Forty-Five Per Cent of the World's Cargo Capacity Is Registered in Three Countries. The Flag Is Not Decoration. It Is the Law That Applies.

by Karim Haddad · September 4, 2026

World Affairs Correspondent, The Globe Ledger

A merchant ship's nationality is not settled by where it was built, where its owner banks or where its crew was born. It is settled by an entry in a register. Article 91 of the United Nations Convention on the Law of the Sea says every state fixes for itself the conditions on which it grants nationality to ships, registers them and gives them the right to fly its flag. Inspection, certification, labour standards, casualty investigation and criminal jurisdiction on the high seas all hang off that administrative act.

The scale is easy to under-read. UN Trade and Development's Review of Maritime Transport 2025, published in 2025, records a world fleet of 112,501 commercial vessels with a carrying capacity of 2,439,830.8 thousand deadweight tonnes at 1 January 2025. Three registers carried nearly half of it: Liberia with 17.4 per cent of world carrying capacity, Panama with 15.2 per cent and the Marshall Islands with 12.5 per cent — 45.1 per cent between them. Hong Kong, China accounted for 8.3 per cent and Singapore for 6.2 per cent.

The owners sit elsewhere. The same UNCTAD tables put Greece first among ship-owning economies with 16.4 per cent of world capacity, China second with 14.4 per cent and Japan third with 9.9 per cent, the top ten holding 67.3 per cent between them. None of the three largest registers is among those top ten owners. UNCTAD's own summary of the comparison is that much of the capacity owned by the top ten ship-owning countries is registered under foreign flags, the exception being Hong Kong, China, where foreign-flagged capacity accounted for less than half.

That gap is not a loophole in the system; it is the system. What the flag buys is a body of law and an administration obliged to apply it. Article 94 requires every state to effectively exercise its jurisdiction and control in administrative, technical and social matters over ships flying its flag, to maintain a register, to take jurisdiction under its internal law over master, officers and crew, and to hold an inquiry into serious marine casualties.

The drafters anticipated the risk. Article 91 also states that there must exist a genuine link between the state and the ship, and for decades some governments read that as a test a registration could fail. The International Tribunal for the Law of the Sea largely closed that reading in the M/V Saiga (No. 2) judgment of 1 July 1999, brought by Saint Vincent and the Grenadines against Guinea. The Tribunal concluded that the purpose of the genuine-link provisions is to secure more effective implementation of the duties of the flag state, not to establish criteria by which other states may challenge a registration's validity.

There is one hard penalty. Article 92 provides that a ship sailing under the flags of two or more states, using them according to convenience, may not claim any of those nationalities as against any other state. Statelessness, not weak registration, is the sanction the convention delivers.

Governments did try to define the link. The United Nations Convention on Conditions for Registration of Ships was negotiated under UNCTAD's auspices and adopted at Geneva in 1986. UNCTAD's own catalogue of the legal instruments it has produced since 1964 still lists that convention with the status 'not in force', and the United Nations depositary record, consulted on 4 September 2026, shows fifteen states having ratified or acceded in the four decades since, together with two successions to signature. The attempt to write down what a genuine link requires did not survive contact with the states whose registers it would have constrained.

So the system moved from definition to audit. The International Maritime Organization's Assembly adopted resolution A.1067(28) on 4 December 2013, setting the framework for the IMO Member State Audit Scheme, which examines how far states implement and enforce IMO instruments on safety of life at sea, pollution prevention, seafarer training, load lines, tonnage measurement and collision regulations — whether a flag state has enacted implementing legislation, enforces it, controls the authority it delegates and oversees survey and certification.

The audits have produced an unusually candid institutional self-portrait. A Secretariat analysis submitted to the IMO's Sub-Committee on Implementation of IMO Instruments, dated 1 May 2024, covers 82 member states and one associate member audited between 2016 and 2022, about 45.8 per cent of the membership. Flag state responsibilities accounted for 601 of 1,445 findings and observations, some 42 per cent — the largest single category. In the area of management, the analysis records that human and financial resources, taken together, are the single most frequent root cause of non-effective implementation.

The detail matters more than the share. Among the flag state findings are those concerning delegation of authority to recognized organizations — the classification societies that survey ships and issue certificates on a register's behalf. The 1 May 2024 analysis counts 44 shortcomings relating to the absence of a formal written agreement with such an organization and 49 relating to the absence of an oversight programme for the delegated work. Further categories cover the qualification of flag state surveyors and the conduct of casualty investigations, including their impartiality. Delegation is what lets a register of thousands of ships be run from a modest office; the audits show what happens when it is not supervised.

The labour side runs on a parallel instrument. The International Labour Organization's Maritime Labour Convention, 2006 entered into force on 20 August 2013 after ratifications covering, on the ILO's account, more than half the world's seafarers and more than three quarters of world gross tonnage. Ships of 500 gross tonnage and above on international voyages must carry a Maritime Labour Certificate and a Declaration of Maritime Labour Compliance issued under the flag state's authority. A 'no more favourable treatment' clause lets port states inspect ships flying the flags of states that have not ratified, which the ILO describes as helping ensure fair competition for compliant shipowners.

The chain ends where the tonnage does. UNCTAD's 2025 review records ship recycling in 2024 concentrated in four countries — Bangladesh at 43.2 per cent of tonnage recycled, India at 33.9 per cent, Turkey at 7.4 per cent and Pakistan at 7.2 per cent, 91.7 per cent together. The rules governing a vessel's last voyage to those yards are, again, whichever rules its register applies on the day it sails.

None of this is hidden; it is written into a convention with near-universal participation and audited by an agency that publishes what it finds. What gets lost is which question the flag answers. It does not tell you who owns the ship, where the profits go or who is aboard. It tells you whose law applies — and that answer is a filing.