INTRODUCTION
According to the United Nations Convention on the Law of the Sea (UNCLOS), the principle of freedom of navigation is upheld in the high seas, allowing access to all states While there are specific state-related issues concerning this freedom, the agreement emphasizes the importance of navigation and overflight rights No state can claim sovereignty or authority over the high seas, ensuring unrestricted access for all vessels However, the UNCLOS and public international law create a framework that prohibits certain conditions aboard vessels, reinforcing the principles of freedom of navigation.
Every vessel must have a nationality to ensure proper registration under a state, enabling compliance with regulations and the ability to navigate the high seas effectively.
A national flag serves as an official endorsement, indicating that a vessel or vehicle is under the jurisdiction and control of a specific country As economic development increases, many ships are registered under foreign flags to facilitate transportation and trade, leading to a surge in maritime activity Consequently, flying foreign flags has become a practical measure to enhance the convenience of circulation and docking at international ports.
Ship registration laws are categorized into open and closed registries Closed registries are managed by individual countries, allowing only their own ships—owned, operated, and crewed by nationals—to be registered under their flag For closed registries, ship owners must be citizens of the registering country, and their business operations must also be based there.
This registration also means that these ships may be requisitioned at time of war for the transportation of goods and people in the service of the nation
Open registries in certain countries allow vessel owners to register and operate ships under a foreign flag, even without a genuine relationship to the flag state This practice facilitates easier trading and can lead to significant cost savings in operations and administration for ship owners Additionally, registering in a different country can help owners benefit from lower regulatory burdens and tax incentives, such as tonnage tax, which applies a standard corporate income tax based on the size and number of ships Open registries are often linked to more lenient tax regulations, labor laws, and environmental standards Panama and Liberia are the most sought-after open registry nations due to their lack of citizenship or residency requirements, straightforward online registration processes, and access to tax-free revenue and affordable labor Proper registration is crucial for ships to engage in international trade, ultimately benefiting the country of registration.
While there are benefits to operating under a flag of convenience, significant disadvantages must be considered by ship owners Ships registered under open registries often expose seafarers to harsher working conditions due to less stringent regulations This discrepancy raises concerns about jurisdiction and the enforcement of appropriate operational standards Seafarers on these vessels face increased risks of working in hazardous environments without adequate insurance or compensation Furthermore, fundamental rights such as the freedom to form trade unions, fair wages, and safe working conditions may not be guaranteed Additionally, standard guidelines that allow for rest periods between duties may not be enforced, further compromising the well-being of seafarers.
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 under its flag, significantly outpacing China by 4,486 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 open registries.
Our research is among the first to employ the best-worst method to identify the most and least important criteria in ship registry selection While numerous studies have previously utilized methodologies such as fuzzy logic, SWOT analysis, and AHP for examining ship flag choice issues, the ANP method has been less commonly applied Notably, Celik & Kandakoglu (2012) utilized a fuzzy quantified SWOT analysis to explore the flagging-out dilemma in Turkey.
In the maritime industry, Perepelkin et al (2010) developed an enhanced methodology to assess flag performance across various countries Kandakoglu et al (2009) introduced a multi-methodological approach for selecting shipping registries within the maritime transportation sector Additionally, Lua, Fan, and Li (2013) analyzed flag choice behavior using individual ship registration data, employing a binary choice model for flagging-out decisions and a nested logit model for final flag selection.
Ship owners must recognize the critical factors that influence their decision to register a ship, as this choice significantly impacts their competitiveness in the international shipping market To achieve operational success, it is essential for ship owners to implement cost-effective strategies, with flag selection being a pivotal step in their shipping operations This leads to 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?”
After reviewing previous studies, our team established eight key criteria to evaluate two options: open and closed registries These criteria include shipbuilding standards, living and working conditions, crew wages, the availability of well-trained seafarers, types of ships, trading routes, taxation, and bureaucratic oversight.
This study addresses the challenges faced by ship owners in the decision-making process for ship registration by utilizing the Best-Worst Method A significant benefit of this research is its reliance on data sourced from esteemed professors in the shipping industry, who possess extensive expertise in the field.
This article will explore the existing literature on closed and open registries, highlighting the factors that influence ship registration decisions and their intended purposes Our methodology, including the development and application of various methods, will be detailed in Section 3, alongside the study design process Section 4 will focus on data processing, while Section 5 will present the estimated outcome model and data analysis Finally, Section 6 will discuss the research results, and Section 7 will provide the conclusion of the paper.
LITERATURE REVIEW
Ship registration is essential for commercial trading, as a vessel without a flag is not permitted entry into ports worldwide Therefore, selecting the appropriate type of registry is a crucial strategy for successful ship operation.
Ship registration primarily falls into two categories: closed registry and open registry Closed registry is the traditional form of ship registration within the maritime industry, while open registry, also known as “flag-out,” allows vessels to be registered in a foreign country instead of their home nation.
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
Registering an American-owned ship in Panama under an open registry, or flag of convenience, allows the vessel to bypass U.S safety regulations and adhere instead to Panama's standards This practice is characterized by lower operational costs and cheaper labor, enabling ship owners to reduce expenses significantly By minimizing the crew's living standards and working conditions, owners can deliver goods at a fraction of the cost compared to registering in developed nations.
Open registries provide numerous advantages for ship owners, including minimal vessel restrictions, a favorable tax environment, and low administrative and registration fees These registries often have few or easily met nationality requirements, along with a quick and efficient registration process Additionally, flexible manning requirements further enhance their appeal One of the most notable benefits is the imposition of little to no local taxes on income, making open registries an attractive option for ship owners.
Open registration, particularly through Flags of Convenience (FOC), has sparked controversy due to its contrasting regulations compared to closed registries Closed registries prioritize stringent shipbuilding standards and crew welfare, focusing on safety, while open registries often prioritize profit, leading to lax enforcement of maritime laws This profit-driven approach can result in sub-standard shipping practices, poor safety performance, and crew mistreatment Research indicates that ships registered under FOCs are more likely to be involved in maritime accidents, contributing to a deregulated and non-unionized segment of the shipping industry Consequently, by opting for open registries, ship operators can bypass unions that enforce essential safety and wage standards, ultimately reducing operational costs at the expense of maritime security and crew rights.
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 categorized the factors influencing shipping registry selection into three main areas: economic, social, and political Their research, utilizing the Fuzzy AHP methodology, revealed that bank financing 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) confirmed the significance of economic factors in their findings.
The flag-out ratio is influenced by a country's 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 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 costs, with overall employment costs being more significant than basic wages alone Qualitative factors such as crew salaries, skilled labor availability, and fiscal reasons also play a crucial role According to Angela and Peter, crew expenses are the primary reason firms opt against national flags, alongside the desire to avoid bureaucratic oversight, high compliance costs, and the lack of skilled labor Firms choosing closed registries are influenced by various factors, including ship type, trading routes, public relations, marketing, and historical context.
Key factors influencing ship registration include crew wages, seafarers' living and working conditions, the availability of well-trained personnel, the type of ship, shipbuilding standards, trading routes, taxation, and bureaucratic regulations.
Crew wages for seafarers are determined by the duration of their time on board, revealing a significant disparity between salaries in developed and developing countries For example, an ordinary seaman in the Philippines earns an average of $5,258, while their counterpart in Japan earns approximately $32,544, according to ERI's Salary Expert Database Consequently, ship owners in Japan must weigh the decision of registering their vessels under Japan's closed registry or opting for an open registry that permits the outsourcing of seafarers.
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 that they have the freedom of movement essential for their well-being and professional activities, thereby promoting international commerce.
Seafarers can be categorized into two types: national and non-national The availability of well-trained seafarers plays a crucial role in the decision to outsource crew members To work on ships, seafarers must comply with various conventions, with the STCW (International Convention on Standards of Training, Certification and Watchkeeping for Seafarers) being a fundamental requirement The STCW aims to ensure a safe working environment for seafarers while enhancing their professional performance on board 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.
Ship owners can choose between national and open registries based on the type of vessel and the benefits they seek For example, fishing vessels that primarily operate within national waters are better suited for closed registries, as they offer more practical advantages for local trade.
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 pertains to ship registration regulations.
Taxation significantly impacts ship owners' profits, with rates varying based on vessel conditions like age and type Each country has its own tax system for ship registration For example, registering a new or secondhand ship in Panama entails three primary fees: a consular fee, a registration fee, and an annual tonnage tax for the first year Tax calculations differ by ship type, but generally include five key fees: annual tax, annual consular tax, annual inspection fee, annual investigation fee, and a 3% charge per Net Tonnage Additionally, vessels that prioritize environmental preservation can receive up to a 50% discount on their annual tax for three years.
Shipbuilding standards encompass the essential equipment and technology required for constructing ships For certain registries, such as Hong Kong, adherence to an IMO convention is considered sufficient to meet national standards (Mayer Brown, 2008) The primary aim of the SOLAS Convention is to establish minimum standards for the construction, equipment, and operation of ships to ensure their safety (IMO, 1974) Various SOLAS certificates are linked to these shipbuilding standards.
Navigation License Passenger Ship Safety Certificate Cargo Ship Safety Construction Certificate Cargo Ship Safety Equipment Certificate Cargo Ship Safety Radio Certificate Cargo Ship Safety 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
The "Best-worst method" is an effective approach for arriving at solutions in multi-criteria decision-making (MCDM), particularly in the context of ship registration MCDM methods are valuable for evaluating the significance of various criteria and have been successfully applied to numerous challenges across diverse fields, including sustainable supply chain management and green port initiatives.
In this study, we introduce the "Best Worst Method" (BWM), a unique approach that offers distinct advantages for our research, marking its first application in this field A detailed description of the method will be provided in the following section.
Decision-making is the cognitive process of selecting the best alternative from a set of options In multi-criteria decision-making (MCDM), a decision-maker must identify the most suitable choice based on various criteria To tackle MCDM challenges, the Best Worst Method (BWM) has been implemented, a technique developed by Dr Jafar Rezaei at Delft University of Technology in 2015 This method utilizes systematic pairwise comparisons of decision criteria to assess and evaluate different alternatives effectively.
BMW stands out among MCDM methods due to its requirement for fewer data inputs, necessitating fewer pairwise comparisons than AHP Specifically, BMW utilizes 2n3 comparisons compared to AHP's n(n-1)/2 The pairwise comparison method involves evaluating each alternative against every other alternative, ranking all possible pairs accordingly.
The data analysis results obtained through BMW demonstrate greater reliability compared to those derived from AHP, as BMW offers more consistent comparisons This consistency in ratios enhances the overall reliability of the data.
According to Chu and Kuang (2002), the consistency in research should be 0.1
The creator of BWM stated that consistency ratio in this method is used to measure the level of reliability because results from BMW are always consistent (Rezaei, 2015)
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 ineffective criteria using this method, it has been applied in various real-world scenarios For example, research by Kusi-Sarpong, Rezaei, and Ahmadi illustrates its practical application.
In 2017, researchers utilized Best-Worst Method (BWM) to identify key social sustainability criteria in supply chain management Wankhele and SVinodh (2021) created a framework tailored for the automotive sector, analyzing challenges to establish a ranking for effective implementation in Indian automotive industries Additionally, BWM has been applied to determine suitable governance models for green port management in the Indian Ocean Rim, drawing on principles of social systems engineering (Ziaul, Henrik, Mariia, 2020).
DATA COLLECTION
We gather data by distributing questionnaires through Google Forms via email, Zalo.vn, and Facebook to professors, teachers, and professionals involved in the Maritime and Shipping Industry.
Out of 20 questionnaires distributed, we received 10 responses, with one response rejected due to a low knowledge rating of 1 regarding the maritime industry and ship registration Data collection occurred over three weeks, from May 1 to May 20, 2022, providing an overview of the respondents' insights.
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 have similar representation, with 5 from Vietnam and 4 from Korea, suggesting potential differences in their perspectives The majority of participants come from the Port and Shipping industries and have affiliations in academia.
Only 1 respondent is from the industrial – commercial with a bachelor’s degree in Chartering Department All respondents have the year of experience more than 11 years.
DATA ANALYSIS
Empirical application of the BWM
Our group is focused on assessing the most suitable type of ship registry, which primarily consists of two categories: closed registry and open registry Closed registry serves as the foundational type of ship registration within the maritime industry, while open registry has emerged as a more recent 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 a set of criteria to effectively describe the subject matter This section elaborates on the development and refinement processes of the proposed framework Through a comprehensive literature review and analysis of prior studies, we identified eight key criteria essential for ship registry selection.
(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 study, participants evaluated the significance of various criteria for ship registration by identifying the most and least important among eight specified criteria Respondents were specifically tasked with determining which criterion held the highest importance and which was deemed the least critical for the ship registration process.
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 preferred criteria on a scale from 1 to 9, with 1 representing the most important factor The findings reveal that shipbuilding standards and tax emerged as the top two criteria, indicating their significance among the respondents.
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 various criteria against the least important one using a questionnaire with a 1 to 9 measurement scale, where the least important criteria were assigned a score of 1 The two criteria identified as the least important were the type of ship and crew wages.
Find the preference of the best criterion over all other criteria
Respondents evaluated the significance of the top criterion compared to all other criteria using a 1–9 scale, which allowed us to represent the best-to-others vector as shown in Table 2.
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 were instructed to evaluate the significance of all criteria in relation to the least favorable criterion, using a scale from 1 to 9 This allows us to represent the comparative importance of the other criteria against the worst one as a vector.
𝐴 𝑤 = (𝑎 1𝑤, 𝑎 𝑤2 , … , 𝑎 𝑛𝑤 ) (2) 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 interviews with nine experts from industrial and academic backgrounds through a questionnaire to gather the necessary comparative data for Best-Worst Method (BWM) analysis Subsequently, we applied BWM to establish the weights assigned by these experts Lastly, we aggregated the results using a simple average to derive the overall weights for the criteria.
Table 4 presents the combined weights of the eight criteria derived from expert input Although the consistency ratios range from 0.13 to 0.21, indicating they are not close to zero, existing literature and studies suggest that these results can still be considered highly reliable.
According to Table 4, "ship building standards" holds the highest weight in social sustainability criteria at 0.224, followed by "trading routes" at 0.141 and "Bureaucratic control" at 0.129 The criterion "Availability of well-trained seafarers" has a weight of 0.080, making it the least important criterion, which aligns with expectations Additionally, "Crew's wage," ranked second, is closely related to the availability of trained seafarers.
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, with values derived from the eight criteria associated with each of the two alternatives These values are calculated by multiplying the normalized values from Table 6 by their corresponding weights The final priority score for each alternative is determined by summing the row-wise totals.
The final priority value for each alternative, denoted as \( Z_i \), is calculated using the normalized values of criterion \( j \) under alternative \( i \), represented as \( x_{ij}^{norm} \) By applying this method, the priorities for ship registry can be determined for all respondents, as illustrated 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 only one participant was from the industrial-commercial sector while the others were from academia This participant favored open registration, a preference that aligned 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 Interestingly, non-Korean respondents shared similar views, consistently expressing a preference for open registration over 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, summarized 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 open registry offers, allowing owners to select a suitable country without being bound by their home nation's regulations Additionally, ship owners benefit from cost savings due to lower taxes and a more affordable labor market in the registered country When considering ship registration, two critical factors emerge: shipbuilding standards and tax implications Ensuring the vessel meets all safety and durability requirements is essential for successful maritime operations Furthermore, vessels that prioritize environmental sustainability can receive annual tax discounts of up to 50% for three years Ultimately, ship owners are particularly focused on jurisdictions with low tax rates, as these directly affect their profitability.
It can be referred from the data analysis that opened registry is a better choice for ship owner with
Out of the top 10 flag states worldwide, 7 are open registries, highlighting their popularity among ship owners The advantages of favorable tax structures and relaxed regulations make operating under an open registry's flag a more commercially viable option for many.
Looking from the respondents’ nationalities point of view, both Korea and Vietnamese respondents chose open registry
Data indicates a preference for open registry over closed registry, with a higher mean in 7 out of 9 responses The primary criterion for selecting a ship's flag is shipbuilding standards, which significantly surpasses other factors with a mean of 0.224 Taxation ranks second in importance, with a mean of 0.151.
Generally, it is thought that open registries usually have easier standard requirements for shipbuilding compared to closed registries that it is harder to register a ship in closed registries
Some registries, like Hong Kong, now consider ships compliant with IMO conventions as meeting their shipbuilding standards In contrast, countries such as China and Panama maintain specific IMO certificates for safety and technical requirements for ship registration, resulting in minimal differences in shipbuilding standards between closed and open registries However, closed registries like China mandate that vessels must not only be owned but also constructed within the country Consequently, shipowners face challenges registering vessels built in Korea or Japan, as they would incur a 27.53% import duty and value-added tax if they insist on registering their ships in China, making shipbuilding a critical factor in the registration process.
Different countries have 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, it is understandable that taxation ranks as a significant factor in these decisions.
The availability of well-trained seafarers and crew wages are among the least important factors influencing ship registration Seafarers must possess STCW-compliant certificates for their desired positions, ensuring they have the necessary knowledge to operate on board While crew salaries differ significantly across countries, outsourcing seafarers from nations with lower labor costs, like the Philippines or China, is restricted by some countries.
Therefore, ship owner should consider carefully between the crew’s wage and nationality
In analyzing Tables 4 and 8 regarding ship registration preferences, Korean respondents identified different top criteria, while they largely agreed on the least important factor, which was the type of ship Conversely, Vietnamese respondents prioritized shipbuilding standards as the most significant criterion, with tax and crew wages being viewed as equally unimportant.
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 interviews with nine experts from both industrial and academic backgrounds using a questionnaire to gather the necessary comparison data for Best-Worst Method (BWM) Subsequently, we applied BWM to calculate the weights assigned by these experts Finally, we aggregated the results through a simple average to establish the overall weights for the criteria.
Table 4 presents the aggregated weights of eight criteria derived from expert input Although the consistency ratios range from 0.13 to 0.21, indicating they are not close to zero, existing literature suggests that these results can still be considered highly reliable.
According to Table 4, the criterion with the highest weight in social sustainability is "ship building standards" at 0.224, followed by "trading routes" at 0.141 and "Bureaucratic control" at 0.129 The criterion "Availability of well-trained seafarers" holds the lowest weight at 0.080, which is not unexpected, while "Crew's wage," which is closely associated with this criterion, 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
Out of the top 10 flag states globally, 7 are open registries, highlighting a significant trend in maritime operations Ship owners often prefer these flags due to favorable tax conditions and regulatory environments, making it more commercially advantageous to operate under an open registry.
Looking from the respondents’ nationalities point of view, both Korea and Vietnamese respondents chose open registry
Data indicates a clear preference for open registry over closed registry, with higher average ratings in 7 out of 9 responses Among the selection criteria for a ship's flag, shipbuilding standards emerge as the most significant factor, boasting a mean score of 0.224, which significantly surpasses other criteria Tax considerations follow in importance, with a mean score of 0.151.
Generally, it is thought that open registries usually have easier standard requirements for shipbuilding compared to closed registries that it is harder to register a ship in closed registries
Some registries, like Hong Kong, now consider ships compliant with IMO conventions to meet their shipbuilding standards In contrast, countries such as China and Panama have specific IMO certificates for safety and technical requirements necessary for ship registration, indicating minimal differences in shipbuilding standards between closed and open registries However, closed registries like China mandate that vessels must not only be owned but also constructed in China, preventing registration of ships built in countries like Korea or Japan unless the owner pays significant import duties and taxes Consequently, shipbuilding becomes a crucial factor in the registration process.
Different countries have unique tax systems featuring various base fees and discount policies, which is why open registries like Panama and the Marshall Islands attract ship owners to register their vessels there Consequently, it is logical and expected that taxation ranks as a secondary consideration.
The availability of well-trained seafarers and crew wages are among the least important factors in ship registration Seafarers must possess STCW certificates relevant to their positions, ensuring they have the necessary knowledge to work on board While crew salaries differ significantly across countries, outsourcing seafarers from nations with lower labor costs, such as the Philippines or China, is restricted by some countries.
Therefore, ship owner should consider carefully between the crew’s wage and nationality
In analyzing the optimal weights and priorities for ship registration, Korean respondents identified different key criteria, while largely agreeing on the least important factor, which was the ship's type In contrast, Vietnamese respondents prioritized shipbuilding standards as the most significant criterion, with tax and crew wages being deemed equally unimportant.
The analysis reveals that there are four results with a consistency ratio between 0.1 and 0.2, and five results ranging from 0.2 to 0.22, both of which are deemed acceptable As previously noted, the results obtained from BMW consistently demonstrate reliability, indicating that a consistency ratio below 0.22 assures us of the data's dependability.
CONCLUSION
A ship's registration signifies its nationality, granting it the right to fly a state’s flag and navigate the high seas This freedom of navigation indicates that the ocean is accessible to all states, but every vessel must possess a legal and national identity This legal personality is essential for protecting the ship under international law.
This dissertation aims to identify a multiple-criteria decision-making approach for ship owners selecting a shipping registry Utilizing the Best-Worst Method (BWM), the study explores the key factors influencing the decision-making process in shipping registry selection.
This is done in a fashion that provides objective assessment of the issues that arise in the highly specialized knowledge’s professors in the shipping industry
Practical experts emphasize that shipbuilding standards are the most critical factor in the industry, while the availability of well-trained seafarers is considered the least important They also identify related taxes, trading routes, and bureaucratic control as significant sub-criteria influencing the sector Furthermore, open registry is regarded as the most favorable option for the shipping registry system.
Shipbuilding standards are crucial for ship owners when selecting a ship's registry, as adherence to International Maritime Organization (IMO) conventions is mandatory for states allowing ships to register Compliance with these standards ensures that ship owners meet necessary norms Additionally, tax implications are vital for profitability, influencing ship owners' decisions For instance, Liberia's marine register, the world's second-largest open registry, generates approximately $18 million annually, contributing to 25% of the national income In contrast, Panama's flag operates over 21.5% of global vessels, yielding significantly higher income from its open registry services Therefore, ship owners must prioritize tax considerations to maximize their economic benefits.
This research investigates the factors influencing ship owners' decisions to register a ship, but it is important to acknowledge certain limitations The study relies on a small, selected sample to mitigate bias and ensure data quality, constrained by a one-month timeframe that hampers thorough exploration Additionally, the limited pool of qualified professionals in the shipping industry with advanced degrees restricted our survey to just ten respondents, resulting in subjective findings The academic nature of the topic also presents theoretical challenges, as a deeper understanding of international maritime law is required but was not fully explored due to limited access to relevant knowledge If we were to redesign this study, we would extend the timeframe for broader participation and aim to recruit a larger number of case studies for a more comprehensive analysis.
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Apple (n.d.) Apple Retrieved from https://www.apple.com/app-store/
In January 2005, E Asyali conducted an analysis of port state control inspections concerning the International Ship and Port Facility Security (ISPS) Code This study, available on ResearchGate, examines the effectiveness and compliance of port state control measures in relation to maritime security standards established by the ISPS Code The findings highlight the importance of rigorous inspections to enhance safety and security in port operations.
The BlackBerry, once a dominant force in mobile technology, played a significant role in shaping popular culture before its decline Its innovative features, such as email accessibility and physical keyboard, made it a favorite among professionals and celebrities alike However, the rise of touchscreen smartphones and changing consumer preferences led to its eventual fall from grace Despite its decline, BlackBerry remains a cultural icon, symbolizing a bygone era of mobile communication The story of BlackBerry reflects the rapid evolution of technology and the impact of shifting trends in consumer behavior.
BlackBerry (2020, March) BlackBerry Anual Report Ontario, Canada: BlackBerry Retrieved from Statista
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- S0895717700X0218X/1-s2.0-S0895717702000729/main.pdf?X-Amz-Security- 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
BlackBerry, một trong những thương hiệu điện thoại di động hàng đầu trong quá khứ, đã trải qua sự suy tàn đáng tiếc Nguyên nhân chính dẫn đến thất bại của BlackBerry là sự chậm trễ trong việc thích ứng với xu hướng smartphone và ứng dụng di động Công ty không thể cạnh tranh với các đối thủ như Apple và Android, do đó mất dần thị phần Bên cạnh đó, sự thiếu đổi mới trong thiết kế và tính năng sản phẩm cũng góp phần làm giảm sức hấp dẫn của BlackBerry Câu chuyện thất bại này không chỉ là bài học cho BlackBerry mà còn cho cả ngành công nghiệp công nghệ, nhấn mạnh tầm quan trọng của việc đổi mới và thích ứng với thị trường.
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, a once-dominant Canadian smartphone maker, faced significant challenges over the years, culminating in its 2013 announcement of a $4.7 billion sale to Fairfax Financial Founded in 1984 by Mike Lazaridis and Douglas Fregin, BlackBerry initially thrived with innovations like the Inter@ctive Pager and the first BlackBerry device, the 850, which introduced mobile email However, the company struggled to compete with the rise of the iPhone and other smartphones, leading to a decline in market share Despite reaching a peak of 40 million users and significant milestones, including the release of the BlackBerry 10 operating system, the company ultimately could not regain its former glory, resulting in substantial layoffs and a strategic shift towards the enterprise market.
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 Statista: https://www.statista.com/statistics/263439/global-market-share-held-by-rim- smartphones/
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, is a key maritime treaty aimed at ensuring the safety of ships and their passengers This convention outlines comprehensive safety measures and regulations that must be adhered to by all vessels engaged in international maritime trade For more detailed information, visit the International Maritime Organization's official page on SOLAS.
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 significantly impacted BlackBerry, leading to its decline in the smartphone market Initially, BlackBerry dominated with its secure email services and physical keyboards, appealing to business users However, the iPhone introduced a user-friendly interface and a wide range of applications, attracting a broader audience As consumers shifted towards touchscreen devices, BlackBerry struggled to adapt its technology and marketing strategies Ultimately, the innovative features of the iPhone overshadowed BlackBerry's offerings, marking a pivotal moment in mobile technology history.
In "Trade Union Regime Formation Under the Conditions of Globalization in the Transport Sector," Koch-Baumgarten (1998) explores the challenges and efforts of transnational trade unions to regulate flag-of-convenience shipping amid globalization The article examines how globalization impacts labor rights and the effectiveness of trade unions in the transport sector, highlighting attempts to establish a cohesive regulatory framework It underscores the significance of international cooperation among trade unions to address the complexities of labor relations in a globalized maritime industry.
Kusi-Sarpong, Rezaei, & Ahmadi (2017) Assessing the social sustainability of supply chains using Best
The Best-Worst Method (BWM) is a valuable tool for assessing the social sustainability of supply chains This method allows for a systematic evaluation by identifying the most and least important criteria in decision-making processes By focusing on stakeholder perspectives, BWM enhances the understanding of social impacts within supply chains The application of this method can lead to more informed and sustainable supply chain practices, ultimately contributing to improved social outcomes For further insights, refer to the detailed research available at the provided link.
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 decline, marked by the resignations of co-CEOs Jim Balsillie and Mike Lazaridis, highlights a leadership failure that has allowed software to triumph over hardware The company, once a leader in mobile email with its BlackBerry devices, struggled to adapt to the software-driven market dominated by Apple and Google Despite early success, RIM's leadership failed to recognize the shift towards software innovation, leading to significant losses in market value and relevance As competitors embraced app ecosystems, BlackBerry clung to its hardware legacy, ultimately resulting in a dramatic fall from grace The urgent need for change is evident, as new CEO Thorsten Heins must prioritize software development to revive the brand, although many believe it may already be too late.
Mayer Brown's 2008 guide details the shipping register and tax regime in Hong Kong, providing essential insights into the regulatory framework that governs shipping activities in the region The document serves as a comprehensive resource for understanding the implications of shipping registration and the associated tax responsibilities for businesses operating in Hong Kong's maritime sector.
Mitroussi, K., & Arghyrou, M G (2016) Institutional performance and ship registration Transport
Moussi, A (n.d.) Mini-Case study: The downfall of Blackberry Retrieved from Adaptive Cycle: http://www.adaptivecycle.nl/images/Mini_case_study_Blackberry.pdf
O'Boyle, B (2020, August 19) Phones: News Retrieved from Pocket Lint: https://www.pocket- lint.com/phones/news/137319-farewell-blackberry-os-here-are-the-23-best-blackberry-phones- that-changed-the-world
Pairwise Comparison (n.d.) Retrieved from 1000minds: https://www.1000minds.com/decision- making/pairwise-comparison
Panama in Korea (n.d.) Services Merchant Marine Retrieved from Embassy & Consulate General of Panama in Korea: http://panama.embaseoul.kr/
Ports and Maritime Affairs (2016, December 21) Certificates and Documents Required by SOLAS
Convention Retrieved from ClassNK: https://www.classnk.or.jp/hp/pdf/activities/statutory/ism/flag/bahrain/directive_solas-07.pdf Rezaei, J (2015) Best-worst multi-criteria decision-making method Omega, 49-57
Seth, S (2020, September 11) BlackBerry: A Story Of Constant Success & Failure Retrieved from investopedia Web site: https://www.investopedia.com/articles/investing/062315/blackberry- story-constant-success-failure.asp
Seth, S (2020, September 11) BlackBerry: A Story Of Constant Success & Failure Retrieved from Investopia: https://www.investopedia.com/articles/investing/062315/blackberry-story- constant-success-failure.asp
Seth, S (2020, September 11) BlackBerry: A Story Of Constant Success & Failure Retrieved from investopedia: https://www.investopedia.com/articles/investing/062315/blackberry-story- constant-success-failure.asp