Panama Ship Registry – Clean Up

05 July 2023

Qualship 21

Recently, the Panama Ship Registry enrolled in the United States Coast Guard “Qualship 21 Program”.

To qualify for the program, vessels must comply with established requirements, encouraging good compliance and environmental management. This important milestone for the Registry demonstrates their efforts in changing working methods and monitoring of the fleet.

Enforcing compliance

The Panama Maritime Authority considers the international compliance of the Panama-flagged fleet of utmost importance and to enforce it, the Authority looks at many factors, such as:

• the age of vessels,
• detentions,
• safety inspection histories,
• statutory and classification inspection and
• certification history.

Ships with a poor history of detentions, or a record of low international compliance, can expect to be subject to a process of sanctions and ultimately cancellation of their registration.

This purging of the fleet began in 2021. Ships corresponding to a total of more than 6.5M GRTs have been cancelled from the Registry in the last two years, whilst in the same period 29.6M GRTs were added to the fleet, according to Clarksons Research data.

Article 49 of Merchant Marine Law 57 lists the following as grounds for cancelling registration:

• Acts affecting national interest
• Serious non-compliance with legal regulations in force in Panama, or with international conventions ratified by the Republic of Panama,
• The expiration of provisional navigation patent, or regulatory patent, without being renewed within five years period from the expiry date,
• The use of the vessel for committing crimes, including smuggling, illicit or clandestine trade, or piracy,
• Presenting false or forged documents,
• Abandoning the vessel,
• Registering the vessel in another registry, other than as provided for in legislation for special charter registers,
• Total loss of the ship,
• High incidence of detentions,
• Other cases established by law, and international law.

It has also been proposed that the law be amended to include grounds for cancellation of registry for fishing vessels where the vessel is being used in activities related to illegal, unreported, or unregulated fishing.

The Panamanian Registry has, to date, cancelled the registration of 182 vessels representing 475,390.46 Gross Registered Tons (GRTs), for not having a valid Fishing License or for having an expired Navigation Patent, which in both cases could represent Illegal Fishing. Another 97 vessels, totalling 59,334.83 GRTs, are currently in the process of cancellation for similar reasons.

Growing the fleet

The Panama Maritime Authority is committed to attracting new builds, and accepting ships from companies with high standards.

In the last four years, the Registry has accepted 1,548 new buildings of around 50M GRT in total.

Being the world’s largest registry demands control, surveillance, and compliance, the Panamanian fleet is inspected on average 14,000 times per year.

The Panama Ship Registry is working on an integrated review for the verification and control of the more than 8,500 vessels that make up the Panamanian fleet and the more than 318,000 active seafarers on board these ships. The Registry has around 8,500 ships and has been inspected at least 45,000 times, with an overall fleet compliance level of 96.17%, and a detention rate of 3.83% downwards.

Paris MoU

The Panama Ship Registry is included in the Paris Memorandum of Understanding (MoU) Grey list.

The Grey List comprises those Administrations whose fleet maintains an acceptable level of compliance with a low level of detentions, the Panama Maritime Administration is committed to the compliance of its fleet by taking measures to reduce Port State’s detentions of Panama-flagged vessels.

The PMA consider some of the main reasons for their flag being included in the Paris MoU Grey List are:

• of the 374 detentions reported (in the last three years), 104 vessels were over 30 years old, 35 vessels over 40 years old. These vessels are subject to a special inspection regime, and risk removal from the register if they do not improve.
• Some ROs are certifying ships without prior notification to the Directorate General of Merchant Marine Ship Registry. A trend is apparent with such ships having a high number of detentions or reported deficiencies and having valid technical certification on board. These ROs have been audited, some suspended and revocation of their delegation of authority is not ruled out.
• some companies have declared bankruptcy and abandoned their vessels and crews due to the economic situation generated by the pandemic.
• Cases were detected where Panama Flag State inspectors did not attend on board the vessels, instead carrying out remote inspections, acting independently and without the authorization of the AMP’s Directorate General of Merchant Marine.

The Panama Ship Registry has implemented a series of actions to maintain its compliance standards, such as:

• Strengthening due diligence, i.e. rejecting ships older than 30 years and extending due diligence to companies. 20 ships have been rejected during 2023, due to their history of detentions in the pre-flagging process.
• Non-compliant vessels are sanctioned and cancelled. During 2023, 1 vessel was sanctioned for multiple detentions and 18 vessels are in a cancellation process due to their detention history.
• Flag State inspectors (ASI) with poor performance are sanctioned and cancelled. To date 3 inspectors have been suspended for poor performance, 14 are in the process of suspension and 9 have been cancelled from the list of Flag State inspectors approved by the AMP’s Directorate General of Merchant Marine.
• The purging of the Register continues. Since 2021, 216 ships have been removed from the register.