adhering to time constraints Ideally, a longer research period is necessary, but this study was confined to just one month Additionally, the data pool is restricted, as only a few professionals with advanced degrees in the shipping industry were accessible, resulting in a survey sent to ten individuals, of which only nine responses were valid This small sample size may lead to subjective results Furthermore, the theoretical complexity of the topic, which involves intricate theories and an understanding of international maritime law, poses another limitation due to restricted access to comprehensive knowledge.
This study has not been explored in depth, and if we were to redesign it, we would implement several modifications Most importantly, we would extend the time frame to ensure comprehensive participation throughout the entire study process, from initial conception to dissemination Additionally, we would aim to recruit a larger number of potential case studies to provide a broader selection for in-depth analysis once the study commences.
ERI's Salary Expert Database (n.d.) Japan Retrieved from Salary Expert: https://www.salaryexpert.com/salary/job/ordinary- seaman/japan#:~:text=An%20entry%20level%20ordinary%20seaman,average%20salary%20of% 20%C2%A55%2C075%2C967.
Statista Research Department (2016, November 17) Global smartphone OS market share held by RIM
(BlackBerry) from 2007 to 2016, by quarter Retrieved from Statista: https://www.statista.com/statistics/263439/global-market-share-held-by-rim-smartphones/
A.Kandakoglu, M.Celik, & I.Akgun (2009) A multi-methodological approach for shipping registry selection in maritime transportation industry Mathematical and Computer Modelling, 586-597
Angelina, B., & Peter, M (1998) Factors influencing the choice of flag: empirical Maritime Policy &
Apple (n.d.) Apple Retrieved from https://www.apple.com/app-store/
An analysis conducted by Asyali (2005) focuses on port state control inspections in relation to the ISPS Code The study highlights the significance of these inspections in enhancing maritime security and compliance with international standards The findings suggest that effective implementation of the ISPS Code is crucial for ensuring safe port operations and protecting against security threats This research is accessible on ResearchGate for further insights into the topic.
The Blackberry 5810 marked the beginning of a significant era for Blackberry, which initially catered to business professionals with its first phone capable of handling emails and calls Over time, it became a symbol of status among celebrities and politicians, with figures like Barack Obama and Kim Kardashian famously endorsing the device However, as the smartphone market evolved with the rise of iPhone and Android, Blackberry's popularity diminished, leading to a decline in its cultural relevance Notably, during the 2011 riots in England, Blackberry's messaging service was controversially linked to the organization of unrest Ultimately, even loyal users like Obama and Kardashian transitioned away from Blackberry, signaling the end of an iconic brand's dominance in the mobile phone industry.
BlackBerry (2020, March) BlackBerry Anual Report Ontario, Canada: BlackBerry Retrieved from
Bye, R J., & Aalberg, A L (2018) Maritime navigation accidents and risk indicators: An exploratory statistical analysis using AIS data and accident reports Reliability Engineering and System Safety
Celik, & Kandakoglu (2012) Maritime policy development against ship flagging out dilemma using a fuzzy quantified SWOT analysis Maritime Policy & Management ( MPM ) , 401-421
Celik, M., Er, I D., & Ozok, A F (2008) Application of fuzzy extended AHP methodology on shipping
Chu, P., & Kuang, J (2002) Note on Consistency Ratio Mathematical and Computer Modelling 35, 1077-
1080 Retrieved from https://pdf.sciencedirectassets.com/271552/1-s2.0-
Token=IQoJb3JpZ2luX2VjEJ7%2F%2F%2F%2F%2F%2F%2F%2F%2F%2FwEaCXVzLWVhc3QtMSJH MEUCIDJ5ASLVPLLmx9rSPppacGA7bVOgj%2F1Np9wInzWs%2F51lAiEAk8ICTE%2
Computer Hope (2019, July 10) App Store Retrieved from Computer Hope: https://www.computerhope.com/jargon/a/app-store.htm
Dalrymple, J (2008, December 31) 2008 in review: Apple Retrieved from Mac World: https://www.macworld.com/article/1137821/apple.html#:~:text=It%20was%20then%20that%2 0Apple,product%20introductions%20in%20its%20history
Tôi không biết!
Enderle, R (2018, May 25) The FBI Makes Accidental Argument for Why We Should All Be on Blackberry
Phones Retrieved from Techspective: https://techspective.net/2018/05/25/the-fbi-makes- accidental-argument-for-why-we-should-all-be-on-blackberry-phones/
Gianni, M (2008) Has the Exception Become the Rule? - Examining the Growing Dominance of Flags of
Convenience in International Shipping Oslo and London: ITF and WWf
Gilbert, B (2019, July 22) First Phone Anniversary Retrieved from Business Insider: https://www.businessinsider.com/first-phone-anniversary-2016-12
BlackBerry has a rich history marked by innovation and challenges in the tech industry Founded in 1984, the company initially focused on wireless communication, eventually revolutionizing the smartphone market with its secure email services However, as competitors like Apple and Android emerged, BlackBerry struggled to maintain its market share Despite efforts to adapt, including a shift to touchscreen devices and a focus on software, the company faced significant declines in sales and relevance Today, BlackBerry has transformed into a software and cybersecurity firm, reflecting its evolution from a leading smartphone manufacturer to a player in the tech landscape.
Gregory, W R (2012, 11 1) FLAGS OF CONVENIENCE: THE DEVELOPMENT OF OPEN REGISTRIES IN THE
GLOBAL MARITIME BUSINESS AND IMPLICATIONS FOR MODERN SEAFARERS Retrieved from
Oceanfnd: https://oceanfdn.org/sites/default/files/Gregory_georgetown.pdf
IDC & Gartner (2016, November) Global market share held by RIM smartphones Retrieved from
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ILO (n.d.) International Labour Standards on Seafarers Retrieved from ILO: https://www.ilo.org/global/standards/subjects-covered-by-international-labour- standards/seafarers/lang en/index.htm
The International Convention for the Safety of Life at Sea (SOLAS), established in 1974 by the International Maritime Organization (IMO), sets vital safety standards for maritime operations This convention aims to ensure the safety of ships and the protection of human life at sea through comprehensive regulations and guidelines For more information, visit the official IMO website.
IMO (n.d.) Port State Control Retrieved from IMO: https://www.imo.org/en/OurWork/MSAS/Pages/PortStateControl.aspx
International Transport Workers’ Federation (n.d.) STCW Retrieved from mptusa: https://www.mptusa.com/pdf/STCW_guide_english.pdf
ITFseafarers (n.d.) FOCs Retrieved from ITF Seafarers: https://www.itfseafarers.org/en/focs
The rise of the iPhone marked a significant turning point for BlackBerry, leading to its decline in the smartphone market As Apple introduced a user-friendly interface and a robust app ecosystem, BlackBerry struggled to adapt to the changing demands of consumers This shift highlighted BlackBerry's inability to innovate and compete effectively, ultimately crippling its once-dominant position in the industry The contrast between Apple's forward-thinking approach and BlackBerry's stagnation serves as a cautionary tale about the importance of adaptability in technology.
In the context of globalization, Koch-Baumgarten (1998) explores the formation of trade union regimes within the transport sector, specifically focusing on the challenges posed by flag-of-convenience shipping The article examines efforts to establish transnational trade union regulations aimed at addressing the complexities and inequalities arising in this globalized industry Through a detailed analysis, it highlights the importance of international cooperation among trade unions to effectively advocate for workers' rights and improve labor standards in the shipping sector.
Kusi-Sarpong, Rezaei, & Ahmadi (2017) Assessing the social sustainability of supply chains using Best
The Best-Worst Method (BWM) is a robust approach for assessing the social sustainability of supply chains It enables decision-makers to prioritize various criteria effectively by identifying the most and least important factors This method enhances the decision-making process by providing a clear framework for evaluating trade-offs among competing objectives in supply chain management By implementing BWM, organizations can achieve a more sustainable and socially responsible supply chain, ultimately contributing to better environmental and social outcomes.
List, L (2019, December 03) Top 10 flag states 2019 Retrieved from lloydslist.maritimeintelligence.informa: https://lloydslist.maritimeintelligence.informa.com/LL1129840/Top-10-flag-states-2019
Luo, Fan, L., & K.X.Li (2013) Flag choice behaviour in the world merchant fleet Transportmetrica A:
M.Perepelkin, S.Knapp, G.Perepelkin, & M.Pooter (2010) An improved methodology to measure flag performance for the shipping industry Marine Policy, 395-405
BlackBerry's leadership failure highlights the dominance of software over hardware in the tech industry Once a leader in mobile communication, BlackBerry struggled to adapt to the rise of software-driven smartphones, ultimately losing its market position This shift underscores the importance of innovation and agility in technology, where software capabilities now dictate success The decline of BlackBerry serves as a cautionary tale for companies that prioritize hardware without embracing the evolving software landscape.