The Growing Risks of Flags of Convenience in Global Shipping

Over 5,000 vessels – equivalent to 14.5% of the global merchant fleet – operate under registries with less than 10% ratification of International Maritime Organization and the International Labour Organization conventions, increasing exposure to enforcement actions, according to new data from analytics firm Kpler.

“Flag risks are increasingly shaping maritime due diligence, impacting regulatory scrutiny, financial exposure, and operational integrity. The strategic use of high-risk flags in evasive practices, such as flag-hopping and shadow fleet operations, underscores the complexities of compliance in global shipping,” wrote Dimitris Ampatzidis, a risk and compliance analyst at Kpler, in a new report.

Sanctioned vessel operations have doubled since early 2023, according to Kpler with more than 600 sanctioned vessels operating under high-risk flags.

The dark fleet cast its shadow over the International Chamber of Shipping’s (ICS) latest annual flag state performance table with four new countries – familiar homes to Russia’s fleet – added to the list.

Cambodia, Eswatini, Gabon and Guinea-Bissau were added to the survey, published last month, which charts the best and worst performing major flag states, while the British Virgin Islands, Costa Rica and Uruguay have been removed due to their relatively small fleet sizes.

“The new additions, Cambodia, Eswatini, Gabon and Guinea-Bissau are reportedly used by some shipping companies seeking to bypass US/EU/G7 sanctions, leading to concerns as to whether international maritime standards are being properly enforced on board ships flying the flags of these States,” the ICS stated in a release.

Splash has reported repeatedly about the growth of shipping registers fuelled by the shadow fleet and Russia’s determination to keep exports flowing despite sanctions.

San Marino, Guyana, Sierra Leone, Comoro Islands, Guinea Bissau and most notably Guinea were the flag states that stood out for their extraordinary fleet growth in the data compiled in the late January issue of Clarksons Research’s World Fleet Monitor.

Wily, shady entrepreneurs are scanning world maps to seek ever more distant outposts to establish ship registers to help grease the flows of the dark fleet. France and The Netherlands have recently submitted a paper to the International Maritime Organization’s legal committee about the emergence of two new shipping flags with questionable credentials, one in the Caribbean and the other, a disputed, uninhabited volcanic island in the South Pacific. The submission hits out at what is described as the “fraudulent” registers of Sint Maarten and Matthew Island (pictured).

It’s not just flags in far off places that have seen business surge in line with the growth of the shadow fleet. Less established names in classification and insurance have emerged. For instance, 86% of the global merchant fleet is now insured with the 12 P&I clubs that form the International Group, down from 95% prior to Russia’s full-scale invasion of Ukraine three years ago. Similarly the amount of tonnage classed by the established members of the International Association of Classification Societies (IACS) has dropped two percentage points over the past three years to 92%.