Flag States
A flag state is the country where a ship is registered, and whose laws and regulations it must follow, regardless of where it sails. The flag state is responsible for enforcing safety, environmental, labor, and operational standards under international maritime laws.
International Regulations and Flag State Responsibilities
Most cruise ships do not sail under the flag of the country where their headquarters are based. Despite where a ship is registered, cruise lines must also follow regulations from the countries they visit, as well as international safety and environmental laws.
Interesting Flag State Fact
There are three requirements of U.S. Law (under the Passenger Vessel Services Act) for a ship to be a qualified U.S. flag vessel for transporting passengers within the United States.
The vessel must be built in the United States
The cruise ship must be owned by a U.S. company
The cruise ship must be staffed by American crew members
About Flag States
Cruise lines choose the country in which to register their vessels (also known as “flag states") based on several factors, including, the flag state’s:
- Capabilities to deliver the services the company needs
- Reputation in the worldwide shipping community
- Safety and environmental performance of other ships within the registry (an indicator of how port states prioritize cruise ships)
- Seafarers pool (officers and crew) able to meet the flag's needs
- Fees (charges) and taxes (country's tax rates)
Cruise lines, by their very nature, are global entities, conducting business in numerous countries.
- The jobs cruise lines create, and the capital they deploy, are extremely mobile, perhaps uniquely so.
- Currently, cruise lines choose to conduct much of their economic activity, hiring, and purchasing in the USA.
- In fact, the top three cruise lines in the world choose to locate their headquarters in the United States.
- Therefore, the majority of the economic benefits the cruise lines generate goes to the United States.
The reality is that virtually all large-passenger cruise ships are registered (or “flagged”) outside of the United States for many reasons.
One reason is that the United States is not equipped to build passenger cruise ships and has not fully built a cruise ship in more than 50 years. In fact, the last cruise ship fully built in the U.S. was the SS United States more than seven decades ago.
It is true that there have been instances where a foreign built ship has been re-flagged in the USA, but those are typically situations where the U.S. government is involved and needs the ships for government/military purposes. Any such ship would still need to be crewed by Americans and majority-owned by Americans to be U.S.-flagged.
