Why Do Ships Register In Liberia?
(FORTUNE Magazine) – We're fine with wearing clothes made in China, drinking wine from Chile, and watching movies shot in Toronto. But one piece of international cross-pollination baffles us. Why are so many cruise ships registered in Liberia?
Look closely at the fine print on any cruise brochure, and you're likely to find mention of Liberia, located on the northwest coast of Africa. Ships register overseas to save boatloads of money on labor, says one cruise official, speaking on the condition of anonymity. For a ship to fly the Stars and Stripes it must be owned and crewed by Americans, making it subject to U.S. labor laws, including the minimum wage. American ships also must hire from costly labor unions.
So why Liberia specifically? Because the Liberian ship registry--set up by U.S. shippers after World War II--is cheaper than nearly any other in the world, says Mohamedu Jones, a Liberian and U.S. maritime lawyer. Liberia, founded by freed American slaves, has always enjoyed a close trading relationship with the U.S.
Today its merchant marine is one of the world's largest. Liberia's ensign rivals even Panama's among so-called flags of convenience. Goodness knows, that's the most American of virtues.