So Where do the Shipping Disasters Take Place?

They take place at home. Let me explain.

In studies of regulatory policy, the international flags-of-convenience system for shipping often gets cited as an example of regulatory competition-in-laxity. Ever since some poorer nations like Liberia and Panama started registering foreign-owned ships under their own flags and subjecting them to lax or non-existant inspection standards, such standards have become more liberal around the world. For a variety of reasons (most prominently, the fact that “standards” were often ways of subsidizing domestic unions and shipbuilders) this is a good thing. But it’s also a proveable fact that, even after adjusting for just about every variable under the sun, convenience-flagged ships prove more dangerous than their brethern regulated by first-world countries. 

A new report from reinsurance giant Swiss Re, however, provides some evidence that the system works decently for safety. In 2006, Swiss Re reports, the world saw about 60 major shipping disasters.

It’s not very interesting to note nearly all of the really bad events disasters happened in the underdeveloped world.

But it’s much more interesting to note that the worst disasters rarely took place in areas not subject to international regulation. The Egyptian Ferry that sank killing over 1,000 was plying a domestic route and, thus, had to carry an Egyptian flag. The same held for the shipwreckthat killed over 100 in Dijibouti, the sinking of an Egyptian riverboat that killed50, the pleasure cruise boat that sank in Bahrain killing 100, and the Canadian ferry that sank in the North Pacific killing 2. Bangladesh, likewise, lost 26 fishing boats and about 370 souls. Around the world nine boats overloaded with illegal immigrants–and thus, one assumes, quite likely to avoid any standards–also sank and killed over 500. In short, all of the worst disasters in terms of life lost happened outside of the flags-of-convenience system.

Major cruise ships, nearly all of which carry flags-of-convenience, were much safer than purely domestic ships. It appears, that, during 2006 that only one person died in a shipping disaster on board a cruise ship. (Of course, cruise ships take far fewer trips and serve afluent clients who likely demand more safety.)

Flags-of-convenience may well increase certain types of risks but, at least in 2006, the truly deadly shipping disasters seem to happen outside of the international shipping realm.