|The Bahamas Investor Magazine
June 27, 2007
June 27, 2007
Most of the cruise ships pulling into Nassau Harbour, and indeed into ports across the region and the world, are flying the Bahamian flag. Since amendments were made to the Merchant Shipping Act in 1995, making The Bahamas a more attractive registry for ship owners, the country has become the number-one registry of cruise ships worldwide.
And with a total of 43 million gross tons and 1,650 vessels flying the aquamarine, gold and black flag, The Bahamas has shown impressive growth over the past 12 years and succeeded in maintaining its position as the third-largest ship registry in the world behind Panama and Liberia.
Kenneth McLean, who assumed leadership of the Bahamas Maritime Authority in 2005, says the Bahamian registry is on track for continued growth. “Recent analysis shows that over the next three years, another 260 ships will be coming to The Bahamas. We currently have 1,650, so to add that many shows good, steady growth. It’s not cause for celebration, but it just shows that we are continuing to do the right thing,” he says.
Some of the biggest names in the industry have opted to fly the Bahamian flag. Carnival, Royal Caribbean, Disney, Chevron, Texaco, Exxon, Teekay Shipping, Restis and the Clipper Group have all expressed their confidence in The Bahamas’ ability to register them, provide ongoing technical service and regulate and enforce maritime laws.
Approximately 10 per cent of the ships flying the Bahamian flag worldwide are owned and operated by the Clipper Group, which has been registering ships in The Bahamas for more than 25 years. In 1998, chairman and CEO Torben Jensen moved his corporate headquarters from Switzerland to Nassau. Not only was he impressed with the tax-friendly environment and government’s welcoming attitude, he says, but it also made smart business sense. Dockendale Group was already based in Nassau. At the time, the two companies had 50-50 partnerships in a number of vessels, with Dockendale handling the technical management while Clipper Group took care of the commercial side of business. The two companies remain in the same West Bay Street building, but increasingly, the Clipper Group handles all aspects of the business itself.
Already, 80 per cent of the Clipper Group’s 108-strong fleet flies the Bahamian flag and 56 of the 72 new vessels scheduled for completion over the next five years will also be Bahamian registered. “If we have a choice, and if there are no other requirements, we will fly the Bahamian flag,” says Jensen. The reason behind different registries, he explains, has to do with requirements set by the countries into which his ships must sail. Some, like Italy and the United States, will only allow ships flying their own flag to carry goods between their ports.
Another significant development in the Bahamian registry’s growth came from Royal Caribbean Cruise Lines. The company recently ordered a 5,400-capacity, 1,180-foot-long cruise ship that will also fly the Bahamian flag. Expected to be completed in 2009, at a cost of $1 billion, this is the most expensive cruise ship order to date.
Local industry benefits
The shipping registry has thus far proven itself to be a solid revenue generator for the country. In addition to attracting companies to base their operations in The Bahamas, since the formation of the Bahamas Maritime Authority a little more than 10 years ago, the registry has directly contributed more than $40 million to the public treasury.
The development of a shipping industry has expanded the local economy by creating opportunities for supplemental businesses as well. The Grand Bahama Shipyard, which opened in 2000, provides steel and aluminium repairs, engine overhauls, electrical work, pipe work and hull treatment to vessels up to 1,000 feet long in its two wet berths and up to 899 feet long in its dry docks. The shipyard is known for servicing many of the cruise ships that sail the region, and 2007 is already shaping up to be a banner year.
Freeport Container Port, which serves as a major trans-shipment hub, also benefits, receiving so much business from its sole client, Geneva-based Mediterranean Shipping Company, that the principal shareholder, Hutchison Port Holdings, is proceeding with expansion plans that will bring its total capacity to 2.2 million TEUs (twenty-foot equivalent units) by early 2011.
Promotion is key
The consistent growth of the Bahamian registry and its ability to maintain its position as one of the top flags in the world has not happened by accident. The Bahamas Maritime Authority and the Bahamian government have allocated considerable resources toward marketing and promotion efforts abroad. “We are constantly promoting ourselves through the trade press, the conferences and other opportunities,” explains McLean. “Our agent in Japan is our register there, so we’re pushing hard in that region, and the next stop will be China. The Chinese are starting to build ships and we want to strengthen our relationship there to attract more of their ships to our registry.”
Another opportunity to promote the Bahamian registry comes in October, when all of the major players in the maritime world will participate in the Bahamas International Maritime Conference & Trade Show. The brainchild of Barry Malcolm, managing director of Grand Bahama-based Global Fulfillment Ltd, the event is intended to bring together experts, industry professionals and key stakeholders in the international trade and maritime industry.
Malcolm says it is critical that The Bahamas play host to such events as a means of establishing itself as a leader in the field. “It is a way of making a statement that The Bahamas is truly a significant maritime centre,” he says, explaining that the country boasts a “truly unique convergence” of key players in the industry.
The Bahamian shipping registry has come a long way since the first ship was registered 30 years ago. Today, the maritime industry is regarded by many as the third pillar of the Bahamian economy, along with tourism and financial services. Shipping remains an integral part of the world’s trade and economy, with current statistics showing that 90 per cent of trade worldwide is still moved by the international shipping industry. Looking ahead, many believe The Bahamas possesses the potential to someday assume the number one spot, with the largest registry in the world. However, if it does, McLean assures, it will never be at the expense of the flag’s exacting standards and stellar international reputation.