FMC opens investigation into flagging practices

The Federal Maritime Commission is conducting an investigation to examine whether the vessel flagging laws, regulations, or practices of certain foreign governments create unfavorable shipping conditions in the foreign trade of the United States.

The Commission is concerned about the conditions created by the wide and uneven range of foreign vessel flagging laws, regulations, and practices. It notes that many foreign nations take great care in creating standards for vessels flagged by their registries. These standards ensure the efficient and reliable transit of goods throughout the ocean shipping supply chain. Other foreign countries, however, have engaged in a “race to the bottom”—a situation where countries compete by lowering standards and easing compliance requirements to gain a potential competitive edge. By offering to register and flag vessels with little or no oversight or regulation, countries may compete against one another to gain revenue from the associated fees and to minimize the expenses associated with inspecting vessels and ensuring compliance with appropriate maintenance and safety requirements. In doing so, these nations compete to lower the cost of registering and flagging vessels beyond a point where they can ensure the efficiency, reliability, and safety of the vessels used in the ocean shipping supply chain. The use of these flags, says the FMC, endangers the ocean shipping supply chain.

Another concerning practice is fraudulent ship registrations whereby owners or operators register vessels under a flag state without the knowledge or approval of the relevant maritime administration, often to evade regulations or conceal illicit activities. In 2019, the IMO Assembly urged governments to send the names of their ship registration authorities and field offices, along with contact details, to the IMO Secretary-General to update the Global Integrated Shipping Information System module. France and the Netherlands reported that as of January 15, 2025, only 62 member states responded with this information.[6]

Based on this lack of responsiveness, France advocated for “an effective, concerted, and global approach.”

The FMC investigation commences with a 90-day public comment period. The Commission is seeking examples of unfavorable flagging laws, regulations, and practices. It says that it is particularly interested in receiving comments from individuals and organizations with expertise or experience in vessel operations, international trade, international law, and national security. Examples of such commenters include other governments, international organizations, standards-setting organizations, shipowners, shipping companies, shippers, and organized labor groups.

Commenters may also identify actions that high-quality registries can take to lower costs and compliance burdens so long as they do not result in diluting standards.

The Federal Maritime Commission is authorized to conduct comprehensive investigations and take vigorous enforcement measures when appropriate, including when foreign laws or practices cause unfavorable shipping conditions.

The deadline for submitting comments is August 20, 2025.

• Much more details in the Federal Register Notice. Download it HERE.