Ship Registration Case Study

Ship registration – a solution to revive a waning Maritime industry

Introduction

South Africa’s last cargo ship left the South African register in 2010. Even then, the ship was not engaged in voyages that included ports of calls in South Africa. This begs the question as to whether the South African government (through the Department of Transport – DoT) and South African Maritime Safety Authority’s (SAMSA) efforts to revive the country’s ship register is misdirected. Most reasons for this push have been to create employment and to get South African cargo carried by South African ships with South African seafarers.

South Africa exports and imports well over 200 million tonnes of cargo per year, costing the nation well over R37 billion rand in shipping transportation (Mokhele, 2012). All this cargo and related income goes to foreign shipping companies employing foreign seafarers. Mokhele points out that less than 1% of these seafarers are South Africans. This as a missed opportunity to eat away on the 24% national unemployment rate.

The United Nations Conference on Trade and Development allows two countries trading with each other to place restrictions on the carriage of cargoes. The conference established what is popularly known as the 40-40-20 formula for carriage of trade. This means that any two countries can restrict carriage between national carriers by up to 40% each and allow another 20% to be carried by a non-national carrier(s) (United Nations Publications, 1975).

Importance of ship registration for South Africa

The South African Ship Registry has not had any cargo carrying ships listed since 2010. At the time, this created concerns at the DoT and SAMSA as there was now no longer a seagoing transport capacity for South Afr...

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...ice these ships. Employment of South African seafarers will reduce unemployment and poverty. The South African export industry will now know who owns the ships that is carrying their cargoes and develop relationships with them.

In order to attract ships faster, the government may have to bring in incentives for South African cargoes being imported and exported on South African ships. Currently, most South African cargo being exported are exported on a Free On Board (FOB) basis. While, on the other hand, imported goods are imported on a Cost Insurance and Freight (CIF) basis (Lamb, 2013). The shipping industry will have a great time convincing importers and exporters changing from exporting FOB to CIF and importing CIF to FOB. Some of the cargoes, especially bulk cargoes have been put on long term contracts for carriage and it may become a challenge to change these.