Freight and its Environmental Impact

Updated: Feb 25

According to United States Geological Survey, “the Earth is a watery place”, having 71% of water and it is fact that the success of the colonial era was because of this 71% water on earth. Even today seaways are considered more cost-efficient and easy mode of cargo transportation as compared to the other two available modes.

But the question must be raised, “is it the safest mode of transportation”?

Crude oil and/or oil distilled products (for example gasoline, diesel, jet fuels) spills can happen during oil exploration, creation, and transportation activities. Ecological effects of spills are really complex and can be hard to evaluate. The synthetic cosmetics of oil and oil products are very diverse in nature which influences oil conduct (for example volatilization, sinking). Degradation by oil is additionally affected by ecological factors, for example, saltiness, temperature, and surface versus underground spills. Oil can affect living creatures both directly (dermal contact, inhalation, ingestion) and indirectly (bioaccumulation in food sources, disturbance of recreational exercises). Thus, the answer to the above question more or less insists towards being negative because when the whole scenario of freight is considered, the damage is much more severe than we think – it will kill the marine life of a particular region completely in absence of due care and cognizance.

From Mexico’s Ixtoc & The Atlantic Express Oil Spills in the year 1979, which jointly resulted in polluting the oceans with approximately 230 Million Gallons of oil, to Mauritius Ship Wreckage in August 2020, which carried 200 tonnes of diesel and 3,800 tonnes of bunker fuel and it is still leaking in the ocean, the ship transportation industry has been killing the water bodies. Because of the Mauritius Ship Wreckage, the country had to declare emergency and locals are suffering because of a ship which does not even belong to their own country. Not only it harms the marine life which consequentially disorganizes the ecosystem but also it impacts human life to a great extent and the Port Blast of Beirut, Lebanon in August 2020, in which 150 people lost their lives is a very recent and tragic incident.

The ship ‘Wakashio’, involved in the Mauritius Ship Wreckage is owned by a Japanese company, which is registered in Panama. Unexpectedly, it turns out that world’s 20% of ship transportation companies are registered in Panama because of lack of a stringent legal system, when registrations in relation to shipping transportation companies are considered, after relinquishment from the United States of America in December 1999. Panama, Liberia & Marshal Islands are top three countries in the world when it comes to registration of companies which deal in freight and the only thing which is common in all these countries includes majorly two points – first, that there are no restrictions on the age of the vessel and second, that these countries follow the practice of ‘Flag of Convenience’.

‘Flag of Convenience’ is a business practice which allows a shipowner company to register the ship in a country’s register other than the ship owner’s country and the ship bears the flag of the country in whose register it is registered, for instance, if a person ‘A’, domiciled in Japan wants to start his freight business and he buys his ship ‘S’ under the company ‘C’ which he decides to register in a country other than Japan then this whole practice shall fall under ‘Flag of Convenience’ whereby the ship ‘S’ shall bear the flag of the country in which Company ‘C’ is registered. At present, there are 36 countries which follow and provide aid in relation to the flag of convenience. But according to the UNCTAD, as per the reports of 2019, more than 40% of world’s ship is registered under the Flag of Panama, Liberia and Marshall Islands which means that the flag of convenience cannot be the sole factor when an individual considers registration. The following are the reasons which show why these three countries are winning the race of highest ship registrations, among the 36 countries which provide and follow the practice of flag of convenience –

  1. Competitively lower registration costs.

  2. Least restrictions on the age of the vessel.

  3. Huge Tax advantages as per the Maritime Authorities and Legislations.

  4. Cheaper foreign labour. Insufficient compensation and improper work schedules.

  5. Least regulations and compliances when it comes to the operation of the business.

We now understand the common line between the three countries, but there are still several grey areas present while considering the above factors such as – Type and Age of Ship, Panama flag puts explicit limitations on particular kinds of the vessel (fishing vessels and so on) and also Panama does not specify age limitations. There is an age limit of 20 years for the Marshall Islands flag. For the Liberian flag, there are extra conditions for vessels that are individually 15 years or 20 years old or over. For Liberia, there is a base weight necessity of 500 NT, however, a waiver might be allowed comparable to this prerequisite. The Panama Maritime Authority (PMA) and the Liberian Registry may decline passage onto their separate registers if the vessel has a terrible history; Ownership, for the Marshall Islands, under the Maritime Act (1990), elements consolidated under the Associations Law (including the Business Corporation Act (BCA) and the Limited Liability Company Act) and any unfamiliar maritime entity qualified under Division 13 of the BCA may register a ship in the Marshall Islands. For Liberian flag, a ship may just be enlisted for the sake of a non-resident Liberian entity, anyway a waiver of such proprietorship necessity might be conceded to allow enrollment by a non-Liberian entity, given that the enlisted (non-Liberian element) proprietor documents in Liberia as an unfamiliar sea element. Identity of possession for Panama flag is not regulated; Registrations, each of the three banners have a provisional and a permanent registration method and an end contract registration system. In the Marshall Islands, provisional registration is not a pre-essential to permanent registration however it is in Panama and Liberia. In Liberia and the Marshall Islands, full registration is allowed until the vessel is erased anyway in Panama, a permanent registration permit is substantial for as long as five years, in spite of the fact that it very well may be restored like clockwork from thereon. Liberia, Marshall Islands and Panama grant double registration (subject to the principles of the other banner).

And thus, we can say that transporting in the sea is very easy. You can be from any country, your business objective can be anything, the ship transporting the material can be old & rusty, your shipwreck can lead to killing ocean life, and you will not be held responsible for it under the law. But this


The international community must come together to form regulations under the Maritime Laws, in relation to registrations of Ships. A particular country should not arbitrarily control the registration for a ship which is going to sail throughout the world that also includes a scenario wherein these ships can extensively harm the ocean life, the human life and consequentially bring imbalance to the ecosystem. It is not a municipal issue. Just like Human Rights, the regulations in relation to bringing a ship into the ocean also brings universal application. It is time to make laws stringent enough which require a company or an individual to go through a plethora of compliances before they can risk the ocean life.


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